Culver City may be getting a new multimedia campus on a 12-acre site at the corner of the Slauson Boulevard and the east terminus of the Marina (90) Freeway.
LuxCore LLC, which originally was the primary developer of the site, is now taking a minority role and the new developers are rethinking the project, according to city officials. Although the deal has not been completed, the new developers are expected to be a partnership led by the insurance fund Zurick Kemper Stevens and the private developer Hileman Co., with New York-based Apollo Real Estate Fund as the money partner.
The new developer is considering scrapping its original studio and sound stage plans in favor of building a multimedia campus. The square footage has not yet been determined, but the developer is considering construction of seven buildings on the western nine-acres of the site. The three-acre eastern portion, which has been approved by the city for a 12-story building, will probably be sold.
LuxCore proposed last summer building a $150 million motion picture and television studio, a project touted as the city’s first ground-up studio development since Metro-Goldwyn-Mayer Inc. opened its headquarters there 79 years ago.
But now the developers are thinking twice about going into the sound stage business. Securing financing for such projects is difficult because television studios rarely know their production schedules more than two months in advance, which makes for a skittish projected cash flow. Production companies are also reluctant to enter into long-term leases because they have no guarantee that their TV shows will be successful enough to last the season.
Sources close to the deal say that there’s still an outside chance that the studio proposal might go through, but only if a major studio is willing to pre-lease the project. And that, as evidenced by the long wait before Twentieth Century Fox Film Corp. agreed in October to anchor the Shamrock Holdings sound stage project in Manhattan Beach, isn’t an easy sell.
LuxCore’s new partner, Apollo, administers three major real estate funds with assets exceeding $6 billion. Apollo is also partner in the 190,000-square-foot Arboretum Gateway project that it is financing the project with Three Coast Ltd., a development company.
What’s up with Rand?
Last year, as reported by the Business Journal, the Rand think tank in Santa Monica indicated that it was finally planning to develop its prime, 15-acre ocean view site into a modern office and residential complex. A developer was supposed to have been announced last November, but officials now say that decision is still months away.
Real estate sources say Eastdil Realty Co. LLC is marketing the Rand property for sale to the development community, and that the non-profit institution is looking to lease back 500,000 square feet for its headquarters.
Eastdil will present the bid offers to Rand in March. Then the decision goes to Rand’s board of trustees, who are meeting in April, according to Iao Katagiri, Rand’s deputy vice president and project manager for development.
The downtown Santa Monica site presents a prime opportunity for a developer, as tight vacancy rates in the seaside city have pushed up office rents by 20 percent last year and housing prices have rocketed up.
Rand is spilling over from its 300,000-square-foot, 45-year-old office building. But this isn’t the first time the think tank has considered redeveloping its primary asset, and it has allowed the real estate cycle to spin away in the past. The city’s 1991 specific plan calls for 300,000 square feet of residential and 800,000 square feet of office and residential at the site, but the project still needs entitlements before it can be built.
Snyder bullish on Santa Monica
The prospect of the Rand development finally becoming a reality doesn’t cause developer Jerry Snyder concern. He intends to break ground on his long-delayed 600,000-square-foot Water Garden phase II project within the next three months, now that his Los Angeles-based firm, J.H. Snyder Co., closed a deal with Colony Capital Inc. this month to be the project’s joint financial partner.
“We’re very bullish about the Santa Monica market,” Snyder said. “We’re charging right ahead with construction and we’re not changing a thing.”
The Water Garden project already has its building approvals from when it was first proposed in the late ’80s, when Snyder built Phase I of the project in partnership with investor Marvin Davis. J.P Morgan now owns that building, which is 96 percent leased and asks monthly rental rates of $3 per square foot.
Snyder intends to begin construction on a “speculative” basis, meaning there are no pre-lease commitments from tenants. The project, located at the corner of Colorado Avenue and Cloverfield Boulevard, is in a bustling office district. Tight vacancy rates in the eastern Santa Monica market have led to two other office development projects already underway, Spieker Properties’ joint venture with Lowe Enterprises on the Arboretum Courtyard and the Arboretum Gateway project. Lowe has almost completed excavation on the Courtyard project.
‘Golden Triangle’ action
Lexington Commercial Holdings announced last week that it selected Ohio-based Madison Marquette as its venture partner for the slice of the Beverly Hills “Golden Triangle” that it purchased last August. The partners plan to build a “family-oriented” retail project on the 67,500-square-foot property, located at the former Bloomingdale’s site between Canon and Beverly drives, said Alisa Freundlich, chief financial officer at the Los Angeles-based Lexington. The two companies will share development and ownership of the project, she said.
Just what that development will entail is still in the conceptual stages, Freundlich said, although she emphasized that it will be a community-oriented center rather than a tourist destination.
“We want something that (neighbors) can walk to if they want to grab a cup of coffee, take their family out to dinner or catch a movie,” she said.
The venture partners plan to begin meeting with community members in the next few weeks. Then the developers will determine a project budget and construction timeline, she said.
By the way, the Feb. 9 column on Credit Suisse/First Boston’s lease in the Oppenheimer Tower failed to mention that John Eichler of Cushman & Wakefield Inc. was the lead broker representing the tenant. Sorry, John.
Joyzelle Davis covers the real estate industry for the Los Angeles Business Journal.