Reflecting the renewed level of activity within local income-property markets, this week’s column focuses on news at some very sexy office buildings, as well as some industrial properties.
In the office sector, fast-growing REIT Arden Realty Inc. purchased the biggest office building in Arden’s home town of Beverly Hills the 410,000-square-foot Wilshire-San Vicente Plaza for more than $58 million.
Arden bought the 1971-vintage 10-story tower at 8383 Wilshire Blvd. from an affiliate of Chicago investor Sam Zell’s Equity Office Properties, which had acquired the property for about $52.5 million in late 1991, according to Arden Chairman/CEO Richard S. Ziman.
Acquisition of the 78 percent-leased property at what factors to about $143 per square foot makes Arden the biggest office landlord in Beverly Hills, Ziman said.
Greenwich Group International’s Kevin Kaseff and Adrian Goldstein helped broker the sale on Equity Office’s behalf, while Arden negotiated internally.
Douglas Emmett takes control
The luxurious downtown Santa Monica office building housing advertising agency Rubin Postaer & Associates and Wolfgang Puck’s business operations has been acquired through foreclosure by a real estate investment fund managed by Brentwood’s Douglas Emmett Realty Advisors.
The Douglas Emmett opportunity fund backed by various institutional investors initially purchased the defaulted mortgage on the 80,000-square-foot property for “well under $20 million” in late April, said Douglas Emmett CFO Jordan Kaplan, who declined to specify further.
Douglas Emmett then completed the foreclosure May 8 through a “consentual” agreement with the property’s owners, which included Rubin Postaer, Kaplan said.
Former mortgage holder Wells Fargo Bank had conducted a bidding competition for the note on the property, which is at 1333 Second St.
Kaplan said the new owners are also finalizing a restructured lease with Rubin Postaer, which ranked third on the Business Journal’s annual List of local ad agencies, with $426 million in gross billings last year.
TRW leases building
TRW Inc. has leased the entire 150,000-square-foot Manhattan Towers office building along the high-momentum Rosecrans Avenue Corridor dividing El Segundo and Manhattan Beach.
Steve Solomon, one of the Seeley Co. brokers who negotiated the lease, declined to disclose financial details of the transaction. But other brokers working the South Bay market area said they understand that TRW leased the property “as is” for five years, and it will finance and construct its own interior improvements.
Sources said the lease was negotiated on a “triple net” basis, i.e., the tenant is responsible for property maintenance, taxes, etc. The monthly lease rate with Baltimore-based property owner USAA Realty is said to be in the 85 to 90 cents per square foot range.
Hughes Aircraft Co. had occupied the six-story building at 1240 Rosecrans Ave. in Manhattan Beach for a decade before vacating it last year. Hughes is also in the process of vacating USAA’s adjacent twin at 1230 Rosecrans.
While Solomon and his Seeley associates who lease the USAA buildings (Craig Meyer and Michael Condon) wouldn’t discuss the TRW deal’s specifics, Solomon did say the transaction is further evidence of the burgeoning interest from a variety of commercial and retail tenants in the Rosecrans Corridor.
Dye house to relocate
In the industrial sector, big textile dye house Kronfli Spundale Mills will expand, consolidate and relocate its corporate headquarters and primary manufacturing operations from four locations east of downtown L.A. to a 220,000-square-foot building in nearby Vernon and an adjacent 51,000-square-foot facility.
Lee & Associates’ Jack Cline, who represented privately held Kronfli Spundale in the headquarters search and lease negotiations, said his client sought a larger, consolidated new home for about a year and was swayed by Vernon’s “business-friendly, manufacturing-friendly attitude.”
About 450 employees will relocate from the four sites, including the current headquarters in the City Terrace district, to the two Vernon facilities.
The five-year lease transaction, with renewal options for the larger building, is valued at about $4 million. Kronfli Spundale will invest another $1 million to improve the 1950’s-vintage property at 4440 E. 26th St.
Lee’s Anthony Brent represented the property owner, Mira Mesa Shopping Centers, whose previous tenant in the larger building sought bankruptcy protection.
Chemical firm to build
Lee’s Cline also just helped chemical distributor Soco-Lynch purchase 11.5 acres at the MCC Commerce Center business park in Santa Fe Springs, where the company plans to develop to a distribution facility of more than 100,000 square feet.
Soco-Lynch, a subsidiary of a Germany-based multinational conglomerate, will expand and relocate from a facility on Washington Boulevard along the Los Angeles/Vernon border.
Cline, who represented Soco-Lynch along with Heger Realty’s Bob Levenstein, declined to disclose what his client paid the business park’s developers McGranahan Carlson & Co. for the site along Florence Avenue or the expected cost of the development.
Cushman & Wakefield Inc.’s David Hasbrouck and Tim Howard (formerly with C & W;, now with Trammell Crow Co.) represented McGranahan Carlson.
Big Burlington lease
Burlington Air Express will relocate its LAX-area operations center from Century Boulevard to about 100,000 square feet at a new 296,300-square-foot, two-building distribution center under construction along Imperial Highway.
Steve Zarnowski Irvine-based Burlington Air’s regional director for Southern California, Arizona, Hawaii and Las Vegas said he’s anticipating a September move to the new project, which is being developed by Birmingham, Mich.-based International Airport Centers LLC.
The development group is headed by veteran Michigan developer Ed Schulak and former KeyBank commercial real estate lending official Alex Kurrelmeier. They’re also developing a 322,200-square-foot, eight-building complex near Charlotte International Airport in North Carolina.
Brad Berton covers real estate for the Los Angeles Business Journal.