Founder & Principal
Bob Safai is the President of Madison Partners. Founded by him in 1996, Madison Partners
was established as a platform to provide a complement of real estate services to his clients.
Madison Partners has participated in the sale/leasing of more than $20 billion, by assisting
investors in the acquisition and disposition of properties in addition to leasing or purchasing
property for tenants. After attending the University of Southern California, Bob went on to
attain his broker’s license and has been instrumental in the Southern California investment
sales arena for the past 24 years. While Bob’s best recommendations are his career sale
figures and superior references from his clients, Bob’s reputation is further enhanced by his
numerous sale honors. He has been awarded Top Sales Broker by Real Estate Forum,
Real Estate Southern California and by The CoStar Group and has consistently ranked
favorably in the Hot Brokers List published by Real Estate Southern California (since 2000).
In addition, Bob was recognized by Commercial Property News as one of the “Top 20 Most
Influential Brokers in the U.S.” Lists of Bob’s top transactions include the following:
21530-21800 Oxnard Street, Woodland Hills $335,000,000 Janss Marketplace Mall – Thousand Oaks $47,000,000
Maple Portfolio – Beverly Hills $330,000,000 10950 Washington Boulevard, Culver City $46,500,000
9536-9560 Wilshire & 131 Rodeo, Beverly Hills $151,000,000 2901 W. Alameda Avenue, Burbank………………………...$46,300,000
1901 Avenue of the Stars, Century City $150,000,000 9000 W. Sunset Boulevard, West Hollywood $45,000,000
MBS-1600 Rosecrans Avenue, Manhattan Beach $150,000,000 6310-6330 San Vicente Boulevard, Los Angeles $44,000,000
400 & 600 Corporate Pointe, Culver City $121,000,000 Scripps Corporate Center – San Diego $44,000,000
801 S. Figueroa Street, Los Angeles $105,000,000 11600-11620 Wilshire Boulevard, Brentwood $44,000,000
12121 Wilshire Boulevard, Brentwood $74,250,000 11620 Wilshire Boulevard, Brentwood $43,350,000
407 N. Maple Drive, Beverly Hills $70,700,000 120 S. Spalding Drive, Beverly Hills $41,850,000
ABB Building – Houston $69,800,000 6255 Sunset Boulevard, Hollywood $40,650,000
Farmers Market I, II & III – Sacramento $69,350,000 1000 & 1050 Lakes Drive, West Covina $40,180,000
CBS Studios – 6121 Sunset Boulevard, Hollywood $66,000,000 2901 W. Alameda Avenue, Burbank $39,400,000
Washington Mutual Portfolio III – Chatsworth $63,500,000 200 & 300 Corporate Pointe, Culver City $39,300,000
660 S. Figueroa Street, Los Angeles $62,400,000 9242 Beverly Boulevard, Beverly Hills $38,200,000
Cruzan Monroe Portfolio – San Diego County $61,800,000 Select Bankruptcy Sales
Trident Hughes Portfolio – Southern California $60,950,000 12121 Wilshire Boulevard $111,000,000
Warner Commerce Center – Woodland Hills $60,000,000 Granada Hills Community Hospital, Granada Hills $22,500,000
1000 & 1050 Lakes Drive, West Covina $58,000,000 Clarion Ventura Beach Resort, Ventura $21,700,000
Tribeca West – 12233 W. Olympic Boulevard, Los Angeles $57,500,000 Ynez Road Auto Mall Development Site, Temecula $19,500,000
120 S. Spalding Drive, Beverly Hills $55,000,000 808 Wilshire Boulevard, Santa Monica $16,000,000
12121 Wilshire Boulevard, Brentwood $54,400,000 Galway Downs, Temecula $10,200,000
6th & Alameda, Los Angeles $52,000,000 2335 Alaska & 2330 Utah, El Segundo $8,750,000
200, 300 & 301 Corporate Pointe, Culver City $51,250,000 Elastar Community Hospital, Los Angeles $8,725,000
9701 Wilshire Boulevard, Beverly Hills $51,000,000 Las Virgenes Development Site $7,000,000
7060 Hollywood Boulevard, Hollywood $50,000,000 10935-10943 W. Weyburn Avenue $5,300,000
15350 & 15400 Sherman Way, Van Nuys $49,500,000 Tehachapi Development Site $4,500,000
www .mad iso npa r tners.n e t
Partial List of Institutional References
Paul Brady Robert Murray
Managing Director Director
THE CARLYLE GROUP THE PRAEDIUM GROUP
