Downtown Law Firms drawn to favorable lease market.

LEASES at a number of downtown law firms are coming up for renewal over the next several years, and they're using the competitive timing to their advantage by renegotiating and signing new deals.

After restructuring its lease, Musick Peeler & Garrett LLP inked a 14-year renewal for its 106,475 square feet at Carlyle Group's One Wilshire Building, according to Eric Duncanson, first vice president of CB Richard Ellis Inc., who along with CB Executive Vice President Stephen Bay represented the firm in the $36 million lease. The base lease was set to expire next year.

"They saved a lot of money," Duncanson said. "They were able to lower their rent between now and the end of the current lease, otherwise we wouldn't have extended." Bruce Asper and John Zanetos, both CB vice presidents, represented Carlyle.

Buchalter Nemer Fields & Younger also took advantage of the market, deciding to pick up stakes at 601 S. Figueroa St. and sign for nearly 70,000 square feet at the 1000 Wilshire building. The 10-year lease at the Sumitomo Life Realty Inc.-owned building is worth about $20 million, according to a source familiar the deal.

Anthony Gatti and David Yamamoto of Cushman & Wakefield represented Buchalter and Howard B. Feuerstein, senior vice president and managing director of Travers Realty Corp., represented Carlyle. None of the brokers returned calls.

Solid Ground

Southern California's persistent housing shortage has local homebuilders shrugging off news that new home sales nationwide tumbled last month, dragged down by rising mortgage rates.

The Commerce Department reported last week that a seasonally adjusted 1.1 million new units were sold in April, an 11.8 percent drop from the month earlier and the largest month-over-month decline in more than a decade.

Robert Rivinius, chief executive of the California Building Industry Association, said rising interest rates will have some impact on new home sales, but that California will not be as strongly affected as other states. He said builders in California were on pace to deliver 200,000 units this year, the most since 1989.

"We don't get too concerned with a one month report," said Jeffrey Mezger, chief operating officer of Los Angeles-based KB Home. "You can drive yourself nuts with monthly trends."

Mezger said KB Home, one of the largest homebuilders in the U.S., has not seen any decline in demand and that the sales pace has been as strong as it was at the first of the year.

KB Home's revenues from home sales in the three months ended Feb. 29 increased by 25.5 percent, to $1.33 billion. The rise was attributed to both an upturn in the number of units sold and a 6.6 percent hike in the average selling price.

Mezger also pointed out that new home sales in April were still 6 percent higher than the year-earlier period.

Grand Narrowed

There's still a chance that the losing candidates for the high-profile $1.2 billion, 3 million-square-foot Grand Avenue project could be reconsidered.

In a recent unanimous vote, the committee recommended continuing negotiations with teams led by Forrest City Development, which includes architectural firm AC Martin Partners; and Related Cos., which includes architect Thorn Mayne's Morphosis.

But developers J.H. Snyder Co. and Richard Weintraub, whose architect is Frank Gehry, could be back in the mix, however, if negotiations with either of the final two candidates fall through.

The committee reports to the Grand Avenue Joint Powers Authority, a group comprised of city and county officials. City Councilwoman Jan Perry, vice chairwoman of the authority, said she was waiting for the justifications behind the decision. "We're interested in getting a more formal presentation that explains the way the cuts were made," she said.

Martha Welborne, the committee's managing director, said the group would present its reasoning and finalize its choice by July. The committee is looking at each team's plans and ability to fund the development.

Pacific Pick Up

With apartment rents climbing and vacancy rates at record lows throughout Los Angeles County, Pacific Property Co. continues to add to its holdings.

The firm, based in Palo Alto, bought the 152-unit Tara Hill Apartment complex in Northridge for $19.4 million and the 40-unit Keystone Place Apartments in Palms for $6.1 million. The two properties, bought from unnamed individual owners, are scheduled to undergo extensive renovations.

Both are located near freeways, a high concentration of jobs and college campuses. "Those are the kinds of characteristics we look for," said Rory D. Gardner, Pacific's acquisitions director for the L.A. region.

The deals mark a return for Pacific, which since its $18 million acquisition of a 104-unit building in Sherman Oaks in 2003 has focused on other parts of the state.

Pacific has a reputation for holding assets a short amount of time, according to John Walsh, vice president at brokerage Marcus & Millichap. "They buy, renovate and then look to exit after increasing the rent structure," he said.

Staff reporter Andy Fixmer can be reached at [phone], ext. 263, or at [e-mail]. Staff reporter Karey Wutkowski contributed.