Uncertain Labor Market Casts Pall Over Office Leasing.

IMPENDING entertainment industry strikes, by screenwriters and actors cast a shadow over the Hollywood office market during the fourth quarter, as entertainment companies were sheepish in signing new leases until the matters are resolved.

"It is a delicate and cautious time for a lot of these companies. They are hesitant to make long-term commitments until they realize how this strike will affect their businesses," said John Tronson, a principal at Ramsey-Shilling. "The demand won't go away, but it will be herd in limbo."

Fourth-quarter leasing activity in Hollywood was dominated by smaller deals, with construction of the major projects -- TrizecHahn Corp.'s Hollywood & Highland and the Pacific Cinerama Dome project -- both progressing nicely.

The CIM Group and Gilmore Associates both preleased restaurant space in the ground floors of major projects currently under construction.

The long-vacant former headquarters of Petersen Publishing was purchased and immediately put under renovation. Asset Management Consultants paid $4.5 million for the vacant 75,000-square-foot building at 6725 Sunset Blvd.

Several other office buildings were purchased during the fourth quarter and will be renovated.

AIDS Project Los Angeles finalized an $11 million deal to sell its headquarters building. The new owner, Accord Interests LLC, plans to more than double the size of the structure as part of its efforts to transform the nonprofit building into a moneymaking asset.

Players in the local commercial real estate game expect the real action to come later this year, once several office projects are complete and Hollywood has finished grappling with the expected strike by actors and writers.

In the fourth quarter, the class-A office vacancy rate in Hollywood grew slightly from 15.3 percent in the third quarter to 15.9 percent in the fourth, said Paul Stockwell of Julien J. Studley Inc. However, the vacancy rate dropped in the class-B and C buildings from 13.1 percent to 11.6 percent, Stockwell said.

"There's still a lot of activity, but not a lot of good class-A buildings yet," Stockwell said. "It is positioned to explode this year."

The fourth quarter was marked by the arrival of several new businesses.

San Francisco-based Amoeba Records, the nation's largest seller of used albums and cassettes, bought a new 45,000-square-foot building at 6400 Sunset Blvd., at Cahuenga Boulevard. Originally intended for Freestyle Camera, Amoeba bought it for $10 million.

David Judaken, owner of the Garden of Eden nightclub, signed a 10-year lease for a 3,000-square-foot, ground-floor sushi restaurant dubbed "O." The value of the lease is $1.2 million. The new restaurant is part of a CIM Group construction project under way at the corner of Cherokee Avenue and Hollywood Boulevard. The project includes 28,000 square feet of retail/restaurant space and will include a six-screen Laemmle Theaters multiplex on the second floor. The project is slated to be completed this spring.

CIM Group also leased two floors of its office building at 6922 Hollywood Blvd. to Creative Domain, an advertising and communications company. That deal involved Creative Domain taking 28,000 square feet. The building is the longtime home of the Bank of Hollywood, which occupies the ground floor. The building was named the TV Guide Hollywood Center last year after TV Guide leased 40,000 square feet on three floors.

Gilmore Associates has preleased the ground floor of its office building at 6253 Hollywood Blvd. to Richard Heyman Entertainment Venue Development. Heyman plans to open a restaurant called the Hollywood/Vine Diner and a nightclub called Ultra Lounge, both in that building. Gilmore Associates is currently doing a complete rehabilitation of the 12-floor, 120,000-square-foot building, which has been known as the Hollywood Equitable Building. It expects to finish that overhaul by this spring.

As for the sale of the AIDS Project Los Angeles headquarters building, new owner Accord Interests LLC plans to spend $30 million to add 180,000 square feet to the 120,000-square-foot building.

Tronson said there is great interest in the building from large entertainment industry tenants, possibly attracted by a previous job in which Accord Interests turned a group of beat-up warehouse buildings in Burbank into a new headquarters building for Nickelodeon.

The Hollywood building was previously owned by ABC Studios and was used as a broadcast studio facility. It includes eight studio spaces, six of which could be used for production purposes, Tronson said.

The renovation is expected to start soon. APLA officials are still in the process of moving employees to four new APLA facilities. The nonprofit decided to sell the building because it did not need so much space, Tronson said.

Elsewhere in Hollywood, Propaganda Films leased a 30,000-square-foot, 1950s' style building at 1741 Ivar Ave. in a 10-year deal valued at $8 million. Propaganda's former home at 940 Mansfield Ave. was leased earlier in 2000 to Fusient Media, which just bought the broadcast rights to World Wrestling Federation events.

Hollywood

Major Events:

* AIDS Project Los Angeles headquarters building was sold for $11 million to Accord Interests LLC.

* Sunset-Las Palmas LLC bought the former Petersen Publishing headquarters building for $4 million.

* San Francisco-based Amoeba Records bought a new 45,000-square-foot building at 6400 Sunset Blvd., at Cahuenga Boulevard.

* CIM Group leased two floors of its office building at 6922 Hollywood Blvd. to Creative Domain, an advertising and communications company.