When mortgage lender PennyMac Financial Services Inc. decided to move its headquarters to one of the new buildings in the Westlake Park Place complex, it was the latest in a string of wins for the region’s only major office construction project, built almost entirely on speculation. PennyMac employs about 1,800 people nationwide, according to its annual report, and more than 1,000 of them work in two leased buildings at its Moorpark headquarters. The company plans to move into the new 60,500-square-foot building on Townsgate Road in Westlake Village by the end of the year, but it will retain its space in Moorpark, senior vice president Patrick Benton said in a statement. “The Westlake location is an expansion and it offers a broader reach for recruiting and improved retention of personnel,” Benton said. “The Westlake Park Place complex with its LEED-certified buildings, solar energy and (electric vehicle)-charging stations aligned nicely with our own focus on sustainability in the workplace.” PennyMac’s move to the Conejo Valley marks a return to its roots. The mortgage company was founded in 2008 by former Countrywide Financial Corp. President Stanford Kurland. Countrywide, formerly based in Calabasas, was a mortgage lender that imploded during the recession, leaving a giant hole in the Conejo office market. Bob Searles, the Newport Beach developer behind Westlake Park Place, bought the 27-acre vacant property in 2005, but he didn’t foresee the national recession that would slow office leasing activity to a crawl for five-plus years. The office park has flourished despite the economic downturn and PennyMac is only one of its key tenants. The site’s prime location, a strategy to target financial service tenants and generous deal-making have enabled the eight-building complex – with more than 460,000 square feet of rentable space – to approach completion nearly fully leased with rents its brokers say far exceed Conejo averages. “It was the right time to purchase it,” said Searles, who bought the site with Denver real estate investment firm Amstar when vacancy in newer high-end offices in Conejo stood at 8 percent. Big draw Clearly visible from the 101 freeway on Townsgate, the complex’s midrise buildings sit next to an older office property, Westlake Plaza Center, anchored by Bank of America Corp.-owned Merrill Lynch. Brokers for Westlake Park Place would not disclose exact lease rates, but said they are getting rents not far from the $3.35-a-square-foot asking rate. That compares with Conejo’s average rate of $2.19 in the second quarter, according to data from Colliers International. Despite the higher asking price, the complex has attracted a series of big-name tenants. In addition to PennyMac, there’s Dole Package Foods Inc.; the financial services arm of Zurich-based UBS Group AG; a branch of Dallas-based Comerica Inc.; the headquarters of homebuilder Ryland Group; and branches of financial services companies Ernst & Young Global Ltd. of London and St. Petersburg, Fla.-based Raymond James & Associates Inc., among others. “We’ve had an amazing amount of inquiries for space in this project considering the rents we charge,” said Tom Festa, senior vice president for Daum Commercial Real Estate Services, a broker for the complex. The Westlake Village address, where many financial services companies and high-net-worth individuals are established, and quick access to the 101 freeway have helped the space get leased, said Mike Foxworthy, executive vice president of Daum and leasing broker for the office park. Proximity to neighborhoods where top executives live, such as Lake Sherwood, Hidden Hills and Newbury Park, also helped make the sale, according to Foxworthy and Festa. Furthermore, employees who can’t afford those areas can find lower-price housing close by in Simi Valley or Camarillo. “In terms of office buildings and where people want to be, this is the center of the universe,” Festa said. One of the biggest tenants is Dole, which relocated in March and leased about 80,000 square feet for the headquarters of its North American, Latin American and European operations. Speed of construction was a top priority, said Brad Bartlett, Dole president, as it had only about 18 months. The company, owned by Tokyo’s Itochu Corp., formed after Westlake Village’s Dole Food Co. Inc. sold its packaged foods and Asian fresh business to Itochu in 2013. Bartlett said the company’s priorities were to stay in Conejo and lease a new building, preferably, if it could design a space, have it built and move in on a short time frame. He wouldn’t disclose Dole’s lease rate but said it was worth it. “If you’re talking about building from the ground up, this is by far the best,” he said. Comerica was one of the complex’s first tenants when it opened a banking center in 2008. A spokeswoman said in a statement that the decision to lease there was driven by the Westlake Village location because the bank saw potential growth in the long term. The increased presence of financial services companies and related businesses is expanding Westlake Village’s standing as a money hub, and is good for the local economy because the area has lost manufacturing jobs, said Robert Scott, executive director of the Mulholland Institute, a public-policy planning consultancy in Calabasas. “Those are perfect industries for us because they import capital,” Scott said. “That helps because, generally speaking, financial services industries are going to do business outside the immediate community and that means bringing capital into the immediate community.” Bringing in new companies has been important since Thousand Oaks’ largest employer, biotech Amgen Inc., began cutting hundreds of positions. The company announced a restructuring in 2014 that would reduce its global workforce by 12 percent to 15 percent, or about 2,900 jobs, although it did not disclose how many jobs would be trimmed at its headquarters. “With PennyMac moving in, that just adds to the diversity we have here,” said Haider Alawami, economic development manager for the city. “Amgen definitely had an impact on the number of jobs in Thousand Oaks. We are not dependent on Amgen right now.” When the real estate recession hit in 2008, it crippled the Conejo office market. Countrywide had a huge footprint, and when the lender was purchased by Bank of America and dismantled, it left entire buildings vacant. PennyMac, formed by Kurland and other top executives from Countrywide, has since grown, forming the parent company and several subsidiaries. The company is now a mortgage lender and loan servicer, known as PennyMac Loan Services, and an investment management company, PNMAC Capital Management, which manages a mortgage real estate investment trust and other funds. In response to a stagnant office market in the early postrecession period, Searles, Amstar and the Westlake Park Place brokers dropped rental rates, made deals and offered generous incentives. Leasing up Lease rates fell to $2.95 during that time, although they were still 30 percent higher than the local market, Foxworthy said. They compensated for that premium price by offering one month of free rent a year and high-end interior upgrades that would normally cost extra such as carpeting, doors, cabinetry, kitchens, collaborative spaces as well as more glass in offices and conference rooms. Foxworthy said tenant improvements over that period were worth $60 to $65 per usable square foot, usually based on leases of at least five years. “We were very amenable to tenants’ demands for what they wanted for their spaces,” Searles said. By the second half of 2012, when the economy showed some growth again, Searles and the brokers reduced the free-rent concessions and tenant improvement deals, and they were able to increase rent, Searles said. By the end of 2012, the complex was 90 percent occupied. In February 2014, construction began on the last three buildings. “There were times it had the only net absorption in the entire Conejo Valley,” Foxworthy said. “It’s one of the very few projects in Southern California that didn’t go back to the bank.” Also that month, Amstar and Searles sold the first phase – about 239,000 square feet – to Atlanta investment firm Invesco Ltd. for $98 million. At the time, 94 percent of the project was occupied, according to real estate data firm CoStar Group. Unleased space now stands at about 7,000 square feet on the ground floor of one building and roughly 60,500 square feet in the project’s last building. Foxworthy and Festa said they are talking to possible tenants but haven’t signed any leases yet. In Searles’ initial vision, everything was supposed to be finished and leased by this year, but the last building is not expected to be available until late summer of next year. “Because of the recession, it took a little longer to bring project to stability,” Searles said.
