Through one of the biggest office lease transactions in Los Angeles history, Fox Entertainment Group Inc. will stay put at the landmark Fox Plaza in Century City--at least for 15 more years.
Media tycoon Rupert Murdoch's Fox team is consolidating various lease arrangements in the building totaling more than 315,000 square feet through a transaction said to be valued at more than $250 million--pretty close to what billionaire investor Marvin Davis paid for the building 28 months ago.
Davis, a former owner of Fox's 20th Century Fox Film Corp., was one of Fox Plaza's original developers in the mid-1980s in a partnership with 20th Century Fox. After Davis and other partners sold their stake to Fox, institutional investors purchased the entire building for a reported $320 million in 1989.
Then as the local economy was rebounding from the severe early-1990s recession, Davis Cos. purchased the 711,000-square-foot Fox Plaza in November 1997 for about $253 million. The booming economy has continued to boost Westside property values.
"When we bought the building Fox still had more than a year left on its lease, so there was some risk involved," said Mike Colleran, the executive vice president overseeing Davis Cos.' real estate operations.
Over several years, Fox expanded as space became available on about 18 floors within the Scott Johnson-designed 34-story tower at Olympic Boulevard and Avenue of the Stars. The elegant high-rise got international exposure as the make-believe takeover target of international terrorists in the 1988 Bruce Willis film "Die Hard."
The company could have found cheaper digs on the Westside's periphery and did consider other sites, but "Fox leaving Century City would be like Universal leaving Universal City," said Westside office broker Stan Gerlach, a senior vice president with CB Richard Ellis.
After all, the Century City name itself is a reference to the 20th Century Fox movie-making operation, which has been in the area throughout much of the past century.
Reflecting the strong demand for Westside office space amid a limited supply, Fox will pay an average approaching $50 per square foot annually over the course of the 15-year lease term, Westside real estate sources estimated. Colleran said Davis Cos. and Fox have agreed to keep financial arrangements confidential.
The new owners have brought Fox Plaza's occupancy up into the high-90% range after bringing Goldman Sachs from downtown L.A. and expanding some of the building's other tenants, including Donaldson Lufkin & Jenrette.
Cushman Realty Corp.'s Steve Marcussen headed the team, which also included John Cushman and John Burlant, that negotiated on behalf of Fox. The DLJ Realty Services team of Jeffrey Strnad, J.D. Cook and Gary Weiss represented the Davis group.