Universal Music to Consolidate in Santa Monica

Universal Music Group plans to consolidate its headquarters and several record labels in a 200,000-square-foot office building under construction in Santa Monica--an important indicator of the Westside’s continued allure to entertainment companies.

The music giant, owned by Seagram Co., has signed a letter of intent to lease all of the Arboretum Gateway building going up at Cloverfield Boulevard and Colorado Avenue. If Universal completes the lease sometime in the next month, sources say, it could move off its lot in Universal City near the beginning of next year.

Sources say Universal will pay about $3.50 per square foot per month over the next 15 years to be in the trendy area that is already home to such companies as MTV and Sony Music.

That’s more than just about any other Santa Monica lease in recent history, brokers say.

Sources say the company will move its IGA (Interscope, Geffen, A&M;) and MCA labels to the new building. The company is selling its Geffen building in West Hollywood and the A&M; lot on La Brea Avenue in Los Angeles.

Universal executives and the building’s owners declined to comment.

Real estate brokers say the deal is a boon for Westside property owners, since one of the largest blocks of vacant space will be taken off the market and a new standard set for rents. They also say it could help fill more Westside buildings by attracting Universal’s vendors and other service firms.

“It’s going to have a ripple effect, bringing other tenants into the market,” said David Thurman, a principal in Concorde Real Estate Partners in Santa Monica.

“There should be another 10% to 15% [of additional square footage] in support leases to go along with that,” he said.

Even with the building vacant, office space is tight in Santa Monica. At the end of last year, vacancy rates averaged 7%, according to data firm CoStar.