New York-based Tishman Speyer is in contract to buy the CNN Building in Hollywood for more than $127 million in a sale expected to close by the end of the week, The Real Deal has exclusively learned.
The deal has been in the works for months, sources said, and neared a close right as Mark Laderman, Tishman Speyer’s regional director for Southern California, resigned, according to sources. The reasons for his resignation are unclear.
Tishman will pay the seller, Palo Alto-based investment firm Broadreach Capital Partners, more than $600 a square foot for the 204,122-square-foot Class A office property at 6430 West Sunset Boulevard. The price towers over Hollywood’s $442 a square foot average for office sales in the past year, according to CoStar Group.
Broadreach acquired the building for only $52 million, or $225 a square foot, in 2006.
Tishman could not be reached for comment, but sources said the firm plans to modernize the tower, which was last renovated in 2001. If the past is a precursor, a creative office conversion is in the works, similar to Tishman’s recent projects in Playa Vista and El Segundo.
Hollywood is certainly not opposed to creative office. With Kilroy’s Columbia Square project leasing Viacom and Hudson Pacific Properties’ Icon project leasing Netflix, it’s not a stretch to think that’s what Tishman is planning. Besides, there aren’t a lot of buyers in L.A.’s hotter markets planning traditional office renovations these days.
The CNN Building already gets rents as high as $4.45 a square foot per month ($53.4 per square foot annually), according to CoStar. That’s well above Hollywood’s fourth quarter average of $3.97, though its highest rents are attached to leases recently renewed. Sources said whatever plans Tishman has in store are aimed at raising rates higher.
The building was 90 percent leased at the time the sale talks began, sources said. It is 84 percent occupied now, according to CoStar. Its anchor tenants are CNN’s parent company Turner Broadcasting System, the movie-trailer-maker BLT & Associates and advertising agency Oxford Road. The building is home to CNN’s West Coast Bureau.
Todd Tydlaska and Andrew Harper of HFF represented Broadreach in the sale with leasing guidance from Steven Salas, Tony Ranger and Joe King of Madison Partners.
Going forward, Tishman will be co-leasing the property with Madison Partners, sources said.
The brokers, Broadreach and Tishman could not be reached for comment.
Hollywood’s office market is already seeing action this year, beyond the “lights, camera” variety. In January, New York’s Clarion Partners bought the historic Eastman Kodak site from Lincoln Property Co. for $61.3 million. The submarket saw $171 million in sales volume in 2015, according to CoStar, a figure it has already surpassed this year.