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Wednesday, Sep 27, 2023

REAL ESTATE — New Economy Meets Old Industry in Rail-Yard Lease

A new tech center under construction at Taylor Yard has signed its first tenant and more deals are in the works.

Broadwing Communications leased a 65,000-square-foot building at the Los Angeles Media Tech Center, a $78 million project with seven buildings that is being developed on the former rail yard north of downtown.

At its peak during the 1950s, Union Pacific employed about 1,000 people at Taylor Yard. The new development by Legacy Partners and AMB Property Corp. aims to replace some of those jobs by targeting tech-related, telecom and media companies as tenants.

Broadwing will bring about eight jobs to the site, while another prospective but as yet unnamed tenant could add 1,000 or more jobs, said Rocky Delgadillo, L.A. deputy mayor for economic development.

“(The Broadwing deal) has sparked significant interest in the site,” Delgadillo said.

Austin, Texas-based Broadwing owns one of the world’s largest fiber-optic networks and provides voice, data and Internet services. It selected the Taylor Yard property in part because of the train tracks that run behind the buildings.

In a meshing of old industry and new technology, Broadwing has run its fiber-optic cables down the rail lines, said Corey Waite, a senior vice president at CB Richard Ellis, who along with Mark O’Brien represented Broadwing. (Dave Harding and Pete Poulson of CB represented the ownership).

“They saved a lot of money. The fiber is right there,” Waite said. The building itself will be used for a switching and Web-hosting facility that is slated to go into use in December.

The 15-year lease is valued at $8.3 million, based on asking rents. Broadwing also plans to spend up to $9 million on tenant improvements and infrastructure.

Legacy and financial partner AMB purchased 50 acres of the former maintenance yard last year. The center’s first phase of 398,000 square feet is almost complete. Legacy plans to start the second phase by the end of the year, adding another 350,000 square feet in five buildings.

The buildings are “mid-tech,” meaning they are designed for more flexible uses than standard industrial space, with a mezzanine level in front and high-bay space elsewhere.

“We designed product intended to meet the needs of high-tech and entertainment (tenants), and what we’ve found out is there’s a strong demand for that,” said Bill Shubin, a partner at Legacy.

On another 40-acre parcel at Taylor Yard, Lennar Partners plans to develop 650,000 square feet of industrial space, a multi-screen movie complex, stores, restaurants and a 1,000-vehicle parking garage. Other recent additions to the site include a Federal Express distribution center, Ralphs supermarket and MetroLink maintenance facility.

Taylor Yard has been designated as part of Mayor Richard Riordan’s Genesis L.A. program, which aims to attract private investment and redevelopment at 15 blighted sites across the city.

Cornfield Dilemma

Another former rail yard near downtown, The Cornfield, is the subject of an Occidental College-commissioned study released last week.

The study by a team of UCLA urban planning graduate students found the two competing proposals for the site to be lacking.

Majestic Realty Co. is proposing to build a light-industrial park on a 32-acre portion of the Chinatown-adjacent site. The developer says the project would create 1,000 jobs.

Meanwhile, a group calling itself Friends of the Los Angeles River envisions a mixed-use plan with housing, commercial and retail space, a middle school, large park, canal and artificial lake.

Majestic’s proposal is economically viable but ignores city and private planning reviews calling for mixed-use development, open space and community facilities, according to the study by UCLA students. The proposal by the Friends of the Los Angeles River failed to provide any evidence of its financial feasibility.

The future of the area remains to be seen, but the study provides food for thought. “This ought to impact the decision-makers,” said Robert Gottlieb, a professor of urban and environmental policy at Occidental.

New Beginnings

There are two significant personnel shifts to announce this week:

Stephen Walbridge, a former executive vice president with Julien J. Studley Inc., has joined Cresa Partners in Brentwood as a principal.

And David McKenney has switched from Cushman & Wakefield Inc., where he had spent about 10 years, to CB Richard Ellis in Century City.

Walbridge, who had been at Studley since 1980, has handled transactions totaling more than 5.2 million square feet and represented a host of major companies, including Microsoft Corp., Walt Disney Co. and CNA Insurance. Cresa, which has 11 offices nationwide, is in a significant growth mode.

“Steve’s experience with high-growth technology companies like Microsoft and his personal commitment to the use of technology in commercial real estate will greatly complement our firm’s core focus on entertainment, new media and technology clientele,” said Jerry Porter, vice chairman of Cresa.

McKenney returns to CB several years after he left the old Coldwell Banker Commercial Brokerage, where he worked for about a dozen years. He said CB has a broad platform and reach around the globe.

“It seemed to be a good formula for our clients,” said McKenney, who will be a senior vice president at CB.

McKenney has made his mark representing owners, both foreign and domestic, in large office, hotel and land sales.

Cyber System Debuts

Another new real estate venture debuted on the Internet last week, joining a crowded field.

The American Industrial Real Estate Association’s e-MULTIPLE system, which registered users can access via AIR’s Web site (www.airea.com), enables real estate pros to retrieve up-to-the-minute data, including property listings and maps. The system is available to any commercial or industrial real estate firm or organization.

Among its features are the ability to map a group of properties and print them in color, and to automatically notify users whenever a property enters the system that meets specific criteria.

“We get excellent data because brokers know it’s shared with brokers,” said Tim Hayes, managing director of the nonprofit AIR.

Elizabeth Hayes can be reached at (323) 549-5225, ext. 229, or at ehayes@labusinessjournal.com.

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