The Arts District is no longer “Waiting for Godot.”
Warner Music Group finally sealed the deal on a lease for the entire 257,000-square-foot Ford Factory building renovated by Shorenstein, Billboard reported Friday, closing a transaction that many see as the tipping point for the Arts District.
CBRE’s John Zanetos, Todd Doney, Rob Waller, Chris Penrose and Phil Ruhl represented the landlord, Shorenstein. Cresa’s Matthew Miller represented Warner.
The music giant’s lease at 777 South Santa Fe Avenue will begin in August 2017 and last for nearly 13 years with an option to renew for 10 years, according to filings cited by the L.A. Business Journal. The lease rate will begin at roughly $10 million a year, valuing the deal at upwards of $130 million.
The company’s build out will cost $40 million to $50 million, with Warner receiving a 75 percent rate abatement during construction.
Roughly two million square feet of office space is set to come online in the Arts District, and industry insiders have been saying the sealing of the Warner deal would make or break those other projects. Many were hesitant to be optimistic, after Buzzfeed backed out of a deal for the space at the eleventh hour last year.
Warner, which will relocate from Burbank, will be the Arts District’s first large-scale office tenant. It will move out of the structure it has inhabited on the Warner Bros. Studios for more than 40 years when the lease ends in 2017, and move in 2018, according to Billboard. It will also vacate the space it takes at Atria West in West L.A. and 185,000 square feet on Olive Avenue in Burbank.
Warner’s consolidation in the Arts District will serve as its West Coast headquarters. [Billboard] — Hannah Miet