11100 Santa Monica Boulevard 270 Lafayette Street
Los Angeles, CA 90025 New York, NY 10012-3327
(310) 575-1700 (212) 224-5600
Victor Coleman Richard Newman
HUDSON CAPITAL LOWE ENTERPRISES
11601 Wilshire Boulevard #1600 11777 San Vicente Boulevard #900
Los Angeles, CA 90025 Los Angeles, CA 90049
(310) 445-5700 (310) 571-4279
Ambrose Fisher James Street
Managing Director Vice President, Dispositions
OAKTREE CAPITAL MANAGEMENT PRUDENTIAL REAL ESTATE INVESTORS
333 S. Grand Avenue, 28th Floor Two Ravinia Drive #400
Los Angeles, CA 90071 Atlanta, GA 30346
(213) 830-6300 (770) 395-8614
Sam Hooker Steve White
Director of Acquisitions Executive Vice President
EMBARCADERO CAPITAL PARTNERS ANGELO GORDON
1301 Shoreway Road, Suite 250 2000 Avenue of the Stars, Suite 1020
Belmont, CA 94002 Los Angeles, CA 90067
(650) 373-1615 (310) 777-5440
Jordan Kaplan Kevin Zoryan
Principal Executive Director
DOUGLAS EMMETT REALTY MORGAN STANLEY
808 Wilshire Boulevard #200 1999 Avenue of the Stars, Suite 2400
Santa Monica, CA 90401 Los Angeles, CA 90067
(310) 255-7700 (310) 788-2266
Damian Manolis Michael Elizondo
Managing Director Executive Managing Director
PRUDENTIAL REAL ESTATE INVESTORS FIDELITY REAL ESTATE GROUP
4 Embarcadero Center #2700 82 Devonshire Street, E27B
San Francisco, CA 94111 Boston, MA 02109
(415) 291-5012 (617) 563-0609
May 9, 2011
Sometimes once just isn’t enough. Madison Partners’ Bob Safai just sold the 268k SF Sherman Plaza East &
West for the second time since 2005.
Majestic Investments paid nearly $50M or $181/SF for the two-building, Class-A office complex, 15350-15400
Sherman Way in Van Nuys. The deal included the buyer’s assumption of an existing $39M loan. Bob represented
the seller, Embarcadero Capital Partners of San Francisco. He tells us the building is known for its many state
and county agencies: tenants in the 95% leased building include the California Franchise Tax Board, General
Services Administration, and North LA County Regional Center. The fully marketed property attracted eight buyers
and took seven months to close because of the loan assumption.
Selling the same building twice is far from a record for Bob. Last fall, he sold Wilshire Bundy Plaza at 12121
Wilshire Blvd in West LA for the third time. (The 311k SF office building was purchased by Douglas Emmett for
$111M or $358/SF.) At the time, he told us fundamentals were tough all over, but that SoCal was still the right
place for capital to find a home given our diverse economy. Bob calls Madison Partners client-centric: It sells a
building, and then “we sell it again.” Embarcadero paid about $40M for Sherman Plaza in 2005, buying it from the
developers, the Nagel family. Well-located buildings that have good occupancy and rent rolls with credit tenants are
getting lots of attention from buyers, and “I think this fit into those criteria,” Bob says.
Office market will stabilize soon, brokers predict
Rents and occupancy fell in Southern California's office buildings last
quarter. But, brokers say, the pace of lease transactions picked up as new
tenants took advantage of the prices.
By Roger Vincent, Los Angeles Times January 23, 2011
Is this what the bottom looks like?
Challenging times persisted for
landlords in the fourth quarter as rents
and occupancy fell in Southern
California's office buildings. But at the
same time, the pace of lease transactions
picked up as business owners moved to
take advantage of comparatively low
rental rates, bolstered by growing
confidence that their firms have
weathered the worst of the economic
downturn, real estate brokers said.
"We are definitely flattening out," said Joe Vargas, area manager of Cushman & Wakefield.
The real estate brokerage reported that 19.6% of offices in Los Angeles, Orange, Riverside and
San Bernardino counties were empty in the fourth quarter, up from 18.5% a year earlier. The
overall average rent sought by landlords was $2.34 per square foot per month, down 7 cents.
