SFVREColMar97/bb/ inches/mike1st/mark2nd The recent mergers among banks and thrifts have sent shock waves through local real estate markets. Bank of America’s acquisition of Security Pacific Bank, which hurt the downtown highrise market, is fresh in the memories of many local property professionals not to mention the acquisition of First Interstate Bank by Wells Fargo Bank. Now the San Fernando Valley office market may face a similar downturn, with Irwindale-based H.F. Ahmanson & Co.’s hostile takeover bid for Great Western Financial Corp. If Ahmanson, the parent of Home Savings of America, is successful, it would likely vacate much of Great Western’s Chatsworth headquarters complex, Ahmanson Chairman and CEO Charles Rinehart told the Business Journal. If it gets an offer it can’t refuse for the campus’ focal 200,000-square-foot headquarters tower, it would probably sell it. Besides the main tower, which Great Western owns, the thrift leases a dozen or so lowrise buildings on the campus property, under long-term lease agreements. Rinehart said that Ahmanson would likely look to sublease much of that lowrise office space, while maintaining some non-headquarters administrative operations in Chatsworth. Of course, there’s still a chance Great Western will find an out-of-state White Knight to outbid Ahmanson and take over the big thrift’s existing operations without slashing the work force and thereby softening the Valley office market. Given that the Valleywide market has shown substantial improvement over the last year or two, having the 1 million square feet or so that Great Western occupies back on the market probably wouldn’t amount to devastation. But it would hurt. “If nothing else, I’m glad it’s happening in 1997 and not in 1990,” said Madeline Schwartz, a Valley office broker with CB Commercial Real Estate Group in Sherman Oaks. Also, the 1 million feet is mostly lowrise campus buildings, and demand for such space is fairly strong especially from health care and entertainment tenants. “The worst is over; the market has really been picking up,” Schwartz added. She and Grubb & Ellis Co.’s Tom Festa another broker with extensive experience in the west and northwest Valley both stressed that the Great Western campus is accessible to and from the Santa Clarita and Simi valleys, where a highly educated labor pool resides. Both brokers mentioned CareAmerica Health Plans as among the more likely candidates to take over much of the Great Western campus if it becomes available. CareAmerica was in a similar series of lowrise buildings in that same area before taking advantage of a Warner Center sublease opportunity. Its current sublease is due to expire in less than two years. (CareAmerica, however, is one of five HMOs threatening to move out of the city of Los Angeles due to tax considerations.) But Festa also pointed out that the Great Western campus is “just five or 10 minutes” from both Warner Center and the Sherman Oaks/Encino office markets. So if the Great Western complex is abandoned, “it would obviously put some pressure on the market” and delay the ongoing recovery to some extent, Festa predicted, adding that some nearby landlords “would be real unhappy.” He added that the Great Western facilities would see substantial interest from “price-sensitive, larger users” and perhaps get leased up in a relatively short time. Great Western’s primary landlord at the campus developer Jerry Katell, who with partner Ray Watt heads partnerships that own about 700,000 square feet of the space the big thrift occupies isn’t shedding any tears. Great Western is committed to the dozen-some Katell/Watt buildings for between nine and 15 years. So if Ahmanson buys Great Western and subleases the facilities, the owners don’t face any near-term exposure. “We don’t care where the checks come from,” said Katell, adding that he and Watt have been expecting Great Western to be the target of a takeover bid for years. But Katell also said a successful Ahmanson takeover “wouldn’t be helpful to any of us, so I’m voting for an out-of-state buyer not that anyone’s asking for my vote.” Katell has concluded that an out-of-state buyer would be more likely than Ahmanson to retain a significant presence in the lowrise Chatsworth campus buildings. MegaDrive consolidates Speaking of Chatsworth-area subleasing activity, CB’s Schwartz and colleagues just helped a high-tech company called MegaDrive consolidate operations from Hawthorne and Beverly Hills into 32,000 square feet of offices subleased from personal care product maker Alberto Culver at 9201 Oakdale Ave. Alberto recently purchased the St. Ives operation that had occupied the entire building under a lease agreement, and Alberto will continue to occupy some 20,000 square feet. MegaDrive, which committed to the space for about two and a half years, specializes in memory storage software for the entertainment industry. New Linens ‘N Things Big retail chain Linens ‘N Things has signed a long-term lease for a new 39,500-square-foot store to be developed by the Horowitz/Franson Trust. The project site is at Woodman Avenue and Riverside Drive, adjacent to the Sherman Oaks Fashion Square regional mall. No financial details of the “build-to-suit” lease transaction or cost estimates were disclosed. The project is slated to get under way this month. John Beaney of Katz & Associates negotiated the lease transaction on behalf of the landlord, Horowitz/Franson. Leider Commercial Real Estate’s Stephen Leider represented Clifton, N.J.-based Linens ‘N Things, which sells bed, bath and kitchen linens, as well as housewares and home accessories. The chain currently operates 13 stores in California, with three more set to open soon. CNA expands in Glendale In an expansion move, CNA Insurance has leased 23,142 square feet of offices for its in-house legal department at the 701 N. Brand Blvd. tower in downtown Glendale. The five-year lease transaction between CNA parent Continental Casualty and property owner ARAI Corp. of America is valued at about $3 million. The legal group is relocating from CNA’s current location nearby at 500 N. Central Ave. Julien J. Studley Inc.’s Steve Walbridge and Stephen Barker represented Continental Casualty. CB Commercial Real Estate’s Doug Marlow negotiated the deal on ARAI’s behalf. The Koll real estate firm is the property’s asset manager. –30–