Playa Vista, Marina del Rey, El Segundo. The waterside office markets south of Silicon Beach have been touted as a lower-cost alternative to pricey Santa Monica and Venice. But lately another alternative has begun to emerge, luring technology, media and other creative tenants further inland: Westwood.
In the next week or so, Santa Monica online dating service eHarmony Inc. is expected to commit to move its headquarters east of the 405 freeway to Westwood. The company is negotiating a 50,000-square-foot lease for the penthouse and top three floors at Murdock Plaza, an 18-story red-brick office tower at 10900 Wilshire Blvd.
If the deal closes, eHarmony will join at least two other media and technology companies that made big moves in Westwood in the last couple of months. All have cited the area’s accessibility and affordability.
“It’ll be much simpler for our employee base near the 405 to commute to work, and it’s a better setup in the building that we’re moving to,” said Armen Avedissian, eHarmony’s chief operating officer. “The pricing is much more attractive as well.”
Avedissian said the company conducted a search spanning a 10-mile radius from its Santa Monica office as it looked for more favorable rental rates and a better commute for employees. The company hopes to move to Westwood in mid-2015, shortly before its five-year sublease at the Colorado Center, 2401 Colorado Ave., expires.
Tishman Speyer, which acquired Murdock Plaza in August for nearly $125 million, is marketing space in the building for $4.45 a square foot a month, according to real estate data provider CoStar Group Inc. At that rate, a 10-year lease for 50,000 square feet would cost eHarmony about $26.7 million. Such a price would exceed average Class A asking rents in Westwood, which were $4.03 a square foot a month in the third quarter, according to data from Jones Lang LaSalle Inc. But prices in neighboring office markets were still higher. Average Class A asking rents were $4.49 a square foot a month in Santa Monica last quarter and $4.82 in Beverly Hills.
Word of the eHarmony deal comes on the heels of a lease signed by TV production company ThinkFactory Media last week for about 33,500 square feet at 1640 S. Sepulveda Blvd. That lease will expand ThinkFactory’s Westwood presence as it relocates from a smaller property nearby. That followed the September deal struck by Wi-Fi service provider Boingo Wireless Inc., which renewed its lease at 10960 Wilshire through 2020 and, at the same time, doubled its footprint in the Westwood area from about 25,000 square feet to nearly 52,000.
Westwood’s 4.7 million-square-foot office market has not historically been much of a draw for technology and other creative type companies.
Stocked with traditional high-rise buildings constructed largely in the 1970s, ’80s and early ’90s, the area has catered more to professional services firms. Until a few years ago, for example, Murdock Plaza was home to the exclusive members-only Regency Club, and the building still hosts small offices for former L.A. Mayor Richard Riordan.
Jaclyn Ward, a JLL broker who represented landlords Ocean West Capital Partners and Westbrook Partners in the ThinkFactory deal, said Westwood, which had a vacancy rate of 14.4 percent in the third quarter, has lately begun to benefit from its proximity to more robust Westside office markets.
“Westwood historically has been more of a traditional office market, with financial and legal companies,” she said. “But now the market is benefiting from the strength of neighboring markets, such as Santa Monica and Beverly Hills, and starting to see an increased interest from creative companies.”
But perhaps more significant than the type of tenants moving into Westwood is the type of offices they’re choosing, Ward pointed out. Both eHarmony and Boingo will build out offices at the uppermost levels of traditional high-rise towers, as opposed to sticking to the types of low-rise buildings their L.A. peers have become known to occupy.
Boingo will move from the eighth floor to the 23rd and 24th floors at 10960 Wilshire, while eHarmony will move from a five-story building to the 15th, 16th and 17th floors as well as the 18th-floor penthouse at Murdock Plaza. Some of the space eHarmony plans to take was once the Regency Club as well as offices for the building’s billionaire developer David Murdock.
David Toomey, a principal at West L.A. tenant brokerage Cresa Partners of Los Angeles Inc., represents eHarmony. He said that while there are several choices for a tenant looking in Santa Monica for 50,000 square feet, none of them appealed to eHarmony.
“There were alternatives – at Colorado Center, the Water Garden, Lantana, the old Imax building, and a few others,” he said. “We explored them, but ultimately the client was really drawn to Westwood.”
EHarmony’s Avedissian said the company is particularly excited by the prospect of using the 5,000-square-foot penthouse space in the building and a rooftop terrace as an exclusive community area for employees to gather and enjoy.
“The views are breathtaking,” he said.