This Week's LA Deal Sheet
A new HQ is in the bag for Fresh & Easy. The grocery chain inked a seven-year, 35k SF lease in Torrance (20101 Hamilton Pl) in a relocation of its executive and administrative offices from El Segundo.
The heavily negotiated transaction includes all the bells and whistles, according to Newmark Grubb Knight Frank's David Kluth (with his sons at Yellowstone during a recent fishing trip to Montana), who repped Fresh & Easy with his colleague Joel Smith. The El Segundo market has increased in cost, he tells us, so from a financial and economic perspective, the deal made a lot of sense. Fresh & Easy plans to implement new workplace standards that are in line with current trends—think open office plans, increased collaboration and greater overall efficiencies—while reducing its footprint. Additionally, the tenant decided it was best for its employee base to stay in SoBay. The company's former HQ in El Segundo contained 50k SF.
David says 20101 Hamilton, a multi-tenant building, gives Fresh & Easy great identity and branding with top of the building signage. A center atrium allows lots of natural light on both sides of the company's space. The new location may be fresh, but finding it wasn't exactly easy. Selecting a new HQ is a "huge undertaking" for a business, David says. NGKF provided strategic analysis and reviewed location options with the tenant before choosing 20101 Hamilton. The landlord, Omninet Capital, was represented by CBRE.
SALES
West Ridge Rentals LLC, an El Segundo-based investment group, bought a three-building, 36k SF medical office complex in Manhattan Beach (500 S Sepulveda Blvd) from Manhattan Beach Mall LP for just under $15.7M. The complex includes a small retail element and 126 subterranean and surface parking spaces. The property has been well maintained with nearly continuous zero vacancy, according to Colliers International's Eric Lastition, who repped the seller along with his El Segundo office colleague, Geoff Ludwig.
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Lee & Associates Ontario's Todd Launchbaugh and Justin Leewood closed the sale of 260 Santa Fe St in Pomona for just under $10M. The industrial building contains almost 94k SF and is next to a Metrolink station. The buyer plans to use the complex, which includes 241 parking spaces and an additional 1.2 acres of trailer storage, as a West Coast distribution center.
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Commercial Asset Group's Dana Brody repped ASBREA LLC in the sale of The Deveraux, a 30-unit apartment building in LA's Koreatown neighborhood. A private investor purchased the property (2921 S Francis Ave) for $4.7M or more than $156k/unit. ASBREA acquired the three-story building in August 2013 for $2.6M. The firm then vacated and renovated 24 of the 30 units—think Carrera marble countertops, tile floors, and stainless steel appliances—and re-leased them at market rents. Dana's seeing strong demand for remodeled units in older buildings from young professionals who want something that feels new but costs less than new construction.
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Arba Capital Partners bought 2233 S Ridgeley Dr, a 24-unit apartment building in LA's Mid-City area, for $4.8M or $200k/unit. Marcus & Millichap's Michael DiSimone, who repped the buyer, notes 17 of the 24 units were delivered vacant at the close of escrow. Built in 1965, the building consists of 22 two-bedroom/1.5-bath units and two townhouses.
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Post-production company Bang Zoom! Entertainment bought an 8,633 SF office building, 1100 N Hollywood Way in Burbank, from KBD Investments in an off-market transaction for more than $2.6M. The buyer was a tenant in the building for 13 years, according to the company's broker, Stacy Vierheilig-Fraser of Charles Dunn Co. The seller represented itself. With interest rates still low and rents on the rise, Stacy notes LA-area businesses are seeking owner-user scenarios, and many of the deals happen off-market. Bang Zoom! Entertainment will occupy 75% of the building for audio, video and animation services for clients like Disney, WB and Cartoon Network. An audio post-production company occupies the rest of the space.
LEASING
Custom Cos, which provides airfreight and truck shipments throughout North America, leased more than 306k SF of industrial space in Santa Fe Springs (13012 Molette). The 63-month lease with Oltmans Real Estate Co is valued at $13.7M. Newmark Grubb Knight Frank's Wesley Hunnicutt and Matthew Moore repped the tenant, which is relocating from 70k SF in Carson. Fremont Associates' Eric Knirk repped Oltmans. The building previously was occupied for more than 10 years by Shaw Carpets and was vacant for just three months.
