Nestle Renews, Downsizes $138M Lease

GLENDALE, CA-Nestle USA has renewed, extended and downsized its commitment to space at Wells REIT’s 505,000-sf office tower at 800 N. Brand, where Nestle’s lease was valued at approximately $138 million when Wells acquired the office tower in 2002. The Swiss food company’s US headquarters will remain the largest tenant in the 21-story office tower, where it once occupied nearly all of the building, but will vacate two floors totaling about 45,000 sf under terms of the new lease.

The new deal renews Nestle’s commitment by five years to 2015 on approximately 300,000 sf, with options for the balance of its space in the building. Wells REIT says that Nestle plans to vacate two floors, including the top floor, and that those floors will be marketed to prospective new tenants.

Nestle’s previous lease was a 20-year deal that began in 1990, according to public documents that Wells REIT filed when it acquired the office building. Terms of the new lease were not disclosed, but the 800 N. Brand building has traditionally commanded some of the highest rents in Glendale as what many consider the highest quality office building in the market. Recent market reports peg the average asking rates for Glendale at approximately $2.48 per sf per month.

Nestle was represented in the lease by R. Todd Doney of the Downtown Los Angeles office of CB Richard Ellis, with Wells represented internally by asset management VP Scott Brown and by Patrick Church of the Tri-Cities office of CBRE. Wells says that the new agreement staggers Nestle’s lease extension, committing some floors to 2010 and others to 2015.

The Wells public filing when it bought the 800 N. Brand building said that Nestle at the time occupied a total of 502,994 sf, or 99.6% of the building in a lease that ran until August 2010. Since then, Nestle has sublet two floors of space to tenants including Children’s Hospital and a mortgage company.