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Owner Aims Sky High With Pasadena Property

The Pasadena office building at 385 E. Colorado Blvd. has been put on the market only weeks after its largest tenant, Western Asset Management Co., renewed its lease.

Owner Worthe Real Estate Group in Santa Monica has put the 276,000-square-foot office building known as Western Asset Plaza up for sale at a noteworthy $140 million, or about $500 a square foot.

If sold at that price, it would be the most expensive sale on a square-foot basis in Pasadena since an office building at 171 S. Los Robles Ave. sold for $682 a square foot in July 2009.

Worthe acquired the building at an undisclosed price out of foreclosure in 2010 after its previous owner, a private company led by developer Robert Maguire, could no longer make payments.

Built in 2003, the five-story building is near Old Town Pasadena and the Paseo Colorado shopping center. It is almost completely leased and has a Ruth’s Chris Steakhouse and Bank of America branch on the ground floor.

In January, Western Asset Management, a unit of Baltimore’s Legg Mason Inc., renewed for 10 years, though it did reduce its lease by 14,000 square feet to 180,000 square feet.

Arty Maharajh, senior research analyst at Transwestern in downtown Los Angeles, said that Worthe made a smart move by renewing Western Asset.

“They are teeing up a building with a good credit tenant,” he said. “But that’s an extremely aggressive price based on the other sales that have occurred in the market. I think it’s lofty but I wouldn’t be surprised, though. Pasadena is always a better buy in the Tri-Cities.”

Eastdil Secured is marketing the property for Worthe.

Port Relocation

Third-party logistics company 3PL Group is moving its headquarters to Carson from its longtime Orange County home.

Last month, the firm signed a lease for the entire 270,764-square-foot building at 2211 E. Carson St. in Carson. Financial terms with landlord Prologis Inc. were not disclosed but industry sources estimate the deal’s value at $13 million.

The company was headquartered at Irvine’s Airport Corporate Center, at 17871 Von Karmen Ave.

The Carson building was the first South Bay industrial property to be built on spec in seven quarters when it came on the market last July, according to Sam Foster, an executive vice president at Jones Lang LaSalle Inc. who represented Prologis of Denver.

“I think they read the market right,” Foster said. “It was, for 3PL Global, one of the very few buildings in the South Bay that was absolutely contemporary and new.”

The building is being tailored to the tenant’s specifications and should be ready next month. Foster said 3PL decided to relocate because it wanted to be closer to the ports of Los Angeles and Long Beach.

Jones Lang LaSalle Senior Vice President Barry Hill also represented the landlord. Chris Jimenez of the Feinberg Group represented 3PL Global.

Discount Rent

The first quarter brought some bad news for L.A. apartment landlords.

While nationwide rental rates increased 4.4 percent to $829 compared with a year earlier, the average apartment rental here fell 2.6 percent to $1,396, according to TransUnion, which reviewed more than 130,000 rental applications from property managers nationwide.

But Los Angeles had some company. Six of the 10 major markets that TransUnion surveyed saw declines in rental rates. The largest drop was in Denver, which saw rates fall 8.8 percent. Atlanta was the only market that saw a significant rise, 6.3 percent, in rental prices.

So why did Los Angeles fall, given how developers are diving into the apartment market and new units are rising across the city?

“That’s the zillion-dollar question,” said Steve Roe, vice president of sales for the rental screening division of TransUnion in Denver. “Some of the operators I have spoken to said we want to get people in the apartments so we are willing to drop rents a little bit.”

But things might be looking up for L.A. landlords. The recently released 2012 Casden Multifamily Forecast from the USC Lusk Center for Real Estate indicates rental rates could be on the rise in the area over the next two years, projecting almost a 10 percent increase next year.

Roe said TransUnion doesn’t have projections, but he believes USC’s study to be accurate, especially as the economy and local apartment vacancy rates improve.

Staff reporter Jacquelyn Ryan can be reached at jryan@labusinessjournal.com or (323) 549-5225, ext. 228.

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