Big Apple Firm Has Taste for Downtown Office

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Big Apple Firm Has Taste for Downtown Office
Under Pressure: Hyperloop One building downtown.

The company that owns New York’s Rockefeller Center is making a foray into L.A.’s up-and-coming Arts District.

Tishman Speyer is close to buying two office buildings leased by Hyperloop One, a high-speed tube transport startup, said several sources close to the deal. Escrow is set to close as soon as this week, with the deal valued at roughly $25 million, or about $660 a square foot.

This is more than triple the price paid by the Borman Group and Lion Real Estate, which purchased the buildings for a total of $7.8 million between 2014 and last year. The co-owners converted the industrial buildings into office space, and Hyperloop moved in last year.

The trade could mark the beginning of a new acquisition cycle in downtown’s Arts District. Tishman would be the first major investor to purchase an office property there that has been fully developed and leased to a noteworthy tenant. Other office projects are still in the works: Shorenstein Properties’ Ford Factory, Hudson Pacific Properties’ Fourth & Traction, Atlas Capital Group’s Row DTLA, and Blatteis & Schnur Inc.’s At Mateo.

The deal also indicates incredibly high office property values for a neighborhood that still has scant office tenants – and none of them top-credit quality. Although Warner Music Group Corp. recently signed a long-term lease for the Ford Factory, it won’t move in for a couple of years, and there are as yet no indications that other blue-chip companies might follow. BuzzFeed last year backed out of a potential deal for the same property.

At $660 a square foot, the Hyperloop deal is still below rates in traditional office hot spots. In Santa Monica, for example, the Lantana building is in escrow for $825 a square foot.

The Hyperloop property, on Sacramento Street, comprises 23,785 square feet in a post-and-beam building along railroad tracks. The site next door on Bay Street holds 14,193 square feet within three buildings.

Mark Borman, co-founder of the Borman Group, declined to comment, as did a Tishman representative. News of the transaction was first reported online by the Real Deal.

New Town

The Brentwood Town Center is getting a shake-up. The compact retail center next to the Brentwood Country Mart recently signed five new leases worth more than $8 million, said Dan Blatteis, co-chairman of property owner Blatteis & Schnur Inc.

The biggest new tenant, upscale cosmetics store Cos Bar, took 1,474 square feet for 10 years. Premium denim brand Paige Denim also signed for a decade, scooping up 1,208 square feet in what will be a flagship location. Activewear company Human Performance Engineering signed a five-year lease for a 540-square-foot location. All plan to open in December. Workout studio Platefit opened last month in a 763-square-foot space in a lease set for 10 years, and Blue Bottle Coffee will replace Starbucks in May with a 10-year lease for 673 square feet.

Blatteis & Schnur purchased the 11,933-square-foot property nearly 10 years ago, when the shops were fully leased. After weathering the recession, Blatteis said the center bounced back.

“We hung on,” he said. “True to form, this property held its value and came back strongly.”

Blatteis & Schnur Senior Vice President Ashley Brown worked for about a year to recruit tenants that would represent an upgrade and appeal to the local market, Blatteis added.

Flick Focus

Netflix Inc. signed a 10-year lease for soundstages and production offices at Sunset Bronson Studios, said property owner Hudson Pacific Properties.

Hudson declined to provide the square footage or financial details of the lease, but said Netflix was already on the lot shooting “Girlboss,” a comedy series about Nasty Gal founder Sophia Amoruso. ABC, CBS, HBO, and KTLA (Channel 5) also rent studios in the Hollywood complex. Netflix did not respond to a request for comment.

The lease marks the second deal for Netflix at Sunset Bronson. The streaming video company inked a contract in February to lease the forthcoming Icon office building. The 323,000-square-foot tower is nearing the end of construction and Netflix is slated to move in early next year.

Hudson jumped into the Hollywood market in 2007 with its purchase of Sunset Gower Studios, the former Columbia Pictures lot, for a reported $200 million. The site encompasses 571,630 square feet across 13 soundstages.

The following year, Hudson purchased the nearby Sunset Bronson lots, then known as Tribune Studios, for $125 million. The property spans 308,000 square feet across 10 soundstages.

Staff reporter Daina Beth Solomon can be reached at [email protected] or (323) 529-5225, ext. 237.

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