A new office complex is being planned in Santa Monica, where international developer Hines just purchased a shuttered industrial plant on Olympic Boulevard.
The Houston-based builder paid more than $75 million for the property, according to a real estate expert who asked not to be identified because terms of the deal were confidential. The seller was a family trust that had held the land since the 1950s.
Hines hopes to build two- to four-story office buildings totaling about 300,000 square feet on the 7-acre site. It is at the northeast corner of Olympic and 26th Street, said Colin Shepherd, a Hines senior vice president.
Hines plans to remove the three industrial buildings on the site, once home to a Paper Mate pen manufacturing plant that is no longer in use.
He declined to state how much the development would cost but said it would probably be intended for tenants in the entertainment industry. The area is zoned for light manufacturing and entertainment studio uses.
Shepherd also could not say when construction might begin. The site is contaminated by industrial pollutants that must be removed before the land can be redeveloped. Paper Mate’s former owner, Gillette Co., is working on a cleanup proposal, he said.
“Whatever we do here is going to be environmentally sensitive and energy efficient,” Shepherd said, and certified as “green” by the U.S. Green Building Council. The site is near a proposed stop on the planned Expo light rail line that would connect downtown Los Angeles and Santa Monica.
There is a high demand for new office space in Santa Monica, said real estate broker Michael DeSantis of Cushman & Wakefield, who represented the seller in the deal.
Office vacancy has fallen to 4.5% in Santa Monica and rents have jumped from about $2.50 per square foot per month in 2003 to about $6.25 a square foot, suggesting that the market is ripe for new development.
“The demand is clearly coming from the media, entertainment and technology industries,” DeSantis said.
The Paper Mate site was part of a 22-acre parcel of land acquired by developer John M. Stahl in the 1950s and included the land across the street now occupied by the Water Garden office complex. He initially developed that site into an industrial park for use by Rand Corp.
Stahl’s heirs were the sellers of the 7 acres being acquired by Hines and its financial partner, Buchanan Street Partners.