Boston Properties anticipates signing leases for more than 200,000 square feet of space at Santa Monica’s Colorado Center in coming days, reducing vacancy at the complex to just 180,000 square feet, company president Douglas Linde said this week in a third quarter earnings call.
The announcement will likely fuel rumors that Boston is close to deals with tenants that include Kite Pharma. The biopharmaceutical company plans to take north of 160,000 square feet in the building and is just days from executing its lease, sources told TRD.
“The West L.A. market has had a string of strong quarters of rental rate growth, as it benefits from both the creativity and entrepreneurship of local content creators and providers, the explosion of new content from new economy entertainment companies, and the growing labor market for a number of San Francisco-based technology companies that are trying to broaden their workforce reach,” Linde said during the call.
Since July, the West L.A. submarket has seen more than 400,000 square feet of signed leases and there are another 790,000 square feet under consideration, including the Boston Properties leases, he said.
Linde noted that rental rates had increased by almost 10 percent for large blocks of space in the submarket since its purchase of the Colorado Center in July. Rents in the area are coming in at around $70 to $80 per square foot per year on 10-year leases, he said. A 15-year deal will be closer to $100 per square foot.
Meanwhile, Boston CEO Owen Thomas noted that while the company is looking to expand its footprint on the west coast, it’s not rushing into additional purchases.
“We are reviewing a number of on and off-market opportunities. However, we will remain disciplined and patient and focus only on investments that create attractive returns for shareholders,” he said. “Where we are in the market today, I don’t think you should expect us to go out and purchase stabilized assets in a 4 percent kind of cap rate environment. Those are not the kinds of things that we are going to be doing.We are going to be looking at new developments. We are going to be looking at assets that need some repositioning or lease-up.”