Douglas Emmett Inc. now owns over one-fifth of the Class A office stock in Beverly Hills. The REIT just acquired the 225,000-square-foot property at 8484 Wilshire Blvd. from L. Flynt, LTD.-8484 Inc. for $89 million, bringing its total presence in the submarket to 1.6 million square feet. 

Douglas Emmett financed a portion of the acquisition with cash on hand. The 10-story tower last traded in 1994, when publisher and activist Larry Flynt acquired it for, as reported in the Hollywood Reporter, less than $19 million. Since then, the office destination has become commonly known as the Flynt Building.

It’s not just any building. The William Pereira-designed property, originally developed in 1972 to house offices of Great Western Savings, holds the distinction of being one of the few elliptical-shaped buildings in Los Angeles.

The property comes with a diverse tenant roster that includes users ranging from physicians and attorneys to entertainment firms and the consulates of Brazil and the Consulate of Ecuador.

With a price tag of $395 per square-foot, 8484 Wilshire fetched a pretty penny, but a few other office properties in Beverly Hills have recently commanded even prettier pennies. During the first quarter of 2013, the building at 100 Crescent Dr. sold for $667 per square-foot, and in the fourth quarter of 2012, 474 N. Beverly Dr. reeled in a whopping $1 million per square-foot.

Douglas Emmett’s last office purchase in the submarket came in 2011, when the REIT snapped up the 74,000-square-foot asset at 150 S. Rodeo Dr. for $42 million, or $568 per square-foot.

JEMB Realty has signed existing tenant ASA College to a lease extension and expansion that will see the higher-educational institution more than double its space at JEMB’s Herald Center, a 10-story, 250,000-square-foot retail and office property at the southwest corner of 34th Street and Broadway.

The college currently occupies space on the first three floors of the property but with its new deal, ASA will leave that space and move to 112,000 square feet on the fourth, fifth, sixth and seventh and floors of Herald Center by June. The lease also allows further expansion when an additional 48,000 square feet becomes available early next year.

“We positioned the building by establishing it as multi-use with retail, office and school,” Joseph Jerome, JEMB Realty’s president, told Commercial Property Executive. “It’s a building within a building concept. We’ve allowed the tenant to establish its own identity, have control of its own elevator bank and now they own the whole top of the building.”

The expansion will allow ASA College to consolidate classroom and administrative space from elsewhere in the city to one convenient midtown location.

“They will be using the bulk of the space for classrooms and adding some administrative room as well,” Jerome said. “We started to build in January and they will be moving in the next 10 days. The additional space will be ready in the next 12 months.”

As part of the deal, JEMB will create a dedicated ASA ground floor lobby entrance on the 33rd Street side of Herald Center and give the college exclusive use of the elevators servicing their floors.

“Most of their students take mass transit and every subway line and every bus just converges on this corner,” Jerome said. “They’ve been at the property for 10 years and enrollment really grew and they attribute a portion of that to location.”

According to Jerome, the space that was occupied by ASA College will be converted into more than 50,000 square feet of prime retail space at one of the most heavily trafficked, high-visibility corners in the world.

Currently, the building is undergoing a renovation of its outside façade, removing the black glass panels on the first three floors and replacing them with transparent panes that will enable retailers to better showcase their brands and goods to the more than 100 million pedestrians who pass the property each year. Jerome added that floors 4-10 will also be transformed with LED panels, creating a light display that will invigorate Herald Square.

“The building has tremendous exposure on 33^rd, 34^th and Broadway and it will be a focal point of Herald Square,” Jerome added. “It will be a major presence on one of the busiest shopping streets in the city, if not the country.”

JEMB acquired the building in 1986.

The Hampshire Cos., owner of the newly redeveloped office building at 175 Park Ave. in Madison, N.J., has obtained financing to the tune of $75 million for the fully leased, 270,000-square-foot property. 

HFF orchestrated the deal on behalf of the owner and noted that there were more than a few lenders interested in providing financing for 175 Madison, which serves as the new headquarters of Realogy Corp. They had their reasons. “[It's a] Class A, newly renovated, award-winning building with a long-term lease,” Jon Mikula, senior managing director with HFF, told Commercial Property Executive. He added that the fact that there was an “excellent sponsor” was a strong draw as well. 

