Gas Co. Stays in 350,000 SF at MPG Building

LOS ANGELES-Southern California Gas Co. has renewed its lease for 350,000 square feet of office space at MPG Office Trust's 1.3-million-square foot Gas Company Tower at 555 W. Fifth St. in Downtown L.A. Terms of the new lease, which is for 15 years, were not disclosed but are likely well below the approximately $36 per square foot per year net that the gas company was paying under its previous lease, public filings by MPG indicate.

In a quarterly report filed in May, MPG said that its leases with both Southern California Gas Co. for its 350,000 square feet at 555 W. Fifth and with Pacific Enterprises for approximately 217,000 square feet at US Bank Tower had in-place rents in excess of $36 per square foot per year. MPG said the $36 rents were approximately 40% above current market rental rates. "We do not expect to re-lease the space at either building at those rates," the company said in the filing. A gas company spokeswoman said that the new lease would mean "significant savings" for the utility, but terms of the deal are confidential, she said.

Southern California Gas. Co. was represented in the lease by a CB Richard Ellis team including executive vice president Steve Bay and senior vice president Kevin Bender of CBRE's Downtown L.A. office, and senior vice president Jeb Bakke of CBRE's San Diego office. MPG was represented internally by Peter Johnston and Josh Wrobel.

The Gas Company Tower was 92.5% leased as of the end of last year, according to MPG's latest annual report, which was filed on March 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 net basis," meaning that the figure did not include expenses, which are approximately $14 per square foot per year.

Michael W. Allman, president and chief executive officer of Southern California Gas Co., said in a prepared statement that the company's 1,300-plus employees in the building enjoy a central location, proximity to public transportation and "all the services and 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 Company Tower.