CNN Tower to Keep Office Space

Hollywood may soon face a shortage of office space, some analysts fear. Thus it can been seen as good news that the CNN building there is being sold to investors who plan to keep it for offices and not join the trend of converting such structures to residences.

Palo Alto investment firm Broadreach Capital Partners is paying about $50 million for the 14-story tower at 6430 Sunset Blvd., home of “Larry King Live” and other Cable News Network broadcasts, Broadreach Managing Director David Simon said Thursday.

The sale by owner Scanlan Kemper Bard is expected to close next week.

The buyer’s strategy calls for making at least $5 million worth of improvements to the 38-year-old building in the hope of luring tenants who can pay higher rents.

“There is not a lot of Class A space to go with the Hollywood resurgence,” Simon said. “There will be tremendous opportunity over the next five years.”

Although more than 14% of the office space in Hollywood is vacant, it probably won’t stay that way for long, said real estate broker Carl Muhlstein of Cushman & Wakefield, who, with Steve Algermissen, represents the sellers of the CNN building.

“Vacancies in neighboring markets like Beverly Hills and Burbank are all in single digits now with nothing to speak of under construction,” Muhlstein said.

Hollywood has lost about 25% of its office space in recent years as developers convert it to housing, said John Tronson, a Ramsey-Shilling broker who is not involved in the sale.

“It wasn’t a big concern before because we didn’t have much of a chance of getting higher-profile tenants here,” Tronson said. “That’s all changed now.”

Broadreach invests in commercial properties in the Western United States and owns buildings in Pasadena, Universal City and El Segundo.