Snapchat in early talks to take up to 400K sf at Santa Monica Business Park: sources

Company recently filed for IPO that would value it at $20B to $25B

Nov.November 18, 2016 06:00 PM
Santa Monica Business Park and Snap Inc. CEO Evan Spiegel
Santa Monica Business Park and Snap Inc. CEO Evan Spiegel

Commercial real estate insiders are wondering whether Santa Monica will land a unicorn — before it disappears forever.

Venice-based Snap Inc., which recently filed for its initial public offering, is in early talks to lease a substantial portion of Santa Monica Business Park at 2850-3420 Ocean Park Boulevard, sources told The Real Deal. The parent company of Snapchat, which is raising financing around a $20 billion to $25 billion valuation, wants 350,000 to 400,000 square feet at the 12-building, 1 million-square-foot campus.

The ground lease for the property, which abuts the Santa Monica Airport, is owned by Blackstone, which acquired it in 2009 as part of its $39.2 billion buyout of Equity Office Properties. Blackstone declined to comment, while Snapchat did not respond to requests.

Sources said Snapchat’s representatives have approached tenants at the park with lease buyout offers, since such a large footprint may not be available as contiguous space. A website for the property shows six of the 12 buildings have availability.

Asking rents at the property are $4.75 a square foot a month, according to the website, which would equate to $28.2 million a year for a 400,000-square-foot lease.

Deron White, Bryan Dunne, Kurt Davis and Christina Villanueva of CBRE lease the property, according to CoStar, but could not be reached for comment. Sources said Gary Horwitz and Blake Searles of JLL are representing Snapchat in the negotiations, but both brokers declined to comment.

While its plans are unconfirmed, some sources told TRD Snap Inc. would be expanding, rather than consolidating. The company already has north of 200,000 square feet in Silicon Beach, and plans to hold onto a chunk of it, maintaining a footprint in Venice, the sources said. It takes 79,000 square feet at the Santa Monica airport itself, as well as smaller blocks of space at 248 Westminster Avenue and 909 Ocean Front Walk in Venice. It even has the master lease for a 25-unit apartment complex, at 29 Navy Street in Venice, for intern housing.

The Santa Monica Business Park is also home to Activision and Pandora. Sources said Blackstone is likely to sell the property if the Snapchat deal closes. It has been on the market in the past, but did not receive adequate bids.

If the lease closes, it will be the latest in a series of Santa Monica office wins. Kite Pharma just inked a lease for 160,000 square feet at Boston Properties’ Colorado Center. Oracle recently expanded at Santa Monica’s Water Garden, upsizing to 175,000 square feet from 90,000 square feet — and is close to closing on a deal to buy 2700 Colorado for $368 million. Hulu is also increasing the space it takes at the Water Garden — from 40,000 to 100,000 square feet.

Helmed by 26-year-old CEO Evan Spiegel and 28-year-old CTO Bobby Murphy, Snap Inc. was valued at $18 billion in May.

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