Planning paves the way as affluent Westside shows signs of commercial real estate resurgence.

It may be known as the shot heard from Westwood to the Water Garden. A signal. A sign that the turnaround in Los Angeles' Westside commercial real estate is arriving.

Citicorp is raising rents from $1.65 to $1.75 per square-foot at its five-story 136,000-square-foot office building at 1640 South Sepulveda Blvd., the first increase anywhere in Los Angeles in several years.

Falling prices and lower rents have brought a steady stream of businesses -- particularly the entertainment industry -- to the safer, newfound values in the historically more affluent Westside.

And with a paucity of available large office space, Citicorp's move follows its successful 6-month small-tenant leasing strategy developed by Prentiss Properties, producing an increase from 69% to 92% occupancy for the building near Santa Monica Boulevard.

There is evidence that other landlords in other submarkets are taking tougher stands against concessions.

After six long years of economic depression that has driven scores of lenders and landlords into bankruptcy, the meaning of Citicorp's 10-cent rent increase should be viewed in commercial real estate circles as a major event.

Not so fast, though, say veteran commercial real estate brokers. While not exactly downplaying the event, they characterize the Citicorp announcement as a sign that rents finally have halted their steady descent at least in Santa Monica and Beverly Hills. Stabilizing rents in other Westside submarkets are expected to follow by 1995.

Planners and architects, however, say business must organize locally, as was done in Santa Monica, creating leadership and submarket identities to build and sustain values. This is why experts say Santa Monica is the first submarket showing signs of recovery.

"Citicorp's decision definitely suggests rents in West Los Angeles are flattening out," says Pat Ayau, a principal broker with Lee & Associates Commercial Real Estate Services, which recently opened on Wilshire Boulevard and Bundy.

"We all knew we were getting close to the bottom. But until rents start up, no one knows exactly where the bottom is. This ends that speculation.

"But more importantly, it will trigger more leasing activity. Tenants will be forced to act with more urgency in negotiating lease agreements. Now there is risk in stalling decisions," Ayau said.

Ayau is among a corps of some 300 commercial real estate brokers who specialize in office, industrial, and retail real estate straddling the San Diego Freeway from Wilshire to Culver boulevards. The region includes Beverly Hills, Brentwood, Century City, Culver City, Marina Del Rey, Santa Monica, West Los Angeles, and Westwood.

The slide in real estate values -- with prices falling to half of their peak in the '80s -- has made the Westside more affordable, real estate analysts say. And for businesses that have staved off financial disaster during the moribund economy, this is their ticket to the more desirable Westside business environment, where urban designers see public safety as the key to the future.

Leading the Westside migration are companies in the insurance business and entertainment industry. New tenants in the entertainment business account for some half-million square-feet or about 2% of absorption in the past year, beginning with MGM's move to Santa Monica, taking 200,000 square-feet at Colorado Place, said John Bertram, a partner with Westmac Commercial Brokerage Company. Bookstores and food users lead the retail category.

"Beverly Hills and Santa Monica are the strongest Westside commercial submarkets where landlords are getting firmer on pricing," Bertram said.

Maple Drive, a 280,000-square-foot garden-style Class A building across from the Beverly Hills Tennis Club, is demanding from $2.35 to $2.65 a foot, Bertram says.

"The Triangle in Beverly Hills is experiencing a shortened supply, too," according to Bertram, who also notes the "highest quality buildings, such as 1999 Avenue of the Stars, Westwood Gateway II and Fox Plaza are 99% leased from $2.15 to $2.65 a foot on 5-year effective leases."

Another reason Santa Monica, Beverly Hills, and much of the Westside have become increasingly attractive is they have escaped much of the crime and deterioration besetting other sections of Los Angeles.

Ivan Axelrod, president and chief financial officer of Recreation World Inc., said sister company, Ice Chalet Inc., had been at Santa Monica Boulevard and Gower in Hollywood for 25 years. But Ice Chalet's work force jumped at the idea of consolidating from "not so nice" Hollywood to the Citicorp building on South Sepulveda, said Axelrod, who was represented by Ayau.

"Ice Chalet was so excited to get out of that area. The staff would eat lunch in the lounge rather than go out in that neighborhood. Even employees living as far away as Diamond Bar regard the longer drive to West Los Angeles as a perk. And it's made us more efficient," he said.

Marc Granier, executive vice president and chief financial officer of The Arthur Company, producers of "FBI, The Untold Stories," moved from Universal City last year after broker Jeff Resnick of First Property Realty Corporation found him suitable offices on Olympic Boulevard.

"It's cheaper here and it's also more convenient to the talent agencies we deal with on this side of the hill such as Creative Artists and ICM as well as the post-production houses. It's even more affordable than the Valley and safer than Hollywood," Graier said.

The move by entertainment companies is a continuing trend, says Resnick, who notes the area is nearer to where many executives reside. Although on the map the Westside is small, it is a region of varying submarkets and offerings.

Sony is expanding in Culver City and the once-tony Westwood Village is working to reposition itself as a mature high-end office, residential and cultural location, and away from the glut of T-shirt and yogurt shops with greatest appeal to teenage cruisers.

"We're attempting to change that somewhat," said Tom Carroll, executive director of the Westwood Village Management Corporation.

Carroll was the architect of Santa Monica's Bayside District Corporation and an influence in revitalization in what he calls the "People's Republic of Santa Monica." He is making a bid to repeat his winning formula in Westwood. Carroll began his career as a 30-year-old redevelopment whiz kid at the knee of Jay Rockefeller, bringing Charleston, West Virginia, a $100 million mall. Carroll is attempting to rally the approximately 1,200 merchants of Westwood, where commercial real estate values remain soft.

It's an effort that shows early signs of success, beginning with a weekly farmers' market, an event which draws from 3,000 to 4,000 people, a planned 400-car public parking garage and Circuit City's plans for a 25,000-square-foot store brought in by broker Steve Soboroff.

"We're going to go to the City Council in the fall with our business improvement district," Carroll said, characterizing the 2,000 business improvement districts nationwide as 21st-century chambers of commerce.

The effort, which would require business to pay 50% to 100% more in gross receipts taxes, is viewed by Carroll and others as a much-needed program to provide leadership and local control for maintenance and marketing.

Prominent Santa Monica-based architect Johannes Van Tilburg, whose firm designed Janss Court on the Third Street Promenade, said planners need to create safe venues in submarkets with their own identities.

"City Walk in Universal City was envisioned as a copy of the Third Street Promenade. The idea was to enable visitors to go from Universal City movie theaters to City Walk, a city environment, without having to go to what they may perceive as the dangerous City of Los Angeles," Van Tilburg said.

"I used to live in Beverly Glen Canyon and spent a lot of time in Westwood in the late '70s. It was a fantastic place. A real village. But it was all private property with no merchants' association. There was infighting. The market moved out. All the services moved out. It became a Friday, Saturday, and Sunday night teenager hangout. My wife and I wouldn't allow our daughter to go to Westwood. It got too tough.

"People have a real desire to be in a urban, safe environment. That's why City Walk is so successful," Van Tilburg said. "You need leadership."

Arthur Barrett is president of Barrett & Associates, a Santa Ana public relations agency specializing in commercial real estate.