Law Firm to Move From Century City’s Fox Plaza Tower
Century City law firm Jeffer Mangels, Butler & Marmaro has agreed to relocate from prestigious Fox Plaza tower to nearby 1900 Avenue of the Stars in a deal valued at about $35 million by market observers.
Jeffer Mangels was one of Fox Plaza’s original tenants when the building opened in the 1980s at Olympic Boulevard and Avenue of the Stars, but rents in the 34-story building are among the highest in Los Angeles. The firm will return to the building it left 15 years ago to pay much less rent than sought by Fox Plaza landlord Irvine Co.
Some local real estate professionals said the move reflects reluctance among even some top-tier tenants to pay premium rents at Century City’s most expensive buildings amid the economic downturn.
Jeffer Mangels partner Keith Elkins, who helped negotiate the 10-year lease of 90,000 square feet with the firm’s new landlord, Divco West Properties, declined to disclose financial specifics of the agreement.
Divco offered space in the 1900 tower at an initial annual per-square-foot rate in the mid-to high $30s, real estate sources said. Irvine Co. is asking as much as $60 or more per square foot.
Assuming the incremental rent increases typically structured into such a deal, the firm probably will end up paying $35 million or more over the course of its lease.
Jim Travers and Jeff Mintz of Travers Realty Corp. negotiated the deal on behalf of Jeffer Mangels. Jeff Pion of CB Richard Ellis represented the property owners along with Divco’s John Moe and Sam Nicassio. The four-floor deal fills nearly all of the 28-story tower’s empty space.
Jeffer Mangels isn’t the only large Century City law firm that has opted for more affordable digs. Kattin Muchin & Zavis will move from the district’s other top-tier address, SunAmerica Center, after subleasing 52,000 square feet at Century Plaza Towers.
Further defections from the premier towers might follow if the landlords don’t negotiate more aggressively amid slowing tenant demand, said office brokers Gary Weiss of CSFB Realty Group and Stan Gerlach of CB Richard Ellis.
Irvine Co. spokesman Rich Elbaum said Fox Plaza continues to attract tenants, including one now negotiating for a floor. Another tenant, Davis Cos., recently renewed its lease on two floors.
The leasing director at Sun-America Center, Mark McCaslin, said owners of luxury properties are tuned in to market dynamics, but they’re reluctant to match the offers some tenants get today from owners of less prominent buildings or from aggressive tenants looking to sublease unneeded offices.
The disintegration of many dot-com companies and the economic downturn has made Century City office leasing much more competitive in recent months. Brokerage Colliers Seeley reports that just less than 7% of Century City’s space is available today, nearly twice as much as was empty a year ago. Yet average asking rents remain above the year-ago rate: $39.95 per square foot compared with $36.70, down slightly from the midyear average.
