Huge Lease Deal Signed in Downtown Los Angeles.

A lease deal finalized last week could be the biggest for a new downtown tenant downtown in the last five years. And the tenant -- as followers of downtown real estate might have guessed -- is a telecommunications provider.

MCI/WorldCom inked a 10.5-year, $31 million lease deal at 800 S. Hope St. for 118,000 additional square feet. Since MCI started with 16,000 square feet last April, it has been steadily expanding and now will occupy a total of 205,000 square feet.

As with most telecom deals, the space is more for equipment than warm bodies. The 240,000-square-foot building houses MCI's international switch, which is a portal to its new Transpacific fiber-optic cable. When fully operational, about 60 employees, mostly technicians and engineers, will work there.

"If you make a call to Indonesia through MCI, you go through 800 S. Hope," said Robert Beguelin, a member of the building's ownership group.

The 13-year-old building originally served as the corporate headquarters for Bullocks, but stood vacant for several years after the department store chain's acquisition by Federated Department Stores. Investment banking firm Donaldson Lufkin & Jenrette sold it last spring for $12 million.

Despite the rapid leasing success, telecom wasn't part of the original plans for the property. "We bought it originally with the concept we could make it work for back-office space. We anticipated downtown turning around," Beguelin said.

Then he started doing research into the telecom industry, which has been gobbling up space downtown for high-capacity networks. Besides MCI, two other telecom companies are also housed at 800 S. Hope: TELx and Prism.

To satisfy the industry's requirements, various upgrades have been installed, including backup power generators, a whopping 24,000 amps of electricity and additional riser space.

Ronda Sigrist and Wade Clark of the Seeley Co. represented MCI.

Hot firm

Insignia/ESG has done it again, luring more top brokers from a competing firm.

Last week, three longtime brokers from CR Richard Ellis -- Rick Buckley, Chris Houge and Hunt Barnett -- moved to Insignia, where they will lead brokerage efforts on the Westside.

"We pursued them to fill in an important piece for us for some number of months," said Stephen Bay, himself a high-profile recruit last year from Julien J. Studley.

Robert Shibuya, executive managing director of Insignia's West division, said the hires are part of Insignia's ongoing goal in L.A. to become "the dominant full-service brokerage." While historically strong in property management, it has not had the same presence on the brokerage side, in tenant and landlord representation and investment sales.

In the past year, several top producers from other companies have come on board, lured by six- and seven-figure signing bonuses.

The CB brokers had been with that firm all their careers and have collectively brokered 20 million square feet of sales and lease transactions.

Big Hollywood deal

Hollywood real estate has caught the attention of a major Wall Street real estate fund.

Archon Group last week purchased the 21-story Sunset Media Tower at 6255 Sunset Blvd. for about $42 million from Kennedy-Wilson Inc., sources said.

Kennedy-Wilson acquired the 300,000-square-foot, class-A office building about a year ago for $30 million, banking on an upswing in the Tinseltown office market.

At the time, the building was 58 percent occupied. Bob Safai and Mitchell Stokes at brokerage Madison Partners increased occupancy to 90 percent. Tenants include House of Blues and A.C. Nielsen.

Safai, and Kennedy-Wilson's Mary Ricks, began marketing the Sunset property last summer. At the time, it was part of a 700,000-square-foot portfolio of properties in Hollywood, the Miracle Mile and Van Nuys. But the strategy was revised to sell the properties individually.

Archon made the purchase on behalf of the Whitehall Street real estate investment fund. Archon is a subsidiary of Goldman Sachs that manages a $6 billion portion of that fund, which goes after undervalued assets that can be renovated and later sold for a gain.

That's the strategy of Kennedy-Wilson, which is now moving on to other markets, particularly Japan.

RREEF strikes again

The RRREF Funds have added yet again to an ever-growing L.A.-area industrial portfolio, with $20 million of recent acquisitions in Cerritos and Montebello.

AEW Capital Management sold two fully leased industrial parks. In Cerritos, the Carmenita Business Park encompasses more than 171,000 square feet in 13 buildings. The Montebello Commerce Center consists of almost 243,000 square feet and counts Ford Motor Co. as the main tenant.

Earlier this year, RREEF purchased two industrial portfolios with properties in the San Fernando and San Gabriel valleys for almost $110 million.

Darla Longo, Barbara Emmons, John Privett and Steve Batcheller of CB Richard Ellis brokered the transactions.

News & notes

Continental Grand Plaza II in El Segundo has quietly signed up another tenant. Hughes Space and Communications signed a 10-year lease for 81,000 square feet at the brand new, 237,000-square-foot office building. Hughes plans to use the space for engineering and office uses. With earlier leases by Regus Business Centres and Sierra Systems, the project is now about 60 percent leased. CB's Grafton Tanquary, John Ayoob and Bill Bloodgood brokered the Hughes deal. ...

The Santa Monica Redevelopment Agency voted last week to move forward with buying 11.3 acres of property from Rand Corp. for $53 million. Rand will build a new headquarters on the property, while the city can proceed with plans for a mixed-use development.