Arco Will Move Retail Arm to New Building

Arco plans to consolidate the 700-employee headquarters of its refining and retailing arm, Arco Petroleum Products, at a new downtown Los Angeles office building in early 1989, a company official said Wednesday.

The oil company has signed a letter of intent with Transpacific Development to lease 12 floors of Transpacific Center, now under construction at 1050 W. 7th St., said Benjamin Cubler, Arco’s manager of corporate real estate.

Reasons for Shift

The consolidation is intended to save money and create a separate corporate headquarters for the only one of Arco’s eight operating companies without such a building, Cubler said. Many of the employees will be coming from the Arco Tower at 515 S. Flower St., while others will be coming from a variety of locations throughout the area.

“This was not done for any reason other than to be cost effective and to find an appropriate space for Arco Petroleum Products,” Cubler said.

Space in the 33-story Transpacific Center will be substantially cheaper than existing quarters in the 52-story Arco Tower, five floors of which will be subleased to other tenants, Cubler said. “There is a 20% to 30% saving in doing this.”

Arco and Bank of America sold the Arco Plaza last September for an estimated $620 million to the American subsidiary of Shuwa Co., a major Japanese real estate firm. Both companies agreed to lease back their offices as part of the deal with Los Angeles-based Shuwa Investment Corp.

Lease Expiration Distant

The planned move will have no short-run effect on Shuwa, because Arco’s lease of the five floors to be vacated will not expire until 1993, Cubler said. “As far as Shuwa is concerned, other than the obvious of people moving across the freeway, there will be no impact.”

Shuwa referred calls Wednesday to Tishman West Management, which operates Arco Plaza.

Several executives at Tishman did not return a reporter’s calls.

Arco will lease 225,000 square feet in the 660,000-square-foot Transpacific center between Bixel Street and the Harbor Freeway, making payments totaling $98 million over 15 years, said Shurl Curci, Transpacific Development’s president.

Annual rent has been fixed, and will be in “the high $20s” per square foot, Curci said. Cubler also declined to reveal the exact rent, but said he would “support” Curci’s estimate.

Cubler added that the lease, which will run for 10 years with a 5-year renewal option, probably will be signed, “within the next several months.”

Curci agreed it was unlikely that the leasing arrangements might fall through.

“It’s very rare when you get to this point where you have a letter of intent that’s so detailed,” he said.

Arco will occupy the second through 12th floors and the 33rd floor in the new building, and has paid for the rights to rename the project and to erect rooftop signs, Cubler said. The company will continue to lease 17 floors, including the top 15, of the Arco Tower.

Transpacific Development has agreed to find tenants to sublease all five vacated floors in the Arco Tower. “We would be responsible for the lease rent,” said Peter Adams, executive vice president of the Torrance-based developer.