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NBCUniversal has agreed to renew its lease at 10 Universal City Plaza for 10 years in a deal valued at about $170 million, according to several real estate sources with knowledge of the Universal City transaction.
The deal, which has not yet closed, is for roughly 370,000 square feet with landlord Normandy Real Estate Partners of Morristown, N.J. It is believed to be the largest office lease in the Los Angeles area since Fox Interactive signed a $350 million deal in 2008 for space in a Playa Vista office development.
Several units and divisions of NBCUniversal maintain offices at the 36-story, 774,240-square-foot granite and glass tower, including SyFy, NBCUniversal Television Distribution and Universal Studios Home Entertainment. Other tenants in the Class A building, which is across from Universal Studios Hollywood, include Panasonic and Universal Music Group, the building’s largest tenant.
The transaction is believed to be the most significant real estate deal made by management since Comcast completed its purchase of a majority share of New York-based NBCUniversal from General Electric in January.
NBCUniversal declined to comment.
The company’s new lease starts at roughly $3.35 per square foot per month and contains annual escalations, according to sources. Typically, such leases escalate by 3% annually. It is a full service gross lease — a type of deal that involves the landlord paying for taxes, maintenance, insurance and utilities.
The lease starts at a slightly higher rental rate than typical deals for high-end space in the area. One source said that leases for Class A space in the nearby Burbank Media District are being inked in the range of $3 to $3.25 per square foot per month. According to data from real estate services firm Grubb & Ellis Co., the average asking rent for Class A space in Burbank during the second quarter was $3.30 per square foot per month.
Bill Boyd, a veteran commercial real estate broker who specializes in the Burbank and Glendale markets, said that Normandy Real Estate had the ability to ask for a higher rental rate because NBCUniversal would have few options nearby if it were to move.
“There’s certainly nowhere nearby with the quality or location of their existing space, which always commands a premium in the marketplace,” said Boyd, a senior managing director at commercial real estate brokerage Charles Dunn Co. He is not involved in the transaction.
Sources said that as part of the deal, NBCUniversal will be given a roughly $17 million allowance from the landlord to make improvements to its offices. NBCUniversal will also give back to Normandy Real Estate about 30,000 square feet of space it currently leases.
The building was once owned by former Universal Studios parent Vivendi, which sold the property in 2003 to investment management firm Beacon Capital Partners of Boston and CarrAmerica Realty Corp. of Washington. Normandy Real Estate acquired the tower in 2008.
NBCUniversal is being represented by commercial real estate services firm Jones Lang LaSalle, which could not be reached for comment; Normandy Real Estate is represented by CB Richard Ellis Group, which declined to comment. Normandy Real Estate did not respond to e-mails seeking comment.
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