Tishman Speyer Properties has signed a long-term master lease that effectively gives it control of the City National Bank Building across from downtown's Pershing Square, and will spend an estimated $20 million to renovate the 25-story structure, The Times has learned.
Brokerage sources say the New York-based real estate partnership also has obtained a series of options to purchase the building from its builder and owner, Beverly Hills-based Buckeye Realty & Management Co.
The lease for the 275,000-square-foot office tower will reportedly last for 29 years and is worth more than $30 million. Carl Muhlstein, a Tishman Speyer executive, refused to disclose the value of the deal but confirmed that the lease "is in excess of 25 years."
The building currently houses a large regional branch of City National Bank and several professional firms, including many law and accounting offices. It is only about 50% leased, Muhlstein said, but the rehabilitation program and a stepped-up marketing campaign "should raise occupancy rates significantly."
Muhlstein said his company has retained three architectural and engineering firms to study possible reconstruction of the lobby and all common areas, upgrading of interior office space and installation of a sprinkler system.
Tishman Speyer is also expected to remove all the asbestos in the building. Asbestos, used in most construction projects until the early 1970s and present in most of the city's older office buildings, has been linked to lung cancer and other maladies.
The City National Bank Building, at 606 S. Olive St., faces the Biltmore Hotel and the Pacific Mutual Building. The three structures surround Pershing Square, the 121-year-old park that is one of the last open spaces downtown.
The park has fallen on hard times over the last several years, and is now the home of dozens of transients.
Muhlstein said Tishman Speyer will likely contribute an unspecified amount of money to the Pershing Square Management Assn., a nonprofit agency that is asking local businesses to contribute part of the $14.5 million needed to rehabilitate the park.
"A renovated park would be a big asset for downtown and would have a major, positive impact on our building," Muhlstein said. Several other developers whose projects are near the park have been pressuring local officials to clean it up, he said.
The deal is Muhlstein's first big transaction since becoming a partner in Tishman Speyer last October. He previously spent 11 years working for Cushman & Wakefield, another big commercial brokerage firm.
The lease/option for the City National Bank Building is also the first major transaction Tishman Speyer has closed in Los Angeles, but Muhlstein said more may follow.
Two Downtown Sites
He said the firm is negotiating for two other downtown sites for new office towers, but declined to identify the parcels. Tishman Speyer's only other West Coast holding is a 1-million-square-foot, 38-story office building at 525 Market St. in San Francisco.
Most of Tishman Speyer's $4-billion, 20-million-square-foot real estate portfolio is in New York, Chicago and Miami.
The downtown office of Cushman & Wakefield represented both parties in the City National Bank Building transaction.