Occupancy and rents will continue to fall slightly over the next quarter or two and then stabilize,
Vargas predicted: "We are essentially bumping along the bottom right now." That counts as
upbeat news in a market that has been in decline for 12 straight quarters.
This year, a slight recovery for the office leasing business is in store, broker Bob Safai of
Madison Partners said. "Now it becomes a matter of going through the process of healing." The
process will be slow, he said, and it will be 2013 before landlords can expect "a huge upswing"
in occupancy and rents.
The Southern California market has shown sparks for the last few months as new leases were
signed and some companies even expanded their offices, but the overall market has been
stubbornly disappointing to landlords who would like to fill their buildings and charge higher
rents. While some firms were ready to make commitments to stay put or expand, others gave up
space or moved someplace else.
"Every time we think we are going to get ahead in a certain submarket, someone bails out," said
Jonathan Larsen, an executive managing director at Transwestern real estate brokerage.
In Century City, for example, legendary studio Metro-Goldwyn-Mayer Inc., aviation giant
Northrop Grumman Corp. and law firm Goodwin Procter have all announced plans to leave.
Century City is considered one of the region's premier office markets, but it had a net reduction
of more than 200,000 square feet of rented space last year, more than it lost in 2009.
West Hollywood landlord Charles Steven Cohen, though, is upbeat. Tenants in his family's
Green Building at the Pacific Design Center have recently opened lease renewal negotiations
years early in hopes of locking in current rates.
"We have been along the bottom for a while," he said. "Rents are not going down any more."
Cohen is one of the few owners building new office space in the region. His $160-million Red
Building on San Vicente Boulevard will be finished this summer and he is asking for $5 per
square foot per month, well above the West Hollywood average of $3.60.
The sleek, bright red building designed by architect Cesar Pelli "will see a flight to its unusually
artistic, monument-type architecture," he said. "We want to pick the very best tenants."
Owners of more typical buildings, however, are waiting for corporate America to start hiring
again. Nearly 110,000 office-using jobs have been lost in Los Angeles County since the
economy tanked, according to brokerage Jones Lang LaSalle.
Companies are slow to hire during the early stages of recovery, the brokerage said, and many
tenants are saddled with excess, unused space for which they are paying rent. Such "shadow"
space must be absorbed before companies start renting larger offices.
Tribeca West Complex Sold for $58 Million (Exclusive)
Tenants at the West Los Angeles entertainment office complex include
Disney, HBO and NBC Studios.
One of Los Angeles’ largest entertainment office complexes has changed hands.
Commercial real estate investment firm Ocean West Capital Partners purchased Tribeca West, the West
Los Angeles entertainment office complex that is a film and television postproduction haven, for $58
million on Feb. 4.
The 12233 W. Olympic Blvd. property, which was sold by Palo Alto, Calif.‐based commercial real estate
investment firm Broadreach Capital Partners, has a roster of tenants that includes Disney, HBO and NBC
“We are interested because we think it’s a great location and we love the tenant mix,” said Russ
Allegrette, a principal at Santa Monica‐based Ocean West.
Tenants at Tribeca West fall into two camps: Some are production companies with short‐term needs for
space — from eight to 24 months — and others rent offices on a long‐term basis. The largest tenant at
the 151,029‐square‐foot, Class A complex is Vin Di Bona Prods., which produces America's Funniest
Home Videos. The property is fully leased.
The sale breaks down to $384 per square foot, which Allegrette believes is roughly 5 to 10 percent more
than the property would have fetched a year ago — pointing to the beginning of a recovery in the
commercial real estate market. Tribeca West, situated on 2.65 acres near the intersection of Olympic
Boulevard and Bundy Drive, had been listed without an asking price.
“I think the price is a win‐win price,” said Bob Safai of Madison Partners, who represented the seller. “I
think there is still opportunity for the new owner to increase cash flow. I think the seller achieved its
Broadreach acquired the property in 2005 for $30 million. At the time, the development, which was
built in 1980, was only 40 percent leased and wasn't catering to postproduction firms. David Simon, the
company's managing director, said Broadreach invested about $8 million to improve facilities to attract
entertainment business tenants.
He said Broadreach, which also owns the CNN Building in Hollywood, sold Tribeca West because the
company typically does not hold properties on a long‐term basis.
“We think we created the value we wanted to create,” Simon said. “We created a unique product and
turned the property into something that particular niche market wanted.”
