SBC Deal Ends Talk of Condos in Tower

SBC Communications Inc. has agreed to move its downtown Los Angeles office to a smaller space in Transamerica Center, ending speculation that the landmark high-rise might be converted to condominiums.

The telecommunications company will take 215,000 square feet on 12 floors in the tower at 12th and Olive streets, said Dave Nichols, senior vice president. About 800 employees, most of them service representatives, will arrive in July 2005 when the company’s lease for 250,000 square feet at 1010 Wilshire Blvd. expires.

As part of the 10-year, $50-million lease agreement, the building will be renamed SBC Tower.

The deal makes the 32-story building about 95% leased, said Bobby Turner, managing partner of Canyon-Johnson Urban Fund, which owns the building with New Pacific Realty Corp.

“This is a marquee deal for us and puts to rest any option of turning the building condo,” Turner said. The building’s size, location and floor plans made it a candidate for conversion.

Canyon-Johnson Urban Fund, whose officers include former Los Angeles Laker basketball star Earvin “Magic” Johnson, is committed to bringing housing to the South Park area of downtown, Turner said.

Two Portland, Ore., builders, Williams & Dame Development Inc. and Gerding/Edlen Development Co., are in escrow to buy a parcel adjacent to Transamerica Center from the center’s owners.

The developers already have purchased a nearby parcel from another owner and hope to build about 690 loft-style condominiums at 11th Street and Grand Avenue, said Tom Cody, a principal at Gerding/Edlen.

That block east of Staples Center has been coveted in recent years by sports operators as part of a potential site for a football or baseball stadium. The condo development will probably preclude such a use, Turner said.

When Canyon-Johnson and New Pacific bought Transamerica Center last year, the deal included three office buildings and 5.5 acres of adjacent land zoned for both housing and commercial uses. One of the office buildings faces Hill Street and is 95% leased. The other building faces Broadway and has been offered for sale to the city for $35 million.

The arrival of SBC, first reported in the Los Angeles Business Journal, will boost the recovery of South Park, said David Margulies, chief executive of New Pacific. “For a vital downtown, we need both residential and business commitments,” he said.