When CalFED Inc. decided to sell its Miracle Mile office tower this year, Goldman Sachs & Co. was hired as the broker.
The sellers of the Ambassador Hotel retained Morgan Stanley to unload their prized mid-Wilshire parcel.
And Salomon Bros. last month sold a prime Laguna Niguel property set to become a high-priced resort hotel to Australian Quintex Group Chairman Christopher C. Skase.
Left out of these New York investment banker deals were Los Angeles' own commercial real estate brokers, who are not just competing against each other anymore, but against the East Coast.
"They're taking people in the securities business and turning them into real estate brokers," said Howard Sadowsky, vice president at real estate brokerage Julien J. Studley in Westwood. "They've certainly gotten into our pockets and affected the national marketplace."
Land of Opportunity
Los Angeles is but one of several cities targeted by investment bankers as a land of opportunity for real estate brokerage. Chicago, New York, Dallas and Washington are on the list, too. Los Angeles, however, is attracting more New York deal makers than ever before.
Goldman Sachs reports almost 20 real estate bankers at its downtown Los Angeles office. Another 140 are dispersed among offices in Europe, Australia and, of course, Asia. Goldman Sachs is credited with adding joint venture partners Mitsubishi Estate and Ayshire Corp. to the 777 Tower under construction at 8th and Figueroa streets in downtown Los Angeles; to the sale of the Dana Point Resort this summer in Orange County, and refinancing of the Century Plaza Hotel in Century City.
Morgan Stanley employs about 85 real estate executives worldwide and brokered the sale of The Hotel Bel-Air and the Beverly Hills Hotel--both at record prices at the time they were sold.
"More of the major Los Angeles properties are being sold internationally," said John Grinch, vice president at Morgan Stanley. "What we offer is international financing."
Sellers Hold a 'Bake-Off'
"There is going to be more of a blend between real estate and the main line of investment banking," he predicted.
Sellers increasingly are holding what Grinch calls a "bake-off" to decide which company will get to represent their building. Global connections and name recognition, he said, are increasingly giving his company and other investment bankers an edge over many local real estate brokers.
But measuring the share of New York-based investment bankers in the Los Angeles-area real estate market is very tough, said Studley's Sadowsky.
"There's no question that investment bankers have the contracts," he concedes, "but they don't know the subtleties of the market."
Foreign Money Is Here
As for marketing local commercial property abroad, he said:
"You don't need to go to Japan to sell to the Japanese. A lot of foreign money is sitting right here in Los Angeles already."
Dick C. Schnell, senior vice president at Cushman Realty in Los Angeles, agreed.
"To succeed in sales you have to understand the local tenant market," he said. "Access to capital is only part of what is needed from a good broker. . . . Everybody thinks foreigners will buy anything at any price--but they are very sophisticated."
Most New York-based investment houses just do not have the local resources needed to serve the Southland market properly, Schnell insisted. And, he said, "New York's share of the market here hasn't been as great as they purport it to be."
Stearns Closed Office
In fact, Schnell said, while firms such as Goldman Sachs, Morgan Stanley and Salomon Bros. have managed to make their mark in Los Angeles, not all their colleagues have been as successful. Bear Stearns Real Estate Group closed its Los Angeles operations this summer for lack of business. First Boston, too, has apparently retracted from earlier plans to claim a share of Southern California's hot real estate market.
Brokers such as Grubb & Ellis, Julien J. Studley and others are not standing by idly either. They have formed international marketing and financing teams for properties worth more than about $20 million.
L.A.'s top local brokers also make it their business to court Japanese and European financiers so that they too can offer sellers their connections in exchange for a top-tier listing.
Shmoozing in Japan
For example, broker John C. Cushman III, head of Cushman Realty, spends one to two months a year in Japan shmoozing with other executives.
The success of New York brokers in Los Angeles will ultimately depend on who they hire and how they are trained, Sadowsky said.
Investment banking houses that do not commit enough staff to the local market will see their share of business erode, he predicted. And, he added, ultimately "each player will have to decide on a well-defined market niche."
Columbia S & L Opens Wilshire at Elm
Columbia Savings & Loan Association celebrated the opening of Wilshire at Elm this month, the first of six new Beverly Hills boutique office buildings being called the "Masterpiece Collection."
Designed by architects Skidmore, Owings & Merrill, the 48,000-square-foot Columbia Development Partners project features three levels of high-end office space wrapped in black granite, limestone and stainless steel.
The style, critics say, could best be described as "deconstructivist," with exposed beams and what looks like a peeled-away facade. Soon to come are the Wilshire at La Peer South and Wilshire at Maple buildings.
Another project, slated for the site of the once-venerable Beverly Theater, remains stymied as Columbia battles in court for the rights to demolish an adjacent building. Blocking demolition is a Beverly Hills investment group, JPL Properties, that claims its rights as the now-empty building's master lessor are being violated by Columbia. Columbia counters that it has paid for all rights to the building and should be allowed to proceed. Yet another hearing on this dispute is scheduled for December.
In the meantime, both parties were urged this month by the judge to "work it out among yourselves."
Teradata Corp. Signs $100,000 Million Lease
$100 million. That's the value being put on a 335,000-square-foot lease just signed by Teradata Corp. with El Segundo's Pacific Financial building at 100 N. Sepulveda. The 11-year lease deal is one of the biggest in Southland history and sure to earn a hefty commission for Jay Borzi and Steve Silk of Cushman & Wakefield of California Inc., who represented Teradata, and John Ayoob and Grafton Tanquary of Coldwell Banker Commercial Real Estate Services, who represented landlord Pacific Financial Group.
Also involved was Nelson T. Korchak, president of Los Angeles Realty Service Inc., a division of Pacific Financial. Computer maker Teradata plans to consolidate its growing work force next year--relocating from three separate Marina del Rey buildings it currently calls home.
$10 Million in Leases at Beverly Hills Site
Three leases totaling more than $10 million were announced at Security Pacific Place, 9665 Wilshire Blvd., Beverly Hills. New York-based stock brokerage Gruntal & Co. Inc. signed for 15,000 square feet of offices in a 7-year contract worth $4.5 million. Austrian merchant bank, Osterreichische Landerbank will establish its first West Coast office at the building--taking 6,000 square feet for seven years at $2.4 million.
And law firm Weissman & Wolff renewed a 15,000 square-foot-lease for five years in a deal worth $3.5 million. Gruntal was represented by Julien J. Studley Inc. and Osterreichische Landerbank by New York brokerage Peter H. Friedman Ltd. Joe and Fawn Bellavia of Grubb & Ellis Commercial Real Estate Services represented the landlord in all of the transactions, and the firm of Weissman & Wolff.
Developer Told Corp. Buys in Camarillo
Developer Told Corp. has purchased 24 acres of industrial property in Camarillo, including a 310,000-square-foot Playtex warehouse and distribution facility. Playtex plans to continue occupying 77,000 square feet--the remainder is up for lease at monthly rates of 35 cents to 37 cents a square foot. The purchase comes just as Told welcomed guests to its new offices last week. Headquarters for the company are now at Pacific Corporate Plaza in Oxnard's Channel Islands Business Center.
NEW COLUMNIST Ron Galperin's weekly column on the Southland commercial real estate scene debuts this week. It replaces the commercial real estate listings column.