Recent films completed at Tribeca West include Wall Street: Money Never Sleeps, Public Enemies and
Ocean West represented itself in‐house in the transaction.
# 1 Commercial Real Estate Information Company
Douglas Emmett Acquires Westside Office Tower for $111M
Complicated Bankruptcy Purchase of 310,000-Sq-Ft Wilshire Bundy Plaza Took A Year
By Randyl Drummer
November 3, 2010
Santa Monica-based Douglas Emmett, Inc. (NYSE: DEI) has closed the acquisition of Wilshire Bundy Plaza, a
310,000-square-foot office building in the Brentwood submarket of Los Angeles, from Namco Capital Group Inc. for
$111 million, or $358 per square foot.
Bob Safai of Madison Partners facilitated the closing of escrow on the 14-story building at 12121 Wilshire Blvd.,
representing one of the largest office sales in the market so far this year. Despite difficult market conditions, a
complicated bankruptcy proceeding and a difficult loan assumption process, Madison managed the transaction and
was able to maximize pricing for its client, the seller.
The building, on just over an acre, was 85% occupied at closing. Madison had an exclusive listing and executed what
it described as an exhaustive marketing campaign to successfully sell the building for the third time. Because of the
complex legal and financial process, the sale took an entire year, including the most recent seven-month escrow. The
buyer assumed a $56.4 million mortgage loan at a 5.67% interest rate scheduled to mature April 1, 2016.
Douglas Emmett owns and operates 14 properties totaling 1.7 million square feet within the Brentwood submarket.
The REIT's portfolio now consists of 57 office properties totaling about 14.6 million square feet. The company also
owns 2,868 apartment units in Los Angeles and Honolulu.
Madison Partners will retain the leasing assignment for Wilshire Bundy Plaza on behalf of Douglas Emmett.
Douglas Emmett Closes on $111 Mil Buy of Wilshire Bundy Plaza
In the exclusive and still pricey area of Brentwood,
Douglas Emmett, already the largest office landlord in
this market, this past Friday finally closed on its much
anticipated purchase of the 14-story, 311k sf Wilshire
Bundy Plaza, 12121 Wilshire Blvd, at the NW corner of
Wilshire and Bundy. The price was $111 Mil, or $358/sf
representing the largest year-to-date sale in the West
Los Angeles office submarket. The office building sits
on 1.02 acres and is 85% occupied.
The deal was brokered by Bob Safai, of Madison
Partners, who despite difficult market conditions, a
complicated property bankruptcy proceeding and a
difficult loan assumption process, was able to manage
the transaction and get what many would consider a
very healthy price for his client, the seller, in this
economic environment. Madison had an exclusive
listing to sell the building, which he has now done for
the third time. Because of the complex bankruptcy and
loan assumption process, the sale process lasted an
entire year. We even heard that the deal still almost
fell out after the bankruptcy judge approved the sale
several weeks ago.
Many RENTV readers know that the most recent owner was NAMCO, headed by Ezri Namvar, which lost the
building last year with Mr. Namvar now facing unrelated criminal charges.
Douglas Emmett has retained Madison Partners to handle the leasing of the building.
MADISON PARTNERS 12121 Wilshire Boulevard
Phone: 310/820-5959 Suite 959
Facsimile: 310/826-3410 Los Angeles, CA 90025-1123
Contact: Bob Safai
MADISON PARTNERS SELLS 501 CONTINENTAL –
SINGLE TENANT BUILDING SALE
West Los Angeles, CA, October 25, 2010: Madison Partners is pleased to announce the sale of
501 Continental Boulevard in El Segundo, CA. The asset is a two-story, single tenant office
building totaling 125,594 square feet and is situated on approximately 6.3 acres in El Segundo’s
“Super Block” submarket. The property is 100% leased with a remaining 7 year term to Teledyne
Technologies, Inc., a leading service provider of sophisticated electronic communications
products. The Buyer, Continental Property LLC, paid $28.5 million for the property, or $227 per
square foot, representing an approximate 7 cap rate on existing net income. The property had an
existing loan of $17.8 million at a 5.6% interest rate, which was assumed by the Buyer. Bob Safai
of Madison Partners represented the seller, RW Continental LP, in this fully marketed transaction.
501 Continental PR 10.1.10
HUDSON BUYS IN
THE DEAL SHEET
Hudson Pacific Properties entered the Beverly Hills market by
acquiring the leasehold interest in this six-story, 58.5k SF office
building at 9300 Wilshire Blvd. It paid $15M in the all-cash deal.
