A Santa Monica-based real estate company bought the building next to its headquarters for more than twice its last purchase price.
Horizon Buildings purchased the three-story, 44,504-square-foot property at 2601 Ocean Park Boulevard for $27.8 million, or $579 a square foot, in a sale that closed last month, according to CoStar. The building, which abuts Horizon’s headquarters at 2525 Ocean Park Boulevard, was 88 percent leased at the time of sale. Tenants at the property include the startup Retention Science.
“A big reason (why Horizon was interested) is that it it’s next door,” Susan Zolla, president of Horizon, said of the property, which was purchased in a 10-31 exchange after Horizon sold a factory it owned in Vernon. “It is easier to manage it and upgrade it. The sale is like coming home — it feels good.”
Zolla said Horizon plans to upgrade the building, adding seating areas to its existing courtyard where workers can eat their lunch. Horizon has already begun painting and making improvements, but she stressed the renovations will not be major.
“It’s already a beautiful building,” Zolla said. “We are going to make improvements and lease the remaining space.”
The seller was a joint venture between Davenport Partners and Buchanan Street Partners. Davenport acquired the property for only $11.4 million in 2006.
Michael Longo of CBRE represented the sellers in the transaction. Gibran Begum of Nermark Grubb Knight Frank represented the buyer.
Horizon owns apartment complexes throughout California, including the Del Rey Vista apartments near Culver City and the Manchester Vista apartments in Westchester, in addition to two small hotels.
Its new office property sits in what some industry folks refer to as the “Ocean Park submarket.” Tenants in the area include media and technology giants like Activision, Pandora and Amobee.
Rental rates in Ocean Park have increased more than 60 percent in the last four years, according to CBRE data.
Rent at the property Horizon bought averages $3.85 a square foot a month, according to CoStar. The Class B property, built in 1979, garners lower rents than the first-quarter average in Santa Monica, which is chock full of newer creative offices. Average rent in the first quarter of the year was $5.12, according to a report by Transwestern.