LOS ANGELES-Southern California Gas Co. has renewed its leasefor 350,000 square feet of office space at MPG Office Trust's1.3-million-square foot Gas Company Tower at 555 W. Fifth St. inDowntown L.A. Terms of the new lease, which is for 15 years, werenot disclosed but are likely well below the approximately $36 persquare foot per year net that the gas company was paying under itsprevious lease, public filings by MPG indicate.

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In a quarterly report filed in May, MPG said that its leaseswith both Southern California Gas Co. for its 350,000 square feetat 555 W. Fifth and with Pacific Enterprises for approximately217,000 square feet at US Bank Tower had in-place rents in excessof $36 per square foot per year. MPG said the $36 rents wereapproximately 40% above current market rental rates. "We do notexpect to re-lease the space at either building at those rates,"the company said in the filing. A gas company spokeswoman said thatthe new lease would mean "significant savings" for the utility, butterms of the deal are confidential, she said.

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Southern California Gas. Co. was represented in the lease by aCB Richard Ellis team including executive vice president Steve Bayand senior vice president Kevin Bender of CBRE's Downtown L.A.office, and senior vice president Jeb Bakke of CBRE's San Diegooffice. MPG was represented internally by Peter Johnston and JoshWrobel.

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The Gas Company Tower was 92.5% leased as of the end of lastyear, according to MPG's latest annual report, which was filed onMarch 31. The report said that the average rent in the building was$28.74 per square foot per year. It said rents were "shown on a netbasis," meaning that the figure did not include expenses, which areapproximately $14 per square foot per year.

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Michael W. Allman, president and chief executive officer ofSouthern California Gas Co., said in a prepared statement that thecompany's 1,300-plus employees in the building enjoy a centrallocation, proximity to public transportation and "all the servicesand conveniences that Downtown Los Angeles has to offer.” Nelson C.Rising, president and chief executive officer of MPG Office Trust,noted that the utility was the original tenant in the Gas CompanyTower.

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