While this might be the new REIT’s first Beverly Hills buy, president
Howard Stern noted the firm’s principals have plenty of experience
owning and operating office properties in the city. He says the 93%-
leased building is a stabilized asset in a desirable market. Madison
Partners’ Bob Safai repped the seller, 9300 Wilshire Building LLC.
The building’s not far from the Beverly Hilton Hotel, where Hudson’s
Victor Coleman spoke yesterday at Allen Matkins’ View From the
Top CRE forum. Hudson launched its IPO in late June, and the
chairman/CEO noted it went on a “road show” in January to talk up
the merits of Hudson’s unique media assets, like Sunset Gower
Studios. The IPO was oversubscribed three times, he says.
Hudson just declared its first two dividends.
MADISON PARTNERS 12121 Wilshire Boulevard
Phone: 310/820-5959 Suite 959
Facsimile: 310/826-3410 Los Angeles, CA 90025-1123
Contact: Bob Safai
For Immediate Release
LARGE WEST LOS ANGELES OFFICE BUILDING
SELLS IN A LENDER-FACILITATED TRANSACTION
LOS ANGELES, CA: PMCF Properties, LLC has sold its 82,000 SF office building at 12304 Santa
Monica Boulevard in West Los Angeles for $16 million to 12304 Santa Monica Blvd, LLC, according to
Bob Safai at Madison Partners.
The three-story multi-tenant office building was built in 1981 and was 55% occupied at time of sale
according to Craig Newlands at Coldwell Banker Commercial WESTMAC.
“This is a great sale for the market where few investments sales have occurred for larger office
buildings in 2010” Safai said.
The lender facilitate sale included seller financing. “The Buyer plans to aggressively lease the property
to bring it back to 100% occupancy which the building enjoyed less than 2 years ago.” Macker said.
Bob Safai, Lynwood Fields and Joe King of Madison Partners represented the Seller. Craig Newlands,
CCIM and T.C. Macker, CCIM of Coldwell Banker Commercial WESTMAC represented the Buyer.
12304 Santa Monica PR 4.12.10
Broker’s Connections, Dealmaking Savvy Helps LA’s Madison Partners Weather Recession
September 22, 2009
By Randyl Drummer
Investment sales specialist Bob Safai hasn't made any dramatic changes to his
business plan in response to the economic downturn. The Los Angeles
rainmaker is still doing what he does best -- tapping into his network and
cultivating relationships that enable Safai to quickly locate, take down and close
transactions, including one of the market's largest sales of 2009.
"This is our kind of market. When I started the firm, we didn't have listings, we
created the deals," said Safai, who started his boutique firm Madison Partners in
1996 after 10 years in commercial real estate spend mostly as a leasing agent.
"If you know the business, you don't need to reinvent yourself during the tough
Then again, even if Safai had a secret formula for continuing to do hundreds of
millions in sales during the recession, he certainly wouldn't tip his cards.
"Negotiating a hand is like negotiating a deal," says the 47-year-old Safai, who Veteran Westside L.A.
has played competitive poker as a hobby. "Often times, they both involve Broker Bob Safai,
gamesmanship." Founder of West LA
Boutique, Expects to
Safai began his commercial real estate career in 1986 after graduating from USC Close as Much as
with a degree in business administration and finance. He worked as landlord-side
leasing broker at Southmark Pacific, a subsidiary of Dallas-based Southmark $200 Million in Sales
Corp. Safai jumped ship to Beitler Commercial Realty in 1990 as the savings- in a Down Economy
and-loan industry collapsed and the economy and commercial real estate market
Safai left Beitler in 1996 and, with Lynwood Fields, his first boss at Southmark, co-founded Madison Partners.
The duo did about $300 million in transactions in the first year. Madison Partners solidified its market position
as one of L.A.'s top brokerages in 2004, when Safai relaunched the boutique firm as a full-service brokerage,
recruiting some of the market's top brokers as partners. He recruited the top-selling team of Chris Houge, Rick
Buckley and Hunt Barnett from CB Richard Ellis, followed by independent broker Gary Weiss. The firm added
Brad Feld and Patrick Nally from Cushman & Wakefield as principals in 2006, followed by veteran Jones Lang
LaSalle brokers Lisa St. John and Peter Best in 2008.
