The former West Hollywood headquarters of noted architect Charles Luckman was sold Wednesday for a near-record price per square foot in Los Angeles County, accentuating a run-up in local office values over the last few years.
Los Angeles-based Mani Bros. Real Estate Group bought two Sunset Boulevard office buildings on the eastern border of Beverly Hills for undisclosed terms, said Chief Executive Simon Mani.
Real estate sources familiar with the transaction, who asked not to be identified in order to protect future business relationships, said Mani Bros. paid $155 million, or about $525 per square foot.
Los Angeles County office prices have climbed rapidly in recent years as investors scrambled to take advantage of the region's improving economy and rising rents. Two Woodland Hills towers sold for more than $560 per square foot in 2004 as part of a real estate portfolio sale. Earlier this year, the Wilshire Roxbury Building in Beverly Hills sold for $484 a square foot.
By acquiring the 12-story tower and three-story companion building that make up Luckman Plaza, Mani Bros. becomes the largest office landlord in West Hollywood and expands its Los Angeles area office portfolio to almost 1.5 million square feet.
The new owners plan to spend $12 million upgrading the building, Mani said. Changes will include a new exterior skin and improvements to the lobbies.
Mani's strategy is to make the building competitive with top Westside properties and cater to business executives who live in Beverly Hills, the Hollywood Hills and West Hollywood, he said.
The Manis were willing to pay top price for the building in part because they expect to be able to raise rents, and because they intend to hold it for many years, Mani said.
Existing leases at Luckman Plaza are generally below market rates because West Hollywood has become more popular and rents have risen at other buildings, said Steve Algermissen, a broker at Cushman & Wakefield who was not involved in the deal. Asking rents there have risen as much as $1 per square foot in the past year, to as high as $4.50 per square foot per month, as the vacancy rate has tumbled to slightly more than 5%, he said.
Also contributing to Luckman Plaza's value is its provenance. Charles Luckman designed and built the buildings in the mid-1960s and lived in the tower's penthouse until his death in 1999 at the age of 89.
An architect by training, Luckman was sidetracked by the lack of construction during the Depression and went into the corporate business world. He became the president of Pepsodent Co. and then Lever Bros. by the age of 37. After supervising construction of a new company headquarters, he was drawn back to architecture and went on to design such landmarks as Madison Square Garden, the Cape Canaveral Space Center and the Forum arena in Inglewood.
Luckman Plaza remained in family control until the sale, said Stephen Somer, one of the brokers at Eastdil Secured who represented the sellers.
"The sons were getting older and the market is very strong and they decided it was an opportune time to sell it," Somer said. "It's time to invest a little capital in it and really make it shine."
The buildings at 9200 and 9220 Sunset are almost fully leased. Many of the tenants are in the entertainment business or professional firms that serve the industry. Entertainer Dick Clark has his business headquartered there, as did disgraced private investigator Anthony Pellicano.