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Commercial complex is planned for Playa Vista

Tishman Speyer and Walton Street Capital hope to draw high-tech and entertainment tenants.

January 23, 2007|Roger Vincent and Martha Groves | Times Staff Writers

Two prominent real estate investment firms are planning a major office building complex in Playa Vista, adding another large development to an area already at the heart of a construction boom.

Tishman Speyer and Walton Street Capital are paying more than $200 million for land south of Marina del Rey where the owners of entertainment company DreamWorks SKG once planned to build a studio, according to people with knowledge of the deal who asked not to be identified because the transaction is still in escrow.

They are expected to develop an office campus that is likely to cater to the area's burgeoning entertainment and technology businesses.

By developing the last available piece of commercially zoned land in Playa Vista, the project would complete Playa Vista's design as a combined residential, retail and business complex and further cement the transition of that section of Los Angeles County from an industrial center to a white-collar business destination.

More than 2,500 condominiums, apartments and town homes have been built at Playa Vista, most of them erected by home builders who bought the land from Playa Vista. Sales have been brisk and 750 more units are in development.

The Los Angeles Clippers recently started work on a new basketball training facility at Playa Vista.

"This was an area with a lot of marginal land uses," said economist Jack Kyser of the Los Angeles County Economic Development Corp. "The project stitches together the Westside with areas in El Segundo and Redondo Beach that are already bastions of Fortune 500 companies and high technology."

Developing offices at Playa Vista "makes perfect sense," Kyser said. Rents are rising on the Westside and vacancy has fallen below 7% as expanding companies lease up existing space.

The property already has approvals from the city of Los Angeles for almost 2 million square feet of development and thus is not subject to further community or environmental review.

But the addition of an office complex nonetheless disheartened Playa Vista opponents and wetlands activists. Further development there "is going to create huge traffic impacts," said Bruce Robertson, director of the Ballona Valley Preservation League, a grass-roots organization formed in 1995.

Wetlands activist Susan Suntree said the additional commercial space, on top of current and anticipated development in Playa Vista, Marina del Rey and environs, portended "that life on the Westside is going to be just that much more intractable and unbearable and air pollution is going to increase and the 405 has had it.

"If you're building office buildings, you absolutely will have more car trips," she said. "It's not a healthy scenario."

Representatives of the Playa Vista corporation, owned primarily by Morgan Stanley, Goldman Sachs Group Inc., Oaktree Capital Management and union pension funds, have said that they have done more than $100 million worth of improvements to nearby streets and the San Diego Freeway to help mitigate traffic congestion around the project.

Included on the 64-acre site are two enormous hangars and offices where mogul Howard Hughes built his famous Spruce Goose airplane in the 1940s and ran his aviation empire, which included an airfield, for decades. Those buildings have been designated as landmarks and must be preserved.

New York-based landlord Tishman Speyer owns properties all over the world, including the 400 S. Hope St. office building in downtown Los Angeles and such icons as Chrysler Center and Rockefeller Center in New York. Walton Street, based in Chicago, invests billions of dollars in real estate for institutions, pension funds and wealthy individuals.

Those companies and their brokers at Cushman & Wakefield declined to comment on the pending sale, expected to close by late spring. Representatives of the Playa Vista corporation, which is selling the land, also declined to speak.

Construction on an additional 2,600 residential units and a shopping center planned by developer Rick Caruso may begin this year at Playa Vista if litigation over the project's environmental impact report is finished.

Also in planning stages at Playa Vista is a five-building office complex to be built by Dallas-based Lincoln Property Co., which paid $100 million for 14 acres there last year. The land has entitlements for close to 1 million square feet of office space, and Lincoln hopes to have designs approved within the next few months for two five-story office buildings valued at about $190 million, said David Binswanger, executive vice president.

Construction would begin immediately on the offices designed by Los Angeles architect Scott Johnson, he said, to be followed later by three more buildings.

No tenants have been signed, but Binswanger said he expected interest from young companies that merge technology and entertainment, such as Electronic Arts Inc. The computer game maker moved to Playa Vista in 2003.

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