Pair of L.A. Offices Trade in $125M Deal
- Jul 21, 2008
Ownership of two premier office buildings accounting for an aggregate 440,000 square feet in Los Angeles’ Culver City submarket has changed hands. With the assistance of real state services firm Madison Partners, Arden Realty sold the structures to Transwestern Investment Co. According to an article in the Los AngelesBusiness Journal, the properties traded for a total of $125 million. Carrying the addresses of 400 and 600 Corporate Pointe, the structures are eight and 12 stories high, respectively. Developed in 1987, 400 Corporate features approximately 165,000 square feet, while the 19-year-old 600 Corporate encompasses 277,000 square feet. Together, the buildings boast an average occupancy level of 93 percent, with Sony Pictures occupying 97,000 square feet as the lead tenant. Located on border of the more prestigious West Los Angeles submarkets, the Culver City office market, over the last few years, had become a new destination of choice for tenants that were unable to stomach the sky-high rents in the coveted neighboring markets. But the tide has turned. While the West Los Angeles area, as per a report by Colliers International, has seen its vacancy level edge up from 8.6 percent in the first quarter to 9.1 percent in the second quarter, it continues to assist Metropolitan Los Angeles in maintaining a place on the list of the tightest markets in the country–but no thanks to Culver City. Despite its relatively reasonable rental rates that had become so attractive, Culver City has the largest total vacancy rate in the West Los Angeles area at 17.3 percent, a significant jump from the submarket’s first quarter rate of 15.7 percent. “What happened with Culver City is a lot of big-rent areas on the West Side like Santa Monica, Beverly Hills and Century City got too pricey, but now those landlords are getting more reasonable and that is causing a strain on secondary markets,” Brent Bissell, associate vice president with Colliers, told CPN today. For example, he said, landlords in the more upscale submarkets are becoming increasingly open to renewals as opposed to seeking new tenants for vacated space in order to reap the benefits of the higher market rates. “Property owners in Culver City are going to have to do a bit more on trying to steal deals and make rates even more attractive,” Bissell said. “That is what fuels that area–tenants that don’t want to pay the rates in West Los Angeles.” Based in Los Angeles, Arden Realty Inc. is one of the largest commercial real estate landlords in Southern California. The fully integrated real estate company was snapped up two years ago by GE Real Estate to serve as its growth platform for the western United States. Currently Arden’s portfolio is comprised of 220 buildings accounting for a total of 123.3 million square feet in Southern California and Phoenix, and most recently, Northern California, Portland, Seattle and Utah. Chicago-headquartered Transwestern Investment is a principal investment company focusing on commercial real estate. Over the last 12 years, the firm has acquired interests in over 450 office, retail, industrial and multi-family properties representing a total growth investment exceeding $10.3 billion. Commercial real estate brokerage concern Madison Partners has orchestrated transactions accounting for more than 100 million square feet of office space valued at more than $20 billion over the last 12 years. Most recently, Madison Partners represented the buyer of a 100,000-square-foot office building at 10351 Santa Monica Blvd. in Century City, and orchestrated the disposition of the 119,000-square -foot industrial property at 901 E. Ball Rd. in Anaheim on behalf of J.H. Snyder.