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SAN FRANCISCO-Babcock & Brown has signed a long-term lease for 155,000 sf at the Presidio’s Letterman Digital Arts Center. Located a 2 Harrison St. on the San Francisco waterfront for the past 16 years, the Australia-based investment and advisory firm will relocate to One Letterman Dr. in the first quarter of 2008.

One Letterman Dr. is a 23-acre campus that includes 843,000 sf in four five-story office buildings surrounded by a 17-acre park. Letterman Digital Arts Ltd., a George Lucas company, officially completed the $350-million development in June 2005 and, along with affiliates Industrial Light & Magic and LucasArts, occupies three of the four buildings. The fourth building, Building D, has remained in shell condition since its completion.

Babcock & Brown’s 12-year lease for the top four floors of the five-story, 170,000-sf building takes the Lucasfilm’s development to 100% occupancy. Jones Lang LaSalle managing director Chris Roeder has the leasing assignment on behalf of owner Letterman Digital Arts Ltd. Aaron Wright, Steve Barker and Michael McCandless with the San Francisco office of Studley represented Babcock & Brown.

Last August, Lucasfilm’s Marlene Saritzky told GlobeSt.com that while having Building D sit empty for nearly two years was not part of the plan, “it’s a very special space and it’s more important that we find the right tenant.” Saritzky did not reveal the asking rate for the building, but local sources told GlobeSt.com last summer that the full-service asking rate for the building was right around $40 per sf. The asking rate is said to have risen from there as the market continued to improve over the past nine months, and an above-standard build-out for a well-heeled firm such as Babcock & Brown would push the rate even higher.

The Presidio was transferred to the National Park Service and made part of the Golden Gate National Recreation Area in 1994. In so doing, Congress mandated a funding model for the Presidio that requires it achieve economic self-sufficiency by 2013 or face being liquidated. The Presidio Trust was established and charged with making that happen.

As part of the self-sufficiency effort, the Trust selected the 23-acre site of the vacated Letterman Army Medical Center to be redeveloped and leased. Following a design competition in 1997, a team led by Lucasfilm Ltd. was selected to replace the hospital with the Letterman Digital Arts Center.

“We have achieved our goal of being 100% leased at the campus, and I know everyone feels Babcock & Brown is going to fit in very well at Letterman Digital Arts Center,” says Roeder, who landed the leasing assignment last summer while he was still with Cushman & Wakefield.

Babcock & Brown was founded in 1977 and is listed on the Australian Stock Exchange. The move is an expansion for the firm, which currently leases 70,000 sf at 2 Harrison St. Jim Babcock, the firm’s co-founder and executive chairman, says the lease “allows us to continue to house our San Francisco operations under one roof while accommodating future growth initiatives.”

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