Business Facilities -November 2008

COVER STORY zon at Playa Vista, has been marketed as a 15-acre “creative-style office campus” offering 950,000 square feet of class A office space. FIM had its eye on the first phase, two five-story buildings on Bluff Creek Drive totaling 460,000 square feet—for an average floorplate of 46,000 square feet—that was scheduled for completion by the end of this year. The office designed by noted tower design firm Johnson Fain Partners will offer 9 foot, 6 inch ceilings and full-height windows, and is near a stop for a planned e-tram system. The Horizon buildings offer views of pedestrian paths, recreation areas and, to the south, the Westchester Bluffs. As it became clear that the location could be made to work, it was time to make the economics work, too. That’s where the open-book approach came in. By the time Horizon at Playa Vista came up on Studley’s radar, development was well under way, ruling out a build-to-suit structure that could be configured exactly to FIM’s requirements. However, with the once-booming economy weakening, the brokers were able to entice Lincoln Properties and its leasing agent Cushman & Wakefield into the open-book structure, allowing Lincoln to make a markup on the documented costs of construction. Then Studley insisted on a cap on the construction costs, too. Though that would put a definite crimp in Lincoln Properties’ return, the developer would benefit from having FIM aboard at a time when the economy was weakening and there were ample grounds for concern that landing a major tenant would get increasingly difficult. Knowing Studley was keeping the door open to other alternatives, Lincoln and its leasing agent had to give 18 NOVEMBER 2008 Kelly Givens, Managing Director Studley Project Management Services serious consideration to Studley’s demands. Still, the negotiation easily could have gone off the tracks at many points. One spur to both sides’ putting their positions frankly on the table with a minimum of grandstanding was the identity of the negotiator on the other side of the table from the Studley team: Cushman & Wakefield executive director Steve Walbridge, a 20-year Studley veteran who had moved to Lincoln Properties in 2001 and, three years later, to Lincoln’s agent Cushman. The former colleagues knew one another’s negotiating styles all too well. With Walbridge involved, there was a strong impetus “to get right to the point,” as Capuciati put it. Among members of the Studley team, Kelly Givens played a vital role, thanks to his diversified experience on the architecture and construction side, in converting the Lincoln deal from spec to open-book. As the partners worked together, Givens and his colleagues layered on several key requirements to Lincoln’s spec plan: more air conditioning capacity, additional power for the data center, upgrades of a pair of outdoor roof decks, a fitness center to be delivered within a year of occupancy, cafeteria doors that would open to the building courtyard. Because one user group within MySpace needed far more than the 46,000 square feet available on a single floor but wanted everyone in contiguous space, the developer was asked to build a bridge connecting the third floors of the two buildings, offering a more than 90,000-square-foot contiguous area on a single floor. “The building had been designed for broad-market speculative use, but we married it to our specific needs,” Givens said. “When they dug in their heels, David pushed them some more,” he said, referring to Gordon. Some of the changes benefited the developer. A more staidly corporate-looking granite lobby was swapped out for a less expensive industrial look better suited to an edgy company like FIM, at a savings to the developer. Finishes on the elevator cabs and other items also could be swapped out for less expensive options that were better-suited to FIM’s corporate personality. Though there is no question that Studley executives used the changing economic climate to drive an unusually hard bargain—capital costs already are believed to have exceeded the cap by well over $10 million— Lincoln Property was able to land a jewel of a client that should do much to ease the marketability of the rest of the Horizon project. On the day he bought the Horizon property, Binswanger recalled, a reporter from The Los Angeles Times asked him whom he had in mind when he talked of creatively oriented lessees. “Tenants like Fox,” was Binswanger’s response. Two-and-a-half years later, he noted with satisfaction, that’s exactly how it played out. PHOTO CREDIT: STUDELY, INC.

Table of Contents Feed for the Digital Edition of Business Facilities -November 2008

Business Facilities -November 2008 Contents First Word Sanpshots Corporate Moves: Utah Kodak Develops a Megasite in Upstate New York Anatomy of a Deal: Studley Finds a New Space for Myspace Metro Spotlight: Johnson City, TN A Renaissance of Growth in Medical Plastics The Lone Star State Flexes Its Muscles Asia: A Portrait of Growth Sky's the Limit for High-tech in Arizona Corporate Moves: Pennsylvania Ohio Leads the Way Alabama's Tide Rolls to the Future IEDC 2008 Award Winners Advertiser Index Introducing Navigator Livexchange

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