Cantor Commercial Real Estate Lending L.P. provided the financing, which came in the form of a 10-year, fixed-rate loan. Hampshire plans to utilize the proceeds to retire the existing construction financing debt on the asset.

311 Arsenal St.

Athenahealth Inc. has acquired the historic 11-building, 760,000-square-foot Arsenal on the Charles office campus in Watertown, Mass., from Harvard University for $168.5 million, it was announced yesterday. The purchase closed last Friday.

Avison Young, of Toronto, represented Athenahealth in what reportedly is the largest user-buyer transaction in Boston so far in 2013; Athenahealth began occupying space in the complex (initially 133,000 square feet) in 2005.

Avison Young principals Steve Cook in Boston and Suzanne Martinez in Chicago represented Athenahealth, and Harvard University represented itself.

Athenahealth provides cloud-based services for medical practice management, care coordination, medical billing and electronic health records.

The company has grown to become one of the area’s largest tech tenants and had been seeking up to 500,000 square feet for its corporate headquarters. The purchase reportedly followed a two-year search of properties and development sites throughout the Boston area by Avison Young and Athenahealth.

Given Athenahealth’s ongoing expansion requirements, Martinez said in a release, “long-term ownership is a financial home run when compared with a long-term lease.”

The choice reportedly was also driven by a lack of existing product and the high cost of new construction, coupled with the fact that Athenahealth’s employees were already happy with the Arsenal on the Charles’ location and amenities.

The campus is more than 90 percent leased. Athenahealth currently occupies 250,000 square feet, and other major tenants include Harvard Business School Publishing (100,000 square feet), Bright Horizons (90,000 square feet) and Boston Sports Clubs (50,000 square feet). The 29-acre complex is managed by The Beal Companies, Boston,

All 11 buildings on the campus were built around 1816 and rehabbed in 2000, Cook told Commercial Property Executive.

The buildings comprise three Class A offices (totaling 228,300 square feet), five Class B offices (totaling 485,750 square feet), two small Class C offices (totaling 22,680 square feet) and a Class B flex/R&D building of 13,000 square feet, according to information provided to CPE by Cook.

Harvard acquired the property in 2001, but after the economic downturn decided to use property closer to its main campus for institutional needs and instead leased the Arsenal on the Charles.

Although the complex has evolved to accommodate Digital Age high tech, it was once an example of Industrial Age high tech.

The campus is called Arsenal on the Charles, said Cook, because it was once part of the 90-plus-acre Watertown Arsenal, founded by the U.S. Army in 1816 as an ordnance storage depot. During the Civil War, the arsenal was expanded and began manufacturing gun carriages, and the complex was hugely expanded again during World War I.

Starting in 1968, the Army began to downsize its operations at Watertown, a process that was completed in 1995. One of the other redevelopments at the former arsenal is Arsenal Mall, a 502,000-square-foot shopping center owned by Simon Property Group.

The glory days of million-square-foot office leases may not be back yet, but you would never know it by the latest news from Houston’s Energy Center office campus. Trammell Crow Co. and Principal Real Estate Investors have landed ConocoPhillips to take a total of 850,000 square feet at two trophy towers. 

The energy company will be the sole tenant of Energy Center Three, a 550,000-square-foot tower now under construction. ConocoPhillips will also take half the space at Energy Center Four, a 600,000-square-foot building scheduled to get under construction during the fourth quarter.

Located in the heart of the city’s bustling Energy Corridor, Energy Center Three and Four will bring ConocoPhillips’ Lower 48 Business Unit together at a single address. The new buildings will be within easy reach of the company’s corporate headquarters campus.

Balfour Beatty Construction, the general contractor for Energy Center Three, kicked off construction in January and is on track to complete the project by the second quarter of 2015. Trammell Crow and Principal have a helping hand from Wells Fargo Bank and U.S. Bank, which are providing construction financing.

Signing on in advance for a new development has become one of the best bets for securing large Class A office accommodations in Houston’s central business district. Big blocks of premier space are at a premium, as Jones Lang LaSalle Inc. notes in a recent report. Only three blocks larger than 200,000 square feet were available in the submarket during the first quarter. “Until new developments slated for delivery in 2014 and 2015 come to market, availability within sought-after submarkets such as The Woodlands, Energy Corridor, and CBD will continue to tighten,” the report predicts.

