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Wednesday, Nov 29, 2023



The Transamerica Pyramid in San Francisco.

The Chrysler Building in New York.

The Sears Tower in Chicago.

That weird TBWA Chiat/Day Inc. building in Venice with the giant binoculars entryway.

There are some buildings whose very identity and design simply scream the name of the company that built or occupies them. Which is why it came as such a surprise to learn that Chiat/Day was recently considering a plan to move out of its signature building and sublease it to Hollywood special effects designer Digital Domain.

Rumors about the negotiations were rampant in the local ad industry this fall. One local ad exec even told me he was dating a woman from Digital Domain a few months ago, and she was expecting to move into the “binoculars building” any day.

Meanwhile, the principals involved denied that any such deal was in the works when contacted last fall by Business Journal reporters.

Well, there were negotiations, and they are now dead. Digital Domain spokesman Bob Hoffman says his company has leased 20,000 square feet of warehouse space on the opposite side of Main Street from its current Santa Monica building, and that will take care of its immediate expansion needs.

Hoffman acknowledges his company was in negotiations with Chiat/Day for several months, but broke off for undisclosed reasons.

The failed deal brings up this question: Why would L.A. County’s biggest ad agency want to move out of a property so deeply connected with its corporate identity?

The binoculars building at 340 S. Main St. was designed by renowned architect Frank Gehry at the behest of Chiat/Day founder Jay Chiat, who wanted a home for his agency that would reflect his revolutionary “virtual office” concept.

Completed in 1991, the three-story, 73,000-square-foot structure has a jungle in its lobby and womb-like meeting rooms topped by gargantuan fiberglass lightbulbs.

Chiat/Day CEO Bob Kuperman concedes that his agency is looking for an exit from its 15-year lease on the property. The reason, Kuperman says, is that Chiat/Day has simply grown out of the building although real estate sources suggest the move might also have something to do with the hefty lease payments that the agency is saddled with.

Business at Chiat/Day has been booming in recent years. Kuperman says the agency employs 420 people, housed in a building that was designed for about 275.

Chiat/Day added about 45 employees in 1996, a year in which the billings of its L.A. office grew to $705 million from $610 million in 1995, according to Kuperman.

“I think we’re doing, based on other peoples’ opinions, some of the most famous advertising in the United States,” Kuperman says. As evidence, he cites a recent Time magazine listing of the 10 best TV commercials of 1996 two of which were created by Chiat/Day, including the high-profile “Toys” spot made for Nissan Motor Corp. U.S.A.

Kuperman’s colleagues agree with him.

“If I was a client having an agency review, (Chiat/Day) would definitely be one of the agencies I would look at,” said the chief of one important L.A.-area agency. “I think they’re doing some of the best work they’ve ever done.”

Said another, “They’re one of the best agencies in the country.”

But Chiat/Day is operating under very high overhead. According to a real estate broker close to the deal, Jay Chiat sold the binoculars building two years ago to New York-based real estate investment firm W.P. Carey & Co. Inc., and the agency he founded is now under a 15-year lease of approximately $2.50 a square foot not counting the building’s expenses, which bring the overall cost to about $3 a square foot.

That $219,000 or so in monthly lease payments is considered a very steep price for such an inefficient building. Its design might be eye-catching, but about 30 percent of the binoculars building’s space is unavailable for working use.

“The rent is outrageous,” the broker said. “Digital Domain would have been foolish to pay such an above-market rent.”

Which leaves Chiat/Day in the market for another sub-tenant. Any takers?

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