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LOS ANGELES-Real estate pros say the estimated $500-million lease that entertainment giant Metro-Goldwyn-Mayer Inc. signed late last week for 425,000 sf in a planned Century City high-rise may indicate that rents and sales prices on LA’s trendy Westside–already one of the West Coast’s priciest real estate markets–still have plenty of room to move higher.

“I think you’ll see a little plateau through January, until after the election, but then prices and rents will just start going up again,” Susan Goodman Byron, a VP in brokerage CRESA Partners’ West LA office, tells GlobeSt.com. “There are lots of factors that are putting upward pressure on [Westside] rents, but nothing that makes you think that rents might go lower.”

MGM VC Chris McGurk confirmed on Friday that the studio will take 17 floors at the planned office complex, which would stand on Constellation Boulevard and Century Park West. Chicago-based developer JMB Realty Corp. won approval to build a 34-story, 700,000-sf tower at the site more than two years ago, but has steadfastly refused to break ground until it could land a major tenant.

McGurk says the 15-year lease is for 425,000 sf. Though he wouldn’t disclose financial terms, one broker familiar with the deal tells GlobeSt.com that it’s worth nearly $500 million.

The lease appears to clear the way for JMB to finally break ground on the Century City tower, which would be in the heart of one of Southern California’s hottest leasing markets. Rents in the area have shot up at double-digit rates for each of the past several years.

“Even as long as two years ago, some brokers were saying that the Westside was going to cool down, and rents were about to flatten,” Goodman Byron says. “But rents have just kept going up, and I think they’ll continue to rise next year.”

Local brokers cite several factors behind the steady run-up in rents and values on the Westside, which includes such prestigious areas as West Los Angeles, Santa Monica, Brentwood and Beverly Hills. A shortage of buildable land has limited new construction, while record box-office and broadcasting revenue has prompted many of the area’s key entertainment tenants to expand.

The Westside market has also been fueled by hundreds of Internet-related tenants, many of which found themselves rolling in money after public offerings in 1997, ’98 and ’99. Their free-spending ways and fast-track growth pushed rents even higher and vacancies down to the low single digits.

Though demand from some dot-coms is starting to wane as the tech shakeout continues, Goodman Byron says the Westside market hasn’t skipped a beat. “For every dot-com that drops out of the market, there’s a law firm or financial-services provider or other tenant waiting to take its place,” she says. “There’s nothing that makes me think that will change in the foreseeable future.”

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