FINANCING
Quantum Capital Partners' Mike Yim and Jonathan Hakakha secured $14.5M in financing with an Asian-based lender on behalf of a local investor, 4th Street LLC and 5th Street LLC. The new mortgage debt paid off a construction loan on a recently completed, nine-unit luxury apartment building in Santa Monica. When completed in May, the building was appraised at $2.2M per unit, representing a 70% premium over the cost of construction. Separately, Quantum arranged $5.6M in debt to refi a portfolio of five single-family homes in Venice and Manhattan Beach. The borrower has been operating the properties as executive short-term rentals catering to visiting professionals in the tech, new media and entertainment industries.
CONSTRUCTION/DEVELOPMENT
Burbank civic leaders joined R.D. Olson Development and Marriott International execs to toast the opening of the 170-room SpringHill Suites by Marriot, marking the continued revitalization of downtown Burbank. R.D. Olson Construction served as the general contractor. The property (San Fernando Boulevard between Providencia and Santa Anita avenues) features Marriott’s latest Gen 4.5 design for SpringHill Suites, catering to both weekday business travelers and weekend leisure guests. The interior design theme reflects Burbank's entertainment and media industries, including the hotel's bar, called Nineteen26, which boasts a mural of Marilyn Monroe. R.D. Olson also developed the 166-room Residence Inn by Marriott Burbank.
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Presidio Residential Capital and Williams Homes broke ground on Foothill 74, a three-acre, 74-townhome community in the Sylmar neighborhood of LA. The three-story homes will be priced from the high $300k range. According to Williams EVP Keith Herren, the project represents an affordable opportunity for homebuyers in the City of LA, where the median home value is $535k. Presidio has committed just over $8M to build Foothill 74, its second JV with Williams in LA. The project's retail value will exceed $28.8M.
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Verizon Wireless celebrated the grand opening of its innovative Destination Store on Santa Monica's Third Street Promenade with a day of fitness classes, skateboard art, live music and other festivities. The two-story, high-tech store offers immersive spaces and "fun zones" where customers can test out how products will work in their daily lives. The location includes a Customize It zone, where a customer's phone case is baked on site and delivered through a two-story pneumatic tube; a Have Fun zone that lets customers practice their drone flying skills and play with other tech toys; and a Get Fit Zone where customers can test vertical leap or practice soccer shots, and set and maintain fitness goals in connection with their smartphones.
EXECUTIVE NEWS
Watt Cos president Nadine Watt was installed as the Los Angeles Business Council's first female board chair. (She's shown above with Jacob Lipa, CEO of Psomas subsidiary Micropolitan, whom she succeeds.) As president of LA County's 12th-largest woman-owned business, Nadine led a strategic reorganization of the Watt Cos and was instrumental in launching Watt Investment Partners, which is focused on placing $60M of debt and equity in various property types across the Western US. During his tenure, Jacob led several key LABC initiatives, including research and advocacy on the Solar Feed-In Tariff, now the largest program of its kind in the nation.
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BentleyForbes promoted Gustavo Boros to managing director for investment and asset management operations, including raising equity capital, financing, acquisition/dispositions, tenant relations and JV opportunities. He'll also source single tenant, net lease and sale-leaseback investments. The firm went through a portfolio-wide financial restructuring and equity recycling program and is capitalized for $750M in acquisitions planned over the next 24 months. Targets: office, industrial, retail, hotel and resort properties in top regional and local submarkets.
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Snyder Langston added veteran construction exec Chip McCorkle as VP of business development, responsible for commercial and multifamily opportunities in the Greater LA area. Chip, who previously served with McCormick, Smith Emery and Pankow, brings diverse project experience including multifamily, office, healthcare, hospitality, retail, entertainment and education. Snyder Langston's current projects include the Porsche Experience Center in Carson and The Point in El Segundo, as well as two mixed-use projects being built by its SL Residential division: Highland 76 in Hollywood and Alhambra Place in Alhambra.
