Deutsch Expands Into Architecture School
One of L.A.’s premier advertising agencies will move into the Marina del Rey building that now houses the Southern California Institute of Architecture under terms of a newly signed lease that underscores the continuing demand for office space from growing Los Angeles companies.
Deutsch Inc., a fast-growing, New York-based ad agency that is “bursting at the seams,” according to its two top local executives, has signed a 10-year lease for the approximately 90,000-square-foot building at 5454 Beethoven St.
The architectural school, known as SCI-Arc, announced in April that it is moving to downtown L.A.
Neither Deutsch nor landlord Catalpa Capital disclosed financial details of the lease, but the deal should work out to approximately $20 million over the 10-year term, based on prevailing rental rates.
Deutsch has its employees squeezed into about 45,000 square feet of space a few blocks from its new offices, according to Mike Sheldon and Eric Hirshberg, general manager and executive creative director of the ad agency.
The office has grown from 10 workers and $1 million in annual billings to 260 workers and $450 million, he said, noting that the new building will be big enough to accommodate the approximately 30 more workers the agency is looking to hire. Deutsch overall has $1.4 billion in billings, according to a company spokesman. The agency’s clients include Mitsubishi Motors of America, Pfizer, Dominos, Snapple, IKEA and Microsoft.
Sheldon said that saving money was the other main consideration in the agency’s search for space. The Deutsch lease is a “below-market deal,” according to broker Steve Kolsky of NAI Matlow-Kennedy Commercial Real Estate Services, who along with Matlow-Kennedy’s Greg Gill represented the ad agency in lease negotiations.
Sheldon and Hirshberg said Deutsch will gut the two-story, 1969 warehouse-style building--which has a clear view of the Playa Vista development--and remodel it. The remodeling, which they hope to complete by Jan. 1, will be designed to make the offices as open, airy and conducive to creative work as possible, they said.
A few other ad agencies have migrated to offices near Deutsch’s new space, but the agency executives said they were more concerned with the specific building than whether it was already a popular ad agency location.
“People here spend a lot of time in the building, so we’re more interested in the culture inside the building than what’s outside,” Hirshberg said.
The new space fits the agency’s credo of “leaner, meaner, smarter,” said Donny Deutsch, chairman and CEO, who said the agency made a similar move last year when it located in a building “off the beaten track” on New York’s lower West Side.
The agency’s new offices will be designed by New York-based Schwartz Architects and Spector Group, who have also designed Deutsch’s New York, Boston and Chicago offices, said principal Fred Schwartz. Long Beach-based architectural firm Shlemmer, Kamus + Algaze also will be involved in the design, with Long Beach-based Turelk Inc. as the general contractor.
With Deutsch moving into the building, SCI-Arc will be released from the six years remaining on its lease, according to Grafton Tanquary, managing partner of landlord Catalpa Capital, a Tanquary family partnership. Tanquary is an office broker with CB Richard Ellis, but he said he negotiated the Deutsch lease in his capacity as a principal of Catalpa, not as a broker.
