Second Phase Begins on Wateridge Office Project

Crown Realty & Development Inc. has begun construction on the 200,000-square-foot second phase of Wateridge, an office development at La Cienega Boulevard and Slauson Avenue in the Culver City-Fox Hills office market.

The new office, which Crown is building on a speculative basis, is on a 21-acre site that includes 330,000 square feet of office space that is 98% leased, said Robert Flaxman, president of Newport Beach-based Crown. He would not disclose the construction cost, but real estate sources familiar with similar projects estimated it at $35 million to $40 million.

Crown is confident it will find tenants for its new building, Flaxman said, despite the increase in the office vacancy rate on the Westside. Even though about 1 million square feet of office space was dumped on the Westside markets in the first quarter, he said, few buildings have large, contiguous blocks of space.

Rather than hurt the market, Flaxman said, the space that has been emptied by Internet companies will help to create “a closer match between supply and demand.”

The office vacancy rate in the immediate vicinity of Crown’s new project is extremely low--about 2% in the Culver City-Fox Hills submarket, according to broker Steve Solomon of Colliers Seeley International, which is marketing the Wateridge project for Crown. Solomon said Fox Hills attracts tenants who “want to be on the Westside but don’t want to pay Santa Monica rents.”

Though Santa Monica and some other Westside markets snagged many dot-com tenants in the Internet’s explosive growth period, the existing Wateridge space is filled with sales organizations, administrative groups and back office operations, Flaxman said.

Crown’s project, which is slated to be finished in October, is one of a number of commercial real estate developments either approved or planned in Culver City and Fox Hills. Among these are a revitalization of Fox Hills Mall proposed by owner Westfield America, a planned retail and movie theater development in downtown Culver City by San Diego developer Oliver McMillan, and a remodeling of the Westside Walk shopping center that has been approved by Culver City’s City Council.

Fox Hills also could be getting more office space at the Corporate Pointe business park south of Slauson Avenue and east of Jefferson Boulevard. The Times reported in September that New York-based developer Tishman Speyer Properties was in negotiations to buy 11 undeveloped acres in the office park, which includes a 250,000-square-foot office building.

The city has not had any conversations with Tishman Speyer regarding the Corporate Pointe property in months, according to Miriam Mack, redevelopment administrator for Culver City, but Mack said the city “would like to see something be developed” on the site. Tishman Speyer executives could not be reached for comment.

The Corporate Pointe site has approvals for a twin to the existing 12-story, 250,000-square-foot office building, but any new proposals for development on the site would need to be reviewed and approved by the city before construction could proceed, Mack said.