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Friday, Feb 3, 2023

The Area

The Area

Office complexes surrounding Santa Monica Business Park live and die by the big deal and it’s mostly die these days but the 1.1-million-square-foot park has chugged through the Westside meltdown making smaller, less flashy leases.

The 20-year-old park, along a half-mile stretch of Ocean Park Boulevard, is surrounded by neighborhoods with single family homes that would be considered modest if not for the exorbitant property values in the area. As a result, the area is far quieter and less congested than either downtown Santa Monica three miles to the west or the Water Garden/MGM/Arboretum district two miles northwest.

The 11,557-square-foot lease struck with CyberU may not have front-page appeal, but it is typical of transactions that have kept vacancy rates at the park at about 14 percent, compared with 18 percent in the greater Santa Monica office market.

The nearby 460,000-square-foot Westside Media Center is facing 312,000 square feet of vacancy (half of which attributed to eToys’ demise). Water Garden and MGM Plaza face the imminent departures of anchor tenants Specialty Laboratories Inc. and MGM, respectively.

The park’s size and layout it covers 46 acres and has no building larger than 140,000 square feet has lured a hodgepodge of smaller businesses attracted to the low-rise environment and willing to eschew the cachet and pricey rent that comes with a Water Garden or MGM Plaza address.

Its largest tenant is computer games software maker Activision, which increased its occupancy to 128,000 square feet (a scant 11.5 percent of the overall project) from 98,000 square feet when it bought out Treyarch and took over its space last fall. The next largest tenant is Art Institute of Los Angeles, which occupies about 75,000 square feet.

“The business park provided an opportunity to go to the beach or the Westside shopping areas,” said Dion Brain, senior director of corporate operations at Activision, which moved to the business park from Brentwood’s World Savings building in 1997. “But honestly, it came down to economics.”

The park, which sits near the southeastern border of Santa Monica and is bordered by 28th Street, Ocean Park Boulevard, Centinela Avenue and Santa Monica Airport to the south, is filled with sub-25,000-square-foot tenants paying rents of about $2.50 a foot a dollar below Santa Monica’s average asking rent during the first quarter.

Employees of infomercial marketing companies, financial services firms and some surviving dot-coms all vie for the surface level parking spaces (an anomaly for Westside office developments) or the machines at the 24 Hour Fitness Center on site.

Formerly the site of Douglas Aircraft’s manufacturing plant, Santa Monica Business Park was built by Transpacific Development Co., which was headed by residential developers Richard Barclay and Shurl Curci, between 1980 and 1983.

“At one point, it represented a quarter of the commercial office space in Santa Monica,” said Thomas G. Irish, president of Transpacific. “There were 10 buildings being developed simultaneously. We were overwhelmed by the demand.” (The park now represents about 14 percent of Santa Monica’s office inventory.)

The Torrance-based developer sold the business park to Spieker Properties as part of a $525 million portfolio sale (the business park was valued at about $140 million at the time, according to Irish) in 1998. After that Spieker invested $7 million in outdoor amenities, signage and building lobby improvements, attracting many of its current tenants in the process. Spieker was bought by Equity Office Properties last year.

“It was always a mixed bag of tenants,” said Gail Goldstein, leasing director at Equity who had been with Spieker since 1997. “It appeals to people with all different types of backgrounds and needs.”

Danny King


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