DreamWorks move might haunt advertising agency.

TBWA Chiat/Day Inc., L.A.'s biggest ad agency, used to inhabit one of the most famous buildings in the advertising industry that famous binocular-shaped edifice in Venice, located in a bustling seaside neighborhood of sidewalk cafes, hip boutiques and fine restaurants.

Today, Chiat/Day's home is a converted warehouse in a nondescript industrial district of Playa del Rey, several blocks from the ocean, where about the only lunch place within walking distance is the Food Mart at a corner Shell station.

On its face, it doesn't seem like much of a trade. But the warehouse district north of Jefferson Boulevard where Chiat/Day moved last fall had one major thing going for it: It was just blocks from the sprawling Playa Vista development where DreamWorks SKG was planning to build a new studio. That meant it would soon be on the spokes of what was expected to be a major hub for entertainment, marketing, new-media and other creative businesses.

Then DreamWorks decided to pull the plug on Playa Vista. And while TBWA Chiat/Day officials insist they're still quite happy with the new location, real estate brokers say that the agency may be one of the biggest victims of DreamWorks' change of heart.

"I think Chiat/Day moved in anticipation of being ahead of the game, just like they were 10 years ago when they moved to Marina del Rey," said Ian Strano, senior vice president with First Property Realty Corp., who handles deals in the Marina/Culver City area. "Now there's no reason to be there. That area is totally no man's land."

Chiat/Day wasn't the only company lured to Playa del Rey at least in part by the promise of the Playa Vista development, but it was certainly the biggest. After outgrowing its space at the famous Binoculars Building on Main Street, the agency bought a 120,000-square-foot warehouse on Grosvenor Boulevard and instituted a massive overhaul. Agency officials won't reveal the cost of the renovation, but real estate brokers say it costs around $30 a square foot for a low-end warehouse conversion, and TBWA Chiat/Day's build-out was definitely on the high end.

Whether the move will ever pay off from a real estate standpoint is very much in doubt. Strano says the area is unlikely to have anywhere near the kind of draw for other creative businesses that it would have had with DreamWorks in the mix.

That's seconded by other real estate brokers in the area.

"There's no logical reason for (Chiat/Day's) move except for anticipation of some activity across the street," said John Wilkinson, a broker with Westmac Commercial. "The loss of DreamWorks impacts the visibility of the project."

Officials with TBWA Chiat/Day say they knew going in that there was a chance DreamWorks would pull out; the project, after all, has been on rocky footing almost from the beginning. They still believe the area will convert from industrial uses to creative office space even without DreamWorks, and cite the location of such companies as special-effects firm Rhythm & Hues nearby as evidence.

"I think the Playa Vista project, and the whole idea of development in the area, was of interest (when we decided to move here). But whether it was going to be centered on DreamWorks or not was not a critical factor in the decision," said Neal Grossman, chief financial officer at the ad agency.

The neighborhood that TBWA Chiat/Day now calls home is a fairly typical post-war industrial complex, built on a grid of streets and cul de sacs lined mainly with old-style, unattractive warehouses. Larger businesses in the area include the headquarters for BMW North America Inc. and Mercury Air Group.

But there are a number of smaller entertainment, technology and marketing films mixed throughout the complex - some of which moved or bought property there within the past few years in anticipation of Playa Vista.

One such was Doug Apatow Agency Inc., a talent agency for behind-the-camera personnel. Principals Doug and Andrea Apatow bought a crumbling, 5,000-square-foot office building on Jefferson about two years ago and did a major remodel, later selling a majority of the property to real estate developer Allan Gardner, who is leasing the top floor of the two-story building back to the Apatows.

The bottom floor remains vacant, however. Gardner says he's been unable to find the kind of tenants he wants; social services agencies have expressed some interest in the property, but he's looking for some kind of professional organization like an entertainment or law firm.

Gardner confesses to some disappointment that DreamWorks won't locate in Playa Vista, but like officials with TBWA Chiat/Day, he believes the neighborhood will improve even without the movie studio.

"I am optimistic about what will be our neighbor across the street, whether it's DreamWorks or not," Gardner said. "The area may still happen in terms of entertainment."

Grossman says the agency picked Playa del Rey because it's close to employees' homes, as well as the ocean and Los Angeles International Airport. As for its lack of amenities, Grossman says that was the case with Venice when the agency moved there, too.

"We kind of have a history of moving to locations before they really become popular and grow," Grossman said. "The only thing in Venice when the agency first moved there was the Rose Cafe - everything was kind of built around us."

But real estate brokers like Strano are considerably less optimistic about Playa del Rey's future without DreamWorks - and the ability of companies like TBWA Chiat/Day to spearhead a redevelopment drive, the way the agency did a decade ago on Main Street.

"Creative tenants move in packs," Strano said. "DreamWorks was a big robber stamp of approval on the marketplace saying, 'Credibility.' While Chiat/Day is a solid name, it's only one name. It's not a name that's strong enough to bring a conveyor belt of activity to that area."