The Lionstone Group, a Houston-based real estate investment firm has acquired a five-building, 165,000-square-foot creative office portfolio in Santa Monica, announced Santa Monica-based brokerage firm Industry Partners.
“Lionstone, which owns more than 800,000 square feet of creative office space on the Westside, saw this as an opportunity to purchase five trophy assets in a market with significant barriers to entry and capitalize on the supply/demand imbalance that exists in Santa Monica, especially for creative office space,” said Scott Rigsby, of Industry Partners, who along with partners Jim Jacobsen and Andrew Jennison represented the seller on the transaction.
“The demand for creative office space from tech, new media and post-production companies is driving leasing activity on the Westside. Santa Monica is one of the tightest markets in Southern California, as both traditional and creative office users are drawn by the lifestyle, local amenities, and one of the fastest fiber-optic networks in the country. As a result, we are beginning to see rates for office over $5.50 per square foot in certain buildings in the city,” said Rigsby.
The five buildings, which range in size from 17,000 to 40,000 square feet are located in downtown Santa Monica and the Bergamot Center Arts Center. Four of the buildings; 631 Wilshire Boulevard; 2415 Michigan Avenue; 625 Arizona Avenue; and 401 Santa Monica Boulevard are pre-1950s construction and have been fully renovated. The remaining building, 1351 4th Street, was built in 1996. The 165,000-square-foot portfolio is collectively 90 percent leased. Tenants include POP Sound, Clearstone Ventures, Bedford Falls, Pier 59 Studios and Bolthouse Farms.
“This was a very complex transaction and Lionstone did exactly what they said they would do to close this transaction,” said seller Arnold Bernstein who controls the general partner of an investment group comprising a sophisticated group of players from the entertainment industry. “In the end, it came down to Lionstone’s financial strength, performance in the local market and executable business plan for these properties. We would work again with them if we had the opportunity.”