Arden Realty Inc. added another piece to the Howard Hughes Center puzzle last week, with its $53 million purchase of a 16-story tower there.
Arden bought the 314,000-square-foot office building at 6701 Center Drive from Prudential Insurance Co. of America to complement the other buildings it owns or is developing at the site. Arden now has two of the three office buildings, along with the Spectrum Executive Health Club.
Renamed the Howard Hughes Tower, the newly purchased building is 80 percent occupied, with such tenants as Blue Shield of California, Perot Systems Corp., the National Football League (which publishes game programs) and Univision Stations Group Inc.
Victor Coleman, Arden’s president and chief operating officer, said leases are being negotiated with an array of tenants that could soon bring occupancy to 93 percent. Asking rents in the tower will range from $2.35 to $2.75 per square foot per month.
The plan is to have the building occupied well before the completion of 6060 Center Drive, a 240,000-square-foot building currently under construction. Arden is jointly developing that project with Lowe Enterprises.
The center overlooks the San Diego (405) Freeway north of Los Angeles International Airport. Development began in 1988 and includes entitlements for up to 2.7 million square feet of office and commercial space, hotels, restaurants and retail. The 6060 building is the first project being developed on the remaining 34 acres.
Fort Worth, Texas-based Crescent Real Estate Equities was poised to acquire the tower last summer, but the deal fell apart after its share price took a beating along with other real estate investment trusts.
Arden, whose stock has hovered between $25 and $26, has slowed its own aggressive acquisition pace of a year ago but hasn’t stopped looking to add to its 18 million-square-foot portfolio.
“Our strategy is looking at unique, opportune acquisitions in markets in which we already have a presence. The Howard Hughes Tower exemplifies that perfectly,” Coleman said.
Cinetech moves to Valencia
It may not be the next Burbank, but entertainment companies have been taking a hard look at Valencia.
In a recent deal, film restoration company Cinetech leased 33,000 square feet at Tourney Pointe, a newly renovated, four-story office building owned by Arden.
Cinetech, one of the largest companies of its kind in the country, has restored such classics as “The Wizard of Oz” and “In the Heat of the Night.”
The company will house its headquarters and film laboratories in the Tourney Point building, which originally was designed for a pharmaceutical firm that needed testing laboratories.
Cinetech currently is located in Burbank and had considered staying there. But rents in Valencia were more attractive, said Doug Marlow, a broker at CB Richard Ellis who represented Cinetech along with Brian Davies.
Office rents in Valencia range from $1.65 per square foot per month to $2.20, compared to $2.25 to $2.75 in Burbank.
“The market moved away from us,” Marlow said. “You’re able to get more bang for the buck in Valencia.”
Other entertainment companies, including Walt Disney Co., Paramount Pictures and Saban Entertainment, have office and/or sound stage space in Valencia.
“As they learn about Valencia, the reverse commute, cost of occupancy and access to labor and executive housing, you’re seeing more deals. It’s in the path of progress,” Marlow said.
CB’s Doug Sonderegger represented Arden in the purchase.
Expansion in Calabasas
Superior National Insurance Group Inc. plans to expand its national corporate headquarters to a two-story, 91,000-square-foot building in Calabasas owned by Kilroy Realty Corp.
Superior, the largest writer of workers compensation insurance in the state, has signed a 10-year lease for an undisclosed sum. With its move in November, Superior will more than double its current corporate staff to 400. It currently has a smaller facility in Calabasas.
Its new offices will be located just west of the Las Virgenes off-ramp of the Ventura (101) Freeway, not far from the 210,000-square-foot Calabasas Park Centre that Kilroy plans to start building this month. Kilroy has already leased 40,000 square feet there to VPA Inc.
Duane Cody and Ron Wade with Cushman & Wakefield represented Kilroy. Jeremy Dee, of Corporate Realty Associates Inc., represented Superior.
Construction start in Sylmar
Signaling more growth in the industrial sector, construction has started on a nine-acre, $11 million development in Sylmar.
Southgate-based World Oil Co. is developing the 168,000-square-foot Valley Gateway Business Park, one of the San Fernando Valley’s largest commercial projects this year.
The park at 15648 Roxford St. will have three freestanding buildings, two with 28-foot warehouse clearances.
There has already been substantial interest in the project, although it won’t be completed until December, said Chris Sullivan of Daum Commercial Real Estate Services, who represents World Oil.
Forecast time
UCLA Extension will host a conference on June 11 to discuss trends in California real estate at the Beverly Hilton Hotel. Grubb & Ellis will release its 1999 mid-year forecast and California Controller Kathleen Connell will be a featured speaker. For further information, call (310) 206-1409.
The Real Estate Conference Group’s mid-year forecast will be delivered June 28 at the Century Plaza Hotel. Featured speakers include Cornerstone Properties Chairman William Wilson III and Arden President Victor Coleman. For further information, call (310) 285-5327.
Elizabeth Hayes can be reached at (323) 549-5225 ext. 229.
