Sony joins trend toward funky office space: 'creatives' move to converted warehouses on Westside.

Sony joins trend toward funky office space

Sony Music Entertainment Inc., widely considered to be the most successful record company in the world, is in final negotiations to relocate its West Coast headquarters to the Arboretum, an as-yet-unbuilt office complex in Santa Monica, sources have told the Business Journal.

The pending deal would be a major victory for Brentwood-base Lowe Development Corp., which has been trying to launch its 1.04 million-square-foot Arboretum office/hotel project for more than a year.

More importantly, the Sony Music deal would be the latest and most prominent example of what is fast becoming a major exodus of creative-oriented businesses from L.A.'s corporate office hubs.

Sony Music, which until Jan. 1 was known as CBS Records, has maintained its West Coast headquarters in Century City for the past 15 years.

But sometime in the second half of 1992 Sony will likely join a parade of entertainment companies, advertising firms, graphic designers, architects and other creative-oriented businesses that are marching out of Century City, downtown L.A., Hollywood and other institutional office markets for "funky" warehouse space on the Westside.

That trend began about four years ago, when local advertising guru Jay Chiat moved his high-flying ad firm, Chiat/Day/ Mojo, out of the staid Biltmore Tower in downtown Los Angeles and into a wildly redecorated warehouse in Venice.

The trend toward funky office environments is now picking up steam, Westside brokers confirmed.

Creative tenants are fed up with "sterile" institutional settings - with their stark white walls, acoustical-tile ceilings, fluorescent lighting and sealed windows, pointed out Dan Powell, president of CityPacific Commercial Real Estate, a Westside brokerage.

Converted warehouses, on the other hand, provide 20-foot-high ceilings, windows that open, a flood of natural sunlight, expansive wooden support beams, natural brick and exposed mechanical/electrical systems, all of which make for an environment where - some would contend - creative minds can flourish.

To this, "cutting-edge" architects are adding an electric mix of new architectural touches that make each converted warehouse office space distinctive.

Sony Music is just one of several prominent creative tenants now negotiating for funky Westside space, brokers said. Among those current funk-seekers are New Line Cinema and celebrity chef Wolfgang Puck, but brokers refused to disclose any other names.

"There are several tenants out here looking who are in the same league as Sony, but I can't tell you who they are," said one prominent Westside broker.

Bob Zito, a Sony spokesman, confirmed only that Sony Music is indeed "looking at opportunities right now" for a new West Coast headquarters. "We haven't announced anything yet, and until we do, I have no comment," he said.

Lowe officials did not return phone calls last week.

Several industry sources, however, including Sal Viesca Jr., leasing agent for the Century City highrise where Sony Music has housed its West Coast operations since 1976, claim Sony Music will definitely relocate to the Arboretum in 1992.

Unlike most other creative tenants moving westward into converted facilities, however, Sony Music will move into a brand new "warehouse-type" building to be developed by Lowe on its Arboretum site.

Lowe has commissioned avante-garde Venice architect Steven Ehrlich to design the new Sony Music headquarters.

Ehrlich said last week that he has completed an architectural rendering of the proposed Sony Music building, but he refused to provide a copy of that rendering to the Business Journal until he gained clearance from Lowe.

Industry sources said the new Sony Music building will be as large as 90,000 square feet, roughly twice what the company now leases in Century City.

"Whatever they end up building for Sony will no doubt end up in Architectural Digest magazine," said Ian Strano, a Westside leasing agent for Julien J. Studley Inc.

Lowe originally designed its Arboretum project to contain only institutional corporate structures, along with a major hotel. But that design was recently reconfigured to include Sony Music's free-standing headquarters building, which will be sequestered away from the project's other buildings.

"They (Sony executives) don't want Michael Jackson walking through some corporate lobby where he's going to get mobbed by 20,000 fans; that's why they're moving out of Century City," explained Strano.

Late last month, Sony inked Jackson to what is reportedly the biggest contract ever awarded to an entertainer. The $1 billion deal gives Jackson his own record label, a role in developing video software and participation in several TV and movie productions.

But Jackson isn't the only superstar Sony Music wants to shield from public view. The company, which Japan-based Sony Corp. bought in 1988 for $2 billion, has a long list of music legends, including Bruce Springsteen and Billy Joel.

Sony originally planned to move its music unit into the 50-year-old complex of warehouses directly across the street from Lowe's Arboretum site. That arrangement would have entailed Lowe purchasing the warehouse complex, called Bow-Truss Studios, from its current owners and converting it into funky office space for Sony Music.

But Lowe could not find a lender willing to finance that acquisition, said Strano, who represents the Bow-Truss Studios' owners. Instead, Lowe offered to build Sony Music a funky new headquarters building from scratch, and Sony executives agreed.

Incidentally, the Bow-Truss Studios, which contains 66,000 square feet of warehouse space on 90,000 square feet of land, remains for sale. The asking price is $9.5 million, with conversion costs totaling another $10 million or so, Strano said.

Meanwhile, Sony Music's pending commitment at the 13-acre Arboretum project is a coup for Lowe.

The Arboretum has faced fierce competition in attracting major office tenants since marketing efforts were launched more than a year ago.

The Water Garden, a 1.26 million-square-foot office project, is going up directly across the street. And Colorado Place, a 1.07 million-square-foot office/ retail project, is nearing completion on a site kitty-corner to Lowe's Arboretum site.

Snaring Sony Music as an anchor tenant, however, could suddenly transform the Arboretum from a dark horse into the neighborhood's Cinderella, despite the fact it hasn't yet broken ground.

"Having a tenant like Sony is like having an American Express Gold Card," Strano explained. "You just can't get a more prestigious tenant, and other tenants want to be associated with a name like that."

PHOTO : Some unconventional alternatives: Centinela Studios in Culver City, right, and Bow-Truss Studios in Santa Monica