New Lease Means Health Net Isn't Leaving Valley After All.

Following a yearlong search that threatened to remove one of the area's largest employers and taxpayers from Los Angeles, Health Net has settled on a new home in Warner Center.

The HMO has inked a build-to-suit deal for about 288,000 square feet of office space at LNR Warner Center, the former Prudential Insurance of America office complex now being redeveloped by Lennar Partners.

The deal, the first for Lennar's project (although unconfirmed reports suggest that Aetna Healthcare also may have signed on to the new development), keeps Health Net in an area that has garnered the nickname "HMO Row" because of the. concentration of health care companies located there. The deal also retains for the city of Los Angeles a prestigious employer with a workforce of about 2,000.

"The fact that they have turned away from other locations that have attempted to lure them says a great deal of the benefits and amenities of Warner Center," said Laura Chick, Los Angeles City Councilwoman for the Woodland Hills district. "We're in an era where, sadly, we've seen a lot of our corporate tenants leaving Los Angeles and here's an example of a very important one saying, 'I'm staying.'"

Health Net, which has been housed in about 300,000 square feet of space at the Warner enter Plaza I high-rise for the past 15 years, had considered moving to Burbank or the Conejo Valley before selecting the Lennar site. The HMO had explored leaving Los Angeles in part because, like the rest of/the health care industry based here, it pays millions more in annual business taxes than it would if located in cities like Burbank or Thousand Oaks. Once utility and business taxes are taken into account, HMOs in Los Angeles can pay up to $18 more per square foot for 250,000 square feet of offices than they would in those other cities, according to estimates by real estate consulting firm Kosmont & Associates.

But the move from the Warner Center high-rise to Lennar's 35-acre, low-rise office complex also allows Health Net to meet its needs with less square footage. Because of the large floor plates in campus-style buildings, "you can make much more efficient use. of space," said Lisa Kalustian, a spokeswoman for Health Net, who confirmed the company's deal with Lennar.

Health Net expects to move to its new offices in phases, beginning in the last quarter of 2001.

Lennar earlier this year broke ground on the first of about 10 buildings it plans to erect on the site. The two buildings in phase one are each planned to contain about 178,000 square feet of space. The Health Net deal will lock up about 80 percent of that space.

Chick believes the decision by Health Net to stay in Warner Center could pump up demand in the area, provided Warner Center can establish a competitive edge over neighboring communities to the west. "I'm hard at work to revisit the Warner Center specific plan and look at ways to further encourage commercial development to locate there," Chick said.

Others are not quite as certain that the Health Net decision will spearhead a renaissance of interest in the area. "It's just less space on the market, but I don't think it's a huge stamp of approval," said Tom Specker, a broker with Charles Dunn Co. Inc. who handles office space in the area. "Does it mean that more people will come here? Probably not."