Madison Partners now has 22 brokers at offices in Brentwood and Century City. Although transaction activity is
down from the firm's high of $2.5 billion in 2006, Safai expects to do about $500 million this year, including
$150 million to $200 million in property sales.
In one of the largest L.A. deals this year, Safai handled the $44 million sale of 6310-6330 San Vicente Blvd.,
two mid-rise office buildings totaling 206,175 square feet in the Mid-Wilshire District. Safai sold the buildings --
part of a portfolio owned by former billionaire Louis Gonda, whose fortune tumbled in the stock price collapse
last year of insurer American International Group (AIG) -- to PRP Real Estate Advisors/Cambra Realty Joint
Venture. Safai represented buyer RP Properties in another Gonda disposition, a six-story, 58,484-square-foot
office that sold for $11 million in a July transaction.
CoStar Advisor recently caught up with the veteran investment sales broker to gain his insights into today's
market and the fundamental traits needed to survive in one of the worst market downturns in modern times.
Advisor: How did your early career track prepare you to open your own brokerage?
Bob Safai: I was a leasing broker for four years before the market cratered in the late '80s and early '90s. I did
my first sale in 1990. Even though it was a small one, it whet my appetite and I got the sales bug. I really enjoy
and understand sales and the capital market and how it works. Each deal is different, and each deal creates
How does the current market compare to those early years?
This recession is dramatically worse, obviously. The country has been in a catatonic state for the last two
years. In the recession of the early '90s, at least there were some lenders who took properties back and put
them in REO. You took the losses and dealt with them. You didn't have the logjam you do now, with the
inability to get anything done. Everyone now is waiting for the other shoe to fall with regard to the CMBS
maturities. The losses now are massive and there isn't any one entity created to deal with it. Lenders are just
kicking the can down the road hoping something good happens.
When did you first realize the market was going to crash?
The numbers didn't work and we all knew it. I told people back in 2005 that it just didn't make sense, and it
continued to go up in 2006. The reality is we had a historic run up in real estate and it continued until it was
completely unreasonable. To buy office buildings at a 4 cap did not make sense due to the capital costs
associated with re-tenanting as leases expired.
It comes down to the numbers. You can take it to another level with complicated projections and Argus runs.
But you can do the actual analysis of the buildings on the back of a napkin: revenue source, operating
expenses, net income, and debt. This cycle told us the fundamentals of real estate are the fundamentals. There
has been no paradigm shift.
What are you doing differently to ride out the down economy?
The firm is doing exactly what it's always been doing. I'm out there utilizing relationships and continuing to
source deals. I'm doing more of the leasing personally now because I have some clients that look to me to do
that. But I still spend 40 to 50 hours a week minimum in the office looking at deals. When I started the firm, we
didn't rely on listings, we created deals. We've kept our overhead low and the company has no debt. I believe
we've built the best brokerage team in the city. We're a boutique firm and the demands are such that you've got
to produce and be passionate about your business. It's a matter of not letting the expectations disappoint you
to the point where you lose your passion for the business. I see a lot of that happening.
How important are relationships to your business style?
Clients have to trust you and believe you're looking out for their best interests. Once you establish that trust, it
will last a lifetime. If you're a broker just trying to make a fee on a transaction, sometimes you may have to walk
away from that fee. I've walked away many times when the right thing was not to do the deal. I've told clients
not to sell under certain circumstances. Fortunately, our advice has paid off.
How long will it be before landlords can regain some of the upper hand in the market?
We're two years into a five-year down cycle. Rental rates have gone down dramatically and there's no business
expansion. I don't know what will drive the next business cycle, and catapult the next technological revolution.
But I do remember when I got into the business, my cell phone weighed about five pounds and I was happy to
have it. Now, it weighs about five ounces or less. There was no Internet. All that change has occurred in a short
20 years. I can't even fathom what's going to happen in the next 20 years, but it will allow this country to remain
at the forefront.
When will the marketplace start seeing transactions involving distressed properties?
I don't think it will be within the next three months. But by the middle of next year we'll see the market opening
up a bit. It will be another two years beyond that before people start reaping the rewards of the recovery.
