The Largest Century City Lease in a Decade

LOS ANGELES—IPG, a network of advertising agencies, public relations firms and marketing agencies, has signed a 150,000-square-foot office lease at the Plaza in Century City. The 11-year lease is the largest lease signed in the submarket in the last decade. Those involved in the transaction would not disclose the value of the lease, but industry sources unrelated to the deal say that it is worth $70 million. IPG will occupy eight floors in the building and will have building signage on two sides of the property.

"IPG is moving to a first-class office building that was designed to be an office building," Henry S. Kobrin, executive managing director at Newmark Grubb Knight Frank, tells GlobeSt.com. "Their former building, the PDC in West Hollywood, was converted for office use and it wasn't as conducive. Century City is a vibrant place to be, and now there are a lot of creative tenants here." IPG will take occupancy of the property in late 2016, after completing their tenant build-out, which will include the addition of an outdoor deck on the second floor. "They are completely gutting the space and starting from scratch," adds Kobrin, who represented the tenant in the transaction, along with EVP and managing director Steven D. Kolsky.

IPG's lease at the Pacific Design Center doesn't expire until January 2017; however, Kobrin and Kolsky saw the office market tightening and rental rates rising and decided to start looking now. "We did this deal a couple of years early, and part of that was to take advantage of this window of opportunity," Kolsky tells GlobeSt.com. "We predicted the market to be going up, so earlier was better to take advantage of the current market conditions before they changed. We saw this window in Century City. Now that we have done this, this opportunity is gone." We have seen the same trend in Downtown Los Angeles, where office tenants are looking years early to lock in lower rents.

While the Century City submarket performs much better that other business district markets, like Downtown Los Angeles, it still had several large blocks of space available. Kolsky specifically notes Watt Plaza and the SunAmerica buildings in Century City has having large blocks of available space that were recently leased. "After the recession, a lot of the law firms and financial services firms were hunkering down and reducing their space when their leases came up," says Kolsky. "So, it was really the perfect time and we had the perfect window. Now, the majority of the space is gone after our lease."