Deals at 21st Century Plaza Indicate Healthy Market

Those looking for signs that the slowing economy is taking its toll on the San Fernando Valley real estate market will have to look elsewhere, at least so far.

Two lease deals have been signed at 21st Century Plaza, a 515,000-square-foot development completed last year, and at prime rental rates.

Aetna U.S. Healthcare inked a deal for 54,000 square feet, leasing the eighth and ninth floors of the building at 6303 Owensmouth Ave. to house approximately 350 employees.

Regus Business Center Corp. signed on for the 10th and 11th floors of the same building, bringing the total square footage leased to just over 100,000.

The deals bring the newly constructed towers to full occupancy. 21st Century Insurance occupies the entire sister tower, at 6301 Owensmouth Ave., along with about 60 percent of the second building.

When developer Tishman International Cos. began construction on the complex with plans to charge monthly rental rates upwards of $2.50 a square foot, Valley rents for Class A properties were averaging $2.15 to $2.25 per square foot. At the same time, Lennar Partners had announced plans to redevelop LNR Warner Center, the site of the Prudential Insurance of America regional headquarters, bringing more than 1 million square feet of additional office space to the Warner Center area.

With so much additional space planned for the market and Tishman’s rental rates expected to exceed $2.50 per square foot at 21st Century Plaza, many wondered whether the development would want for tenants.

“There was a lot of controversy or skepticism,” said Alan D. Levy, chairman of Tishman International Cos. “We saw (rents) trending and we reached a little bit, no question about it.”

Over the past year, however, rents in the area have continued to climb, and the newest deals at 21st Century Plaza were made for rates in excess of $32 per square foot annually.

“21st Century paid $32 a foot, and we felt it was a fair number. We thought the market could support it,” said Levy. “We hung in and we got two tenants for two floors each. So we beat our $32 target in both instances, and we got annual bumps. The others are probably thanking us now because we established the market.”

Aetna will be relocating its regional offices from LNR Warner Center.

Regus operates office suites for short- and long-term leases.

Lisa Dowers at CLW Real Estate Services Group and Rick Pearson of Cresa Partners represented Aetna.

Kent Handleman and Nancy Stark of CB Richard Ellis Inc. represented Regus.

Tishman’s Arlene C. Pepp represented the landlord.

Soft Landing

Executive Software has acquired a 72,000-square-foot office building in Burbank for just under $10.7 million.

The company will be relocating its corporate headquarters from Glendale.

The site, at 7590 N. Glenoaks Blvd., includes 3.9 acres of land and a two-story concrete-and-steel building. It was previously the worldwide headquarters for Elmo Semiconductor Corp., which is relocating to Valencia.

Executive Software will occupy about 45,000 square feet of the space and plans to lease the remaining 27,000 square feet.

The buyer was represented by Brian Metcalfe and Don Ferris of Cushman