Bethesda, Md.—The Meridian Group, a real estate investment and development firm based in Bethesda, Md., has acquired Science Applications International Corp.’s landmark 18-acre corporate headquarters campus at Tysons Corner in Northern Virginia.

The purchase was made through Meridian’s $160-million discretionary real estate fund, Meridian Realty Partners I. Meridian’s purchase includes SAIC’s 600,000-square-foot three-building headquarters complex, and Meridian will lease back one of the buildings for seven years. The other two buildings will be vacated within a year. A fourth building with a surface parking lot is currently vacant and will be demolished for redevelopment.

“Tysons is the downtown of Northern Virginia, and is the 12th largest office market in the country. It has the largest concentration of retail space between DC and Miami, and will increase its attraction to employers due to its Beltway access, new HOT lanes and four new Metro stations,” Gary Block, The Meridian Group’s managing director, told Commercial Property Executive. “This transaction provides us with the ability to participate in the transformation of one of the largest office markets in the country into a dynamic live-work-play atmosphere.”

The property is located on Route 7 at the new Tysons Central 7/Greensboro Metro station, and it has the closest existing buildings to Metro anywhere in Tysons. Bounded by Westpark Drive and Greensboro Drive, the property sits in a major submarket of Tysons known as “The Hill” near Tysons Galleria Mall.

“The Greensboro area of Tysons, in particular, offers what we believe can be the true urban core of Tysons, and the property is right at the center of that,” Block said. “As tenants today are increasingly looking to relocate to newer, more efficient space, we believe the property is uniquely-situated to meet that demand at different price points, with new development competing at the upper end of the Tysons market and our existing, renovated buildings offering an extremely competitive product for more price sensitive tenants that are also seeking amenity rich, efficient space.”

According to Block, Meridian will start a $20-million renovation plan that includes repositioning and rebranding the three building complex, which will include an overhaul of the buildings’ mechanical system, renovation of all common areas including the main lobby, corridors, elevator cabs, ceilings (including lighting and sprinkler systems), fitness facilities, and restrooms, as well as creating exceptional outdoor work and social gathering spaces.

It will also create a new grand entrance to the complex immediately adjacent to the new Metro station, which should afford additional retail opportunities.

“Our investment philosophy is to acquire institutional quality assets in ‘path of growth’ locations near Metro rail stations, highway interchanges and retail or mixed-use projects;  and, with value-creation potential,” Block said. “This transaction represents well the strategy that we have devised for our $160 million+ discretionary private equity fund.”

Photo: Florian Fuchs via Wikimedia Commons

“The Bow” Tower in Calgary has made the Emporis list of the most spectacular 15 corporate buildings in the world.

Developed by Matthews Southwest of Texas and owned by H&R REIT, the 58-story crescent shaped skyscraper offers nearly 1.9 million square feet of rentable space. Canadian energy producers EnCana Corporation and Cenovus Energy are headquartered in the building.

Named after the Bow River, the steel and glass high-rise is the tallest structure in Western Canada and the second largest in terms of floor space after First Canadian Place in downtown Toronto. The 775-foot tower was completed in 2012 as part of an approximately $850 million project which also features a 7-story building and an extensive park-like plaza. The development’s design architect is Foster + Partners of London.

“Calgarians see The Bow as a new icon of that city’s growth and modern spirit, and we see it as an icon of what can be achieved in terms of mega-projects when the right team is brought to the table,” said Southwest CEO Jack Matthews in a statement. “At the same time, the building has been designed to meet the specific needs of its tenants and deliver lower than market lease rates.”

Three of the building’s floors feature sky gardens (indoor park-like levels with trees and vegetation) with seating and meeting spaces serviced by express elevators. A typical floor offers approximately 32,000 square feet of space.

“EnCana is very happy to be a tenant in such a great building; one which is attracting this type of local and international recognition. Our staff are not only impressed with the overall quality of the new space but by how well it works for the way that we work,” said Craig Reardon, vice president, administration for EnCana Corporation.

Based in Germany, Emporis is an internationally renowned provider of building information. The company’s experts also named the Hearst Tower in New York and the General Motors Renaissance Center in Detroit among the most architecturally impressive corporate developments across the globe. The BMW Building in Munich or the Petronas Towers in Kuala Lumpur have also been selected.

For a complete list of the world’s most spectacular corporate buildings, click here.

