The high-profile CNN Building on Sunset Boulevard gives Meringoff Equities yet another prized possession in Hollywood.
The firm already owns two office buildings at the corner of Hollywood and Vine and was poised to close escrow last week on a 30,000-square-foot office building on Ivar Avenue.
In all, Meringoff will have close to 600,000 square feet, or a third of the Hollywood market, when the deals close, said Rob Langer, a partner. The firm also has several more office-studio-retail buildings under contract.
“We look at this building (CNN) as the last great buy in Hollywood, significantly below anything else put on the market,” Langer said. “The location, look and tenant mix make it the premier office building in Hollywood.”
The deal is expected to close by early August. The seller, Copperfield Investment and Development Co., is a private partnership that has owned the 200,000-square-foot building for many years.
Sources said the purchase price is about $24 million.
The building was constructed in the late 1960s and houses the cable news giant’s West Coast bureau. Considered one of only a handful of class-A buildings in Hollywood, it’s 85 percent full, but will likely go to 95 percent in the coming weeks, said Langer, who worked on the acquisition with partner Bruce Blumenthal.
Besides CNN, which leases 30,000 square feet and has building-top signage, other tenants include video and sound production companies and Priority Records. Monthly asking rents have risen from $1.30 a square foot three years ago to $1.85 today, Langer said. Nonetheless, leasing activity has been brisk in recent weeks, he said.
“In 1986, you had to grab tenants by the collar to bring them through the building. Now if you don’t return calls, they show up at your door,” he said.
The renewed interest in Hollywood is in part due to the retail projects that are unfolding from one end of the community to the other, as well as tight office markets elsewhere.
“Hollywood has gone through 15 years of broken promises,” said David Doup & #233;, who handled the CNN building sale when he was with Greenwich Group International. “Now it’s finally turned the corner.”
Doupe now works for Insignia/ESG Capital Advisors Group.
Brokerage struggling
CB Richard Ellis Inc.’s Los Angeles ranks escaped relatively unscathed in the round of layoffs the firm announced last week. Among the 70 middle managers nationwide being shown the door, only one is based in Los Angeles, said Chris Ludeman, president of brokerage services for North America.
The L.A. regional director of operations was terminated, but offered another position. Ludeman declined to disclose the name of the director, or specify which other position the director was offered, or whether that offer was accepted.
Taking over as L.A. regional director is Bruce Bates, an executive from CB Richard Ellis’ operations in Washington, D.C.
Bates will oversee a newly enlarged L.A. region, which now will encompass Southern California, as well as Las Vegas, Arizona and Salt Lake City, Ludeman said.
The moves are all part of an ongoing North American reorganization that CB Richard Ellis expects will save $11 million in annual operating expenses.
On a related front, the firm last week announced it would report lower-than-expected earnings for the second quarter. Company officials attributed the decline to “a holdover from the capital markets malaise experienced last year, as well as a lengthening of buyer cycle time.”
Farmers Market update
Unless it’s appealed, the Grove at Farmers Market project has the necessary city approvals and will begin construction in September.
Developer Rick Caruso said the goal is to open in February 2001. About 50 percent of the space has been pre-leased, with such anchors as a Nordstrom department store, Crate & Barrel, Banana Republic and The Gap. It will also have a Pacific Theatres multi-screen cineplex.
“We’ve had an enormous amount of interest in the project. Leasing is a non-issue,” Caruso said. “The commercial area adjacent to the market has really declined over the years. This will have an enormous impact on revitalizing the area.”
Caruso said he plans to meet with neighbors who have concerns about traffic around the project, which will be built adjacent to the landmark Farmers Market on the northeast corner of Fairfax Avenue and Third Street.
Big industrial lease
Performance Team Freight Systems, a regional logistics company, has leased the Pacific Distribution Center in Santa Fe Springs for 10 years.
The 356,000-square-foot building is one of the largest class-A facilities in that region. It has 39 docks, sprinklers, a fully enclosed yard and state-of-the-art security system and is near three major freeways.
The project is one of many defunct drive-in theaters that have been redeveloped throughout the region by Pacific Theatres Realty Corp.
Stephen Batcheller and Ben Seybold of CB Richard Ellis represented Pacific in the lease, and Tres Reid of CB Richard Ellis represented Performance Team.
Apartments coming
JPI, a large national apartment developer, bought a 33-acre parcel from Newhall Land & Farming Co. for about $32 million, said Jim Fisher of Montrose-based Barry Powell Real Estate Investment Co., who represented Dallas-based JPI.
The site, at the corner of McBean and Magic Mountain parkways, will be developed with more than 800 apartment units, Fisher said. He said the project should fare well because the apartment market in Valencia is relatively underserved.
“This will have a tremendous impact on the marketplace,” he said.
Westlake Village investment
Mitsui sold the Westlake Plaza Center at 2801 Townsgate Rd. to Sagamore Equities for $17.6 million.
“We are extremely excited about the Westlake Village market. It provides opportunities for firms like Sagamore that are looking to acquire assets in strong, growing markets and add value by undertaking capital expenditures and a strong leasing program,” said Mike VanderLey, chief financial officer for Sagamore.
GTE is the main tenant in the 118,000-square-foot building, said Bob Safai, of Madison Partners, who represented the buyer along with Lynwood Fields.
VanderLey said Sagamore is looking to acquire six to eight additional buildings in the L.A. area in the next 12 to 15 months.
Elizabeth Hayes can be reached at (323) 549-5225 ext. 229.
