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Saturday, Sep 23, 2023

RE Column

Realestate/29inches/dp1st/mark2nd By SHELLY GARCIA Staff Reporter J.H. Snyder Co. has filed a lawsuit against its financial partners in a deal to develop an office complex in Burbank, alleging Equity Office Properties breached its contract. The suit, filed last month in U.S. District Court in Los Angeles, claims Equity abandoned the Media Center project in January 1998 when it told Snyder not to perform any work on the site. Snyder was to have started construction last year. The suit seeks $7.2 million to compensate Snyder for the costs it incurred as a result of Equity’s action, plus legal fees and other costs. The Media Center project, which was designed to add 585,000 square feet of posh office space to the Burbank market, sat idle for more than a year after the merger of Beacon Properties, the company that first teamed with Snyder in the development deal, and Equity Office Properties Trust. Since the merger a year ago, Cliff Goldstein, a partner with J.H. Snyder, has indicated Equity is no longer interested in the project, and the company is seeking a new equity partner for the development. But Snyder’s effort to find new financing was made all the more difficult by a downturn in the office real estate market that began last summer in Burbank. When Snyder and Beacon first inked the deal in August 1997, the entertainment industry was growing dramatically, fueling a need for high-end office space in the area. The five-acre site at 3300 W. Olive Ave. was conceived to attract its target market with amenities that included operable windows, fiber-optic communication capabilities, restaurants and a health club. But with the office market slowdown, Snyder has not been able to attract companies willing to pay the pricey cost of entry of $3 and more a square foot. According to Snyder’s suit, Equity approved construction on the site following the merger. “Nevertheless,” the lawsuit states, “(Equity) instructed Snyder, on January 26, 1998, not to excavate at the property or otherwise perform work at or with respect to the property. (The) notice constituted an abandonment of the project and materially breached the project agreement.” Jerry Snyder, chairman of J.H. Snyder, and a spokeswoman for Equity said they could not comment on pending litigation. Burbank City Manager Bud Ovrom downplayed the significance of the situation, saying that while Burbank’s office market has clearly cooled, the area’s economy is still strong. “A lot of projects are not moving forward as fast as originally hoped or as big as originally hoped,” Ovrom said. “When the market is right, it’s going to be built, and the market isn’t right now.” Still, the Media Center dispute is the latest in a string of disappointments for Burbank, which until recently appeared to be riding an unstoppable wave of development. Last month, Vestar Development Co. pulled out of a deal to redevelop the former Lockheed Martin Co. site, a 103-acre parcel earmarked for retail and office development. And in August, Ford Motor Co. bagged plans to build an auto superstore on the former Zero Corp. site in Burbank. Lockheed is proceeding with plans to find another builder for its project, but there have been no decisions made concerning the Zero Corp. site, which is owned by Ford. Quick profits on Burbank deal In just six months, brokers from Julien J. Studley Inc. represented the buyer in the purchase of a Burbank office building, signed up a tenant for the entire building, then negotiated its sale for a quick $4 million profit. When Sagamore Equities, a San Francisco-based investment company, bought the building at 3015 Winona Ave. last summer for $10.1 million, it was empty. After the deal closed, Studley brokers Paul Stockwell and Will Adams represented the new landlord in negotiating a 12-year, triple-net lease with Qwest Communications. It was the largest lease transaction in Burbank last year. Just recently, the brokers represented Sagamore in its sale of the two-story, 83,000-square-foot building for $14.1 million. It was the largest sale in Burbank in the last 12 months. The building was bought by Hines Corporate Properties, which was represented in-house by Colin Shepherd and Charles Hazen. Sagamore expects to make several more purchases in Southern California. Encino office building sold A group of private investors has acquired a four-story office building at 16250 Ventura Blvd. in Encino for $2.7 million. The new owners, Mokschinder Singh and Rajinder Mahil, who are engaged in international trade, plan to renovate the common areas of the 28,000-square-foot building, and will occupy a portion of the space. Joel D. Frank and Jason K. Bailey of First Property Realty Corp. represented the buyer. The seller, Ambresco, an institutional investor based in Texas, was represented by Chris Baer and Peter Puzo at Grubb & Ellis. Chemat’s new digs Chemat Technology Inc., a chemical manufacturer, signed a lease for 30,490 square feet of industrial space at 9030 Winnetka Ave. in Northridge. Chemat, which will be moving from its current headquarters at 19365 Business Center Drive in Northridge, will expand its facilities three-fold with the move. The five-year lease is valued at $1 million. Jerry Scullin of Delphi Business Properties in Van Nuys represented Chemat. David Katz of CBI Partners represented the landlord, trustees of the Dmitri family trust. Camarillo sale The Ezralow Co. has acquired a 98,950-square-foot industrial building at 4030 Via Pescador in the Camarillo Commerce Center. The space is currently occupied by Diamondback Bicycles, which will be relocating to a build-to-suit facility in Camarillo. Tim Foutz of Capital Commercial/NAI, represented the seller, Via Pescador Partnership. Ezralow was represented by Richard Gold of Capital Commercial America. Terms of the deal were not disclosed. News and notes Medical Analysis Systems, a biomedical firm, has leased a 181,354-square-foot industrial building in Mission Oaks Business Park in Camarillo. The 15-year lease is valued at $26.1 million. The tenant was represented by Jim Linn and Bob Crenshaw of Grubb & Ellis and Steve Valenziano of Lones Lang Wooten. The landlord, Pegh Investments LLC, was represented by Bob Flink and Bob Shafer at CB Commercial. A private group of investors has acquired a two-story office building in Thousand Oaks for $3.7 million. The 23,000-square-foot facility is located at 4035-45-55 E Thousand Oaks Blvd. at the intersection of Westlake Boulevard. The seller, North Ranch Atrium LLP, was represented by Brian Forster of Told Partners. The buyer, K2M2 LLC, was represented by Joe Jusko of Seeley Co.

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