August 31, 2009
Special Report – Who’s Who in Real Estate
By DANIEL MILLER
LOS ANGELES BUSINESS JOURNAL STAFF BOB SAFAI, 47
Earlier this month, veteran commercial real estate broker Bob Safai Madison Partners, Brentwood
took his first long vacation in 17 years. Unlike some other brokers
in town, he actually needed a break. Founded brokerage Madison Partners
in 1996 and has sold several high-
Safai, 47, has been involved in the sales of L.A. properties owned by profile buildings during the recession,
Louis Gonda, a one‐time Wealthiest Angeleno whose fortune in including a large office property for
American International Group Inc. stock was wiped out when the
former billionaire Louis Gonda.
insurer nearly went bankrupt last year.
In one deal, Safai handled the $44 million sale of a Miracle Mile‐area
Biggest Challenge: There is an
office complex, one of the biggest commercial real estate educational process in which sellers
transactions of the year in Los Angeles. and buyers need to come to an
understanding of where market values
Safai, who co‐founded brokerage Madison Partners in 1996, said are. The lack of data points in a
that while business is down this year, he still could complete $200 downturn often creates difficulty in
million in deals. Pretty good for one of the worst real estate slumps bridging this gap.
in decades, though just a fraction of the $2 billion he cleared in one
year at the height of the boom. Toughest Recent Deal: 6310-6330
San Vicente Blvd. (Gonda buildings
“It feels fine. Hey, there are guys doing nothing,” said Safai in a
that sold for $44 million). Although
phone interview from the French Riviera, where he was vacationing.
“Perspective is a great thing. If you did $2 billion of business and these buildings had existing financing,
didn’t put any money away and save for this happening, tough luck. they also had 40% of the project due to
But if you did, and you are passionate about the game, you are going roll over within an 18-month period.
to be in it.” This, coupled with a four-and-a-half-
month loan assumption process, made
Safai specializes in investment sales, though during the downturn it extremely challenging to close this
he has begun to do more leases, which he calls “the bread and transaction.
butter” of the brokerage business. It’s something he had experience
with early in his career. The Glendale native graduated from USC in Secret of Success: The greatest
1986 with a degree in business administration and finance, and one
of his first jobs was with Beitler Commercial Realty Services, where
teacher in real estate has been history.
he brokered lease deals. But an investment deal he completed in Real estate goes in cycles and history
1900 whetted his appetite for what would later become his main tends to repeat itself.
line of work.
Recession’s Silver Lining: Having
“I found what I wanted to do,” said Safai, “Any broker that is in real more time to spend with my family and
estate loves the hunt.” not working on the weekends.
The Gonda sale is emblematic of the “hunt” and the business End of Downturn: I think we are two
Madison Partners has become known for after a decade of sold years in on a five-year turnaround.
growth. (The company now has 22 brokers spread between offices
in Century City and Brentwood.)
Stress Release: While others play golf
Safai got the listing and was later about to sell the property at 6310
as a stress reliever, when I played golf,
and 6330 San Vicente Blvd. to a joint venture of PRP Real Estate it created more stress for me. I choose
Advisors and Cambra Realty because of long‐standing relationships to play poker as my hobby to take my
with both sides of the deal. He also marketed the property to only a mind off the stresses of work. It’s a
select group of real estate players who’d be able to close on the very challenging game, and a metaphor
purchase. for life.
Still, the decision to sell by Gonda, who received his AIG stock nearly Recent Splurge: With age comes the
20 years ago in the sale of an airplane leasing company he co‐ realization that needs and wants are
founded, gives Safai pause.
completely different. My desire for
things I want has diminished because
“It’s all very scary; forces beyond nature have affected many people
in this downturn,” he said. “Some of the smartest guys that have
I’ve been fortunate to have been
created wealth have lost massive amounts of wealth. You try to be provided with all that I need.
MADISON PARTNERS 12121 Wilshire Boulevard
Phone: 310/820-5959 Suite 959
Facsimile: 310/826-3410 Los Angeles, CA 90025-1123
Contact: Bob Safai
MADISON PARTNERS SELLS 6310 & 6330 SAN
VICENTE DESPITE TOUGH MARKET
West Los Angeles, CA, May 22, 2009: 6310 & 6330 San Vicente Boulevard, twin office midrise
buildings, with a combined square footage of 206,175 SF, just two blocks from prestigious Beverly Hills
sold to PRP Real Estate Advisors/Cambra Realty Joint Venture. The Buyer paid $44 million for the
property or $220 per square foot representing approximately a 9 cap on existing net income. Bob
Safai of Madison Partners represented the seller, Lexington San Vicente Associates, in this
transaction. Despite extremely difficult market conditions, Madison was able to maximize pricing on
this transaction for the Seller as well as manage the transaction through a difficult loan assumption
process. This transaction represents the largest sale year to date in the West Los Angeles market.
