Rising emerges as top contender to take helm of Catellus Development.

The local commercial real estate community had to get at least a mild shock from news that Nelson Rising, senior partner with local powerhouse developer Maguire Thomas Partners, is the leading candidate to become CEO of San Francisco-based Catellus Development Corp.

Rising was instrumental in the development of downtown L.A.'s "Library Square" project, which includes the First Interstate World Center and Gas Company Tower skyrises and the Central Library renovation.

He's also been the leading figure behind the highly public battle over development entitlements at the massive Playa Vista residential/commercial community planned for 1,000 Westside beachfront acres.

Rising is also this year's president of the Central City Association, downtown's primary booster organization.

The San Francisco Business Times reported June 24 that Rising is among three candidates Catellus board members are wooing to replace Vernon Schwartz, who reportedly was ousted at the behest of dissatisfied shareholders -- California Public Employees Retirement System, in particular.

Catellus holds thousands of acres of formerly railroad-held land and dozens of major developments -- including downtown L.A.'s big Union Station project.

As real estate hit hard times, the Santa Fe Pacific Corp. spin-off has seen its share price fall substantially along with property values and development opportunities.

Last Friday's Business Times notes that the board is now focusing on Rising, who hasn't publicly denied that he's interested in the position. The CEO job would likely include tempting financial incentives and nearly unlimited long-term real estate development potential.

But Rising would be giving up a lot to leave his current position -- and the city and Maguire Thomas would likewise suffer major blows. One has to wonder who would take the leading role at Playa Vista and at Rising-led deals reportedly in the works to bring a big new user to the historic downtown L.A. property that Times Mirror Corp. is expected to leave.

It looks like Allegiance Realty Group, comprised primarily of the former Tishman West Cos. commercial and Balcor Co. multi-family property management operations, is for sale. American Express Co., parent of Skokie, Ill.-based apartment syndicator/manager Balcor, has hired New York investment bankers Lazard Freres & Co. and James D. Wolfensohn Inc. to explore the potential sale of Allegiance, an AmEx spokeswoman confirmed.

Back in 1988, Balcor purchased a half-interest in the former Tishman West Management Corp. operation from its founding partners, led by then-Chairman/CEO Perry S. Herst Jr.

Herst and other senior Tishman West executives have left the firm since the Balcor brain trust exercised a "buy-sell" option in 1992 and acquired the balance of the firm.

Late last year, that brain trust combined the Tishman West and Balcor property management operations into Allegiance, which now manages 56,000 apartment units and 23 million square feet of commercial space across the U.S.

Last week, Allegiance moved from the longtime Tishman West offices in the former "Tishman" building along Westwood's skyline to the nearby Landmark I tower across the San Diego (405) Freeway near Brentwood. Allegiance manages and leases that building for TCW Realty Advisors, which advises the investment fund that owns the property.

AmEx spokeswoman Susan Miller noted that her company is following a course set years ago: winding down Balcor's real estate investment activity. Hence, the firm is "considering the outsourcing" of functions, i.e., property management, not directly related to ownership of the big portfolio of apartments affiliated with Balcor syndication activities.

Balcor reportedly paid at least $24 million for its initial half-interest in Tishman West and another $5 million when purchasing the balance in 1992. But real estate management sources said the firm's primary assets -- its property management contracts -- are worth but a fraction of that amount in today's ultra-competitive real estate services environment.

A buyer might find value in negotiating a long-term management contract for the apartment properties that will likely remain under Balcor's control, one industry veteran noted.

But AmEx and its subsidiaries -- Balcor, essentially -- control only 30 percent of Allegiance's commercial property portfolio, and "third-party" management contracts typically carry 30-day cancellation clauses. That makes the commercial management portfolio's value hard to peg today.

L.A.'s Westside submarkets saw two relatively small but nonetheless significant office relocation deals close recently.

The big Detroit-based law firm Honigman Miller Schwartz & Cohn is moving from McNeill Plaza over the hill in Sherman Oaks to a portion of the failed Capital Bank's former 22nd-floor offices at Century City's Watt Plaza north tower. Cushman & Wakefield's Anthony Gatti negotiated the 9,300-square-foot, five-year deal for the tenant, Briar Penton of Watt Management Co. for the landlord partnership.

And Chicago's Leo Burnett Co. Inc. advertising agency is moving its local offices all the way from 3801 Barham Blvd. in the Universal City district to Westwood's Murdock Plaza. Burnett, represented by Scott Ogilvie and Mike McRoskey of John Buck Co., took about 7,300 square feet for 10 years. C&W's Gatti and Mike DeSantis negotiated for owner Sumitomo Life Realty (New York) Inc.

Law firm subleases have been driving much of downtown L.A.'s office leasing activity in recent months, and another sizable one just closed.

Meserve Mumpher & Hughes subleased about 24,500 square feet on the 18th floor of the Arco Plaza's Bank of America Tower from Paul Hastings Janofsky & Walker through the year 2002. The subtenant is moving to the BofA tower, 555 S Flower St., from the former Security Pacific Plaza highrise just up Bunker Hill at 333 S. Hope St.

Lynn Williams and Pat Nally of Cushman Realty Corp. negotiated the deal for Paul Hastings. Two brokers previously with Cushman -- Don Hudson of CB Commercial Real Estate Group Inc. and Kelly Stevenson of Engineer Development Concepts -- represented the subtenant.

Updating a recent item, it should be noted that Marcus & Millichap's Carl Reinhart represented the trust that bought the former IDM Corp. headquarters building in Long Beach, sold by Great Western Bank through its Royce Co. subsidiary and Seeley Co.