The temporary halt in development of Boston Properties’ 1 million-square-foot office project at 250 W. 55th St. in Midtown Manhattan grows smaller and smaller in the rearview mirror as building activity moves closer toward completion, and Arup is the latest participant in the endeavor to achieve a major goal. The engineering and consulting firm just reached substantial completion of the structure and envelope of the $1 billion building.

It was back in 2009 when Boston Properties suspended construction of 250 W. 55^th, but since 2011, when law firm Morrison & Foerster L.L.P’s pre-lease of 180,000 kick-started the project again, work has been moving forward at a steady clip.

Arup, which is teamed with the architectural firm of Skidmore Owings and Merrill L.L.P. on the design of the LEED-certified tower, has been quite crafty in realizing its objectives. The firm’s design integrates a creative viscous damping system that allowed for the reduction of steel tonnage by 10 percent and provided unanticipated additional elbowroom in the 40-story high-rise. “The firm’s engineering innovations helped us save $5 million and gave us more usable space per floor,” Robert Schubert, senior vice president of construction at Boston Properties, said in a prepared statement.

Indeed, 250 W. 55th is well on its way to completion. In May 2012, general contractor Turner Construction Co. topped out the structure, which, before year’s end, became 46 percent pre-leased with the 20-year lease comment to 246,000 square feet by another law firm. The building is on track to open its doors in early 2014.

A $118 million, 16-property office portfolio fully leased to federal agencies through the Government Services Administration is on the market and attracting  interest from both U.S. and international buyers.

“This is getting a lot of attention and a lot of discussion,” Colin Cavill, a member of Colliers International GSAXCHANGE group that is marketing the 273,000-square-foot portfolio for West Second Street Associates, told Commercial Property Executive.

Cavill, managing director of Colliers International’s GSAXCHANGE, said the size of the portfolio is unusual in the GSA space.

“This is a very rare opportunity to pick up a portfolio that has geographic and tenant agency diversity in this space,” he added.

The properties are occupied by GSA tenants including the Social Security Administration, Internal Revenue Service, Immigration and Customs Enforcement, Department of Veterans Affairs and Customs and Border Protection. Seven of the properties are in Michigan; three in Ohio; two each in Florida and Texas and one each in Colorado and Minnesota. They were all build-to-suit and the oldest was built seven years ago. Two are still under construction but close to completion. The properties range in size from 6,000 to 40,000 square feet. The remaining average lease term is 10 years.

Cavill said the ongoing sequestration affecting the federal government budget does not affect these properties.

“Because these are long-term leases that have firm terms, there is not going to be any disruption of the rents,” he said.

Cavill said the GSA properties attract investors because they “provide a steady income stream and consistent yields.”

He told CPE that WSSA, a Flint, Mich.,-based developer and long-term property manager that specializes in GSA buildings, was selling the portfolio to redeploy the capital into other parts of its business.

But he added, “They’re not getting out of the GSA market.”

Cavill said the portfolio had been marketed for about two weeks, both inside and outside the U.S.  He expects bids to be submitted by May 21.

“We hope by early summer it will be closed,” he said.

The federal government is the largest single occupant in the U.S., leasing or owning more than 3 billion square feet of real estate. GSAXCHANGE, which is part of Colliers Government Solutions, is an investment sales and capital markets platform that deals solely with government-leased assets. Joining Cavill on the WSSA portfolio team are Bob Cottle and Darrin Kennedy.

“WSSA selected Colliers Government Solutions because of the deep federal-sector knowledge we provide, enabling us to better market the positive attributes of this portfolio,” Kurt Stout, executive vice president, Government Solutions at Colliers Internationl, said in a news release. “We are thrilled to have this opportunity to represent such a large portfolio of GSA properties, and look forward to expanding our presences in several strong markets.”

The Colliers Government Solutions platform consists of six services focused on government real estate: leasing, investment sales, finance, property management, appraisal and tax appeal. Members of the group work in teams to provide clients with solutions to deal with the often complex requirements of government-leased properties.

At the 2013 Mortgage Bankers Association CREF/Multifamily Housing Conference, David Durning, president and CEO of Prudential Mortgage Capital Co., explains Prudential’s targets for balance sheet, Fannie Mae, Freddie Mac and FHA, CMBS and bridge financing for 2013.