The properties’ full-block central location cannot be duplicated. Surrounded primarily by retail and
residential properties, there is little to no land available for new office construction. The 5-story office
buildings contain a combined 206,175 square feet of space situated on 1.65 acres of land. Occupancy
at close of escrow was 92% providing a stable cash flow, with anchor tenants including Equity
Marketing, Movilla Productions, AIPAC and Pinkberry. The property will have approximately 60,000
square feet of vacancy in the next 18 months, allowing for value creation through a lease-up program
that will include the ability to offer tenants building top signage. The property will be managed by
Riverrock Realty Group and Madison Partners will assist the ownership with the leasing.
BS/afl (6310 6330 San Vicente PR 5.22.09)
Commercial Real Estate Slumps Hard in the Southland
By Roger Vincent
July 19, 2009
Offices and warehouses empty out, even as rents decrease, in L.A., Riverside, Orange and San
Bernardino counties. A turnaround might be years away.
The lousy economy continues to quash the commercial real estate market, driving down rents and
pushing out tenants.
Nearly a third of office space is flat‐out empty in parts of Los Angeles, Orange, Riverside and San
Bernardino counties. A fifth of the offices are empty in the once‐crowded Burbank Media District.
Viewed just months ago as far less responsive to the troubles that sank the housing market, commercial
real estate is in such a profound slump that the sector's woes could threaten a broader recovery.
"The statistics are alarming," said Joe Vargas, senior managing director of real estate brokerage
Cushman & Wakefield. "And the turnaround could potentially be some time away."
The sector is deeply connected to several troubled parts of the economy, including the frozen credit
markets and the small retailer who can't make his rent.
As a result, companies are moving out of buildings, not into them. Tenants who continue to rent are
demanding ‐‐ and getting ‐‐ discounts.
Los Angeles County landlords are asking for an average of $3.08 per square foot per month for Class A
buildings, down 5% from a year ago, according to Cushman & Wakefield, which tracks activity on a
quarterly basis. In Orange County, rates plunged even more, with office building rents down 16%, to
$2.61 per square foot.
Some upscale markets have seen even more dramatic drops.
"Tenants have the ability to trade up to better buildings," said broker Bob Safai of Madison Partners.
In desirable Santa Monica, for instance, landlords eager to keep their buildings occupied have dropped
their average asking price almost $1 a foot, to $4.74. Such reductions have spurred more lease deals
lately, Safai said, but further landlord discounts are probably coming.
"The Westside still has some softening to do," he said. "All markets do."
Tenants can demand lower rents because landlords have so many empty spaces.
Overall office vacancy in Los Angeles County jumped to almost 16% in the second quarter, from 11% a
year earlier, according to the Cushman & Wakefield report. In Westwood, a perennial favorite of
Westside professionals, 18% of office space is vacant.
Vacancy at the John Wayne Airport area, home to many white‐collar Orange County firms, reached 21%.
Ontario, the heart of the Inland Empire office market, has 29% vacancy.
Part of the problem in Orange County and the Inland Empire is that developers built way too much
office space during the boom, and now the market in those places is flooded.
But even in downtown Los Angeles, where the last major office building was completed in 1992, vacancy
rates rose to 16%, from 13% a year earlier. More than half a million square feet of office space has been
vacated downtown this year.
The picture is also grim with regard to industrial space, including factories, workshops and warehouses.
Los Angeles County industrial vacancies averaged about 5% in the second quarter and could hit 10% by
the end of this year, said Dwight Hotchkiss, another Cushman & Wakefield senior managing director.
The number of leases being signed has dropped as much as 50% from last year even though rents are
down about 17%, he said. "Many companies have shut their doors."
Vacancy is more than 20% in some parts of Riverside and San Bernardino counties, where landlords
provide large distribution centers for companies that bring goods through the ports of Los Angeles and
Because of the slow economy, such imports have declined substantially for several months.
Experts do not expect the region's market for office or industrial space to recover any time soon.
Commercial real estate is a lagging indicator of the economy that will not come back until well after the
job market does.
Safai of Madison Partners predicts that the real estate market will roar again, but maybe not for three
"Everyone thinks that the market will take five years to recover from a downturn," he said. "We're
already two years in."