LNR Warner Center Property for Sale By SHELLY GARCIA Senior Reporter Yet another Warner Center landlord has decided to follow the ancient wisdom and strike while the iron is hot. The owners of LNR Warner Center put a portion of their office campus up for sale even as they continue to build on the 35-acre site. LNR is selling three buildings totaling 450,000 square feet on the corporate campus that it began developing in 2000 on the east side of Canoga Avenue north of Burbank Boulevard. Although the company has not put a listing price on the property, it is expected to fetch upwards of $115 million. “Like many developers today, they build properties to sell them once they reach a stabilized basis,” said Tom Bohlinger, a broker at CB Richard Ellis who, with CB’s Sean Sullivan, is marketing the property on behalf of LNR Warner Center LLC. “And it’s a very good market to be selling properties today.” The listing is the latest in a rash of office sales in Warner Center over the past two years. Sale prices have remained high even as the office leasing market has taken a downward turn, a reflection, brokers and others say, of the long-term investment potential of the area. The three LNR buildings included in the offer were completed in the first two phases of the development, which is eventually expected to include 10 buildings and total about 1.5 million square feet of new office space. Two of the buildings are leased to Health Net. The third is leased to First Union Bank and Wachovia Securities, both divisions of Wachovia Corp., and Univision Music Group, a division of Univision Communications Inc. Combined, the three buildings are 96-percent leased, although a large block of space remains in the building that Health Net does not occupy. LNR has also completed construction on a food court for the complex, and the company has begun a fourth building. Those properties are not included in the offer. An estimated 20 acres remains to be developed. LNR, a division of Miami-based real estate company Lennar Corp., acquired the complex from Prudential Insurance of America in 1998 for an estimated $70 million. It had been Prudential’s regional headquarters until the insurance conglomerate restructured. Among only a handful of newly constructed developments in the area, LNR offered tenants features not readily available in Warner Center, mostly composed of high-rise and single-story buildings. LNR designed a campus-style setting of mid-rise buildings with large floor plates that gave companies the option of housing all their operations on a single floor. Many believe such a setup reduces costs and enhances productivity because workers don’t have to travel from floor to floor for meetings and to access resources. The design of the complex, along with its location, proved a winning combination for the owners, who have continued to see strong leasing activity despite an overall slowdown in the market. Most recently, LNR inked a deal with ATK Alliant Technology for 74,088 square feet. The deal will allow the company to proceed with construction on the next phase of development. Despite the slowdown in the office leasing market, and the local vacancy rate in the West Valley, which hovers around 20 percent, there seem to be no dearth of buyers for office properties there. In 2002 more than 3 million square feet of office space was sold in the Woodland Hills area alone. Prices averaged about $150 per square foot, although brokers caution that the average includes a wide variety of properties. Warner Center Plaza, a trophy collection of six high-rise buildings, fetched the highest price, selling for about $186 per square foot. Warner Center Business Park, a group of 15 relatively small single- and two-story buildings, sold for about $117 per square foot at the low end. With the exception of Corporate Pointe at West Hills, a 30-acre campus of buildings that sold for about $160 per square foot, the other properties that changed hands in 2002 were at least several decades old. Bohlinger said that, while the two earlier Warner Center sales may have some bearing on the pricing of the LNR properties, there are significant differences. “They have different rent rolls, different age, and tenants in the market prefer the mid-rise,” Bohlinger said. “The floor plates are a lot more efficient.” Bohlinger said he has already had a number of inquiries on the listing. “We would expect initial offers sometime in the first couple weeks of January,” he added.