Boston Properties CEO on cracking the LA market
Boston Properties’ $500 million-plus acquisition of a stake in Santa Monica’s Colorado Center in May represented the company’s first foray into the L.A. market, where company executives say the firm is looking to grow its presence.
But cracking L.A. is sometimes easier said than done. “It’s a tough market to break into and there’s a lot of nuance,” Sandler O’Neill analyst Alex Goldfarb recently told The Real Deal. Real estate giants such as Vornado Realty Trust have also moved into L.A., only to later withdraw.
Boston CEO Owen Thomas tackled that question in a recent discussion as part of the Bank of America Merrill Lynch Global Real Estate Brokers Conference, saying he thought the company’s reputation and long track-record in other cities would enable it to compete against the big local players who’ve long dominated L.A.
Asked by Bank of America analyst Jamie Feldman to identify whether or not the company would have an edge in the L.A. market, he said: “I think you can say that what was company’s edge in 1970 when we started Boston and what was it in the 80s when it started in New York and what was it in 1998 when it started in San Francisco. I’m sure that question got asked every time that happened. And I do think that our company is a market leader in the four established markets of our company. I think the strategy of the company has been a time-tested and delivered strong returns to shareholders.”
He noted that the company has already been successful in gaining access to off-market deal flow in the region, despite having only done one transaction.
“So in the Los Angeles now that we’re a significant property owner and I think the local community knows that we’re committed to the city we want to grow. And we’re seeing more off market opportunities in Los Angeles as well,” he said.
In a July earnings call, Thomas noted that the Colorado Center was looking likely to lease up quickly. As of July, the company announced it had signed a letter of intent with a tenant for 160,000 square feet at the property and was in discussions for an additional 60,000 square feet.
“If we complete simply these two leases, we will have leased 63 percent of the available space,” said Boston President Doug Linde.
The company is planning to move personnel and hire new employees to help manage its L.A. portfolio, he said.