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SANTA MONICA, CA-Blackstone Group affiliate Equity Office has launched a $25 million capital improvement program throughout its 11-million-sf portfolio in 63 buildings from Los Angeles to San Diego. The company says that its reinvestment efforts via the improvements are designed to attract and retain key tenants and also to keep its portfolio at the top of the commercial office market.

Frank Campbell, market managing director for Equity Office, notes that the upgrade efforts have already paid off in terms of leasing: “In San Diego, the renovations to 701 B St. helped close a couple of big deals, including a new 54,000-sf lease with Alliant Insurance and a large renewal of an international insurance company,” Campbell says.

Other capital improvements in the portfolio include interior renovations that are now complete at 6701 Center Dr. and 5670 Wilshire Blvd. in Los Angeles. Renovations are commencing at 233 Wilshire Blvd. in Santa Monica and Sorrento Towers at 5375 Mira Sorrento Place in San Diego, with both scheduled for completion in November.

In addition to specific interior renovations, Equity Office has spent $15.5 million throughout its Southern California portfolio. The work has included upgrading common areas and tenant space including lobby, corridors, and restrooms; improving building aesthetics and spec space build-out.

Campbell also commented on leasing activity at Equity Office, which signed 357,841 sf of new and renewal leases during the first two quarters of this year among entertainment, technology and service sector tenants. “With an overall vacancy rate of approximately 8%, it is clear that the fundamentals of the market on the Westside are still very solid,” Campbell observed. He says that entertainment and technology industries continue to be the driving force behind most of the leasing momentum throughout the Westside, in part because “these types of tenants are attracted to high-quality assets.”

According to Brendan McCracken, vice president of leasing for the Equity Office Southern California region, the company “was responsible for more than 20% of the leasing momentum” on the Westside during the first three months of 2008. The Westside, which measures about 50 million sf of office space, tallied almost 400,000 sf of leasing activity during those first three months of the year.

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