LAUSD Taking Long View With Beaudry Building Deal
By DANNY KING
Los Angeles Unified School District’s $74.5 million purchase of the downtown Beaudry Building is significant not only for its expected effect on school operations but for the deal’s size and the changes it will bring to downtown.
“It’s not a simple building sale,” said Jonathan Larsen, senior vice president at Trammell Crow Co. and, with Peter Best and Lisa St. John, LAUSD’s representatives on the deal. “It’s got a little bit more to it than that.”
The school district purchased the 928,000-square-foot building at 333 S. Beaudry St. from New York-based Beaudry I Investors LLC for $74.5 million. Behind those numbers are several key circumstances:
– A school shortage: The district’s well-publicized shortage of schools, forced the LAUSD to look at its headquarters at 450 N. Grand Ave. as a possible school site. With the Beaudry building purchase in place, the current headquarters will be torn down, with a 2,200-student high school to go in its place. It is scheduled for completion in 2005.
– Excess space at the Beaudry Building: Bank of America, the master leaseholder, agreed to sublease 781,000 square feet to LAUSD in a $33 million deal that begins this September. The district will take over an additional 147,000 square feet when Bank of America vacates the space at the end of 2005.
– Short-term space at KPMG Tower: The district has re-upped its 308,000-square-foot space at 355 S. Grand Ave. for one year, buying the district enough time to complete the sublease and purchase deals and begin the process of moving its administrative offices to the new headquarters.
With the building purchase, the sublease and the short-term lease in tow, LAUSD has spent over $120 million to ensure a large, long-term home for its administrative operations. In addition to its KPMG Tower and 450 North Grand offices, operations at the Third Street Annex, San Pedro Street and the Knudsen Building on East 21st Street will be moved into the new space.
With that much space available, the LAUSD was the perfect buyer for the Beaudry Building, according to downtown broker Chris Runyen.
“It’s a ‘needle in the haystack’ type of deal,” said Runyen, vice president at Grubb & Ellis Co. “It’s so rare to have someone like that show up to buy it.”
Just two blocks from the contaminated Belmont Learning Center site, the Beaudry Building was not built on an oil field, so initial fears from school board members about a potentially hazardous site were unfounded. Also, at a purchase price of $80 a foot, the 20-year-old building, which once housed operations for Security Pacific Bank in addition to Bank of America, proved to be an economically superior alternative to building new headquarters downtown, which would cost over twice that figure.
Because of the expected consolidation of district operations, LAUSD became enough of a force to command the attention of developer Robert Maguire, who attempted to put together a last-minute deal to buy and renovate Arco Plaza and sell off one of the 1.2 million-square-foot towers to the district. The proposal, which was submitted the day before the LAUSD was to vote on the decision to buy the Beaudry Building, was turned aside, as the district approved the purchase Oct. 9.
Most Significant Building Sale
Project: Beaudry Building, purchase by LAUSD
Players: Peter Best, Jonathan Larsen and Lisa St. John, senior vice presidents at Trammell Crow Co. and representatives of the LAUSD.
The Deal: Los Angeles Unified School district purchased the 928,000-square-foot building at 333 S. Beaudry St. for $74.5 million for its headquarters after subleasing 781,000 square feet from Bank of America, the building’s master leaseholder. The deal allows the LAUSD to replace its former headquarters at 450 N. Grand Ave. with a 2,200-student high school and consolidate its administrative operations at Beaudry.