SANTA MONICA, CA-The Lionstone Group of Houston continues its quest for “creative” office space in the West Los Angeles area, with the purchase of a five-building, 165,000-square-foot portfolio, mostly in the city’s downtown area. With the purchase, Lionstone currently controls 800,000 square feet of Westside office space.

Neither the identity of the seller nor the sale price were disclosed.

“These are five trophy assets in a marketplace with high demand and high barriers to entry,” says Scott Rigsby, a partner in Industry Partners, who represented both buyer and seller.

The owner decided to leave real estate and sought an institutional buyer, says Rigsby. Attracting the buyer was basically a “bid process,” according to Rigsby, who says he approached investors in New York, California, Texas and Oregon.

In the end, the seller settled on Lionstone because of the company’s depth in Westside creative space. The Texas company, headed by several former execs from Hines Interests, includes Lantana Entertainment Media Campus, 1630 Stewart St./Penn Station and Broadway Place in Santa Monica and 5340 Alla Rd. in Playa Vista.

The seller felt comfortable with the buyer, says Rigsby, because “these guys are familiar with the product type.”  

Although the Santa Monica portfolio is comparatively small, the real estate is highly desirable.  “This type of product is particularly appealing because the occupancy is well stabilized and the tenants are on long term, good-credit leases,” he says. “We’re not dealing with mom-and-pop businesses with the possibility of a high turnover rate,” Rigsby adds. “This is a core investment.”

All of the buildings are located in downtown Santa Monica, with the exception of an office and retail building in Bergamot Station, the former train yard that is currently a popular art gallery complex in the city. Four of the buildings--631 Wilshire Blvd.; 2415 Michigan Ave.; 625 Arizona Ave.; and 401 Santa Monica Blvd. date from the 1920s and ‘30s construction and have been fully renovated. The fifth building, 1351 4th St., was completed in 1996, using historic brick from an earlier structure on the site.

Downtown Santa Monica, which some observers call “Silicon Beach,” is a magnet for media companies, particularly those in involved in post-production and special effects. Media and entertainment firms like Santa Monica for both recruiting and amenities.

“This is not your grandfather’s real estate,” says Rigsby. The preference among creative firms for small buildings with older materials is part of a “lifestyle,” he adds. “It represents who they are and how they want to live their life,” Rigsby says.

“Companies here work 24-7,” he adds. “An employee might want to walk to Third Street Promenade, see a movie and grab  a cup of coffee, then go back to work until 2 in the morning.”

The portfolio is 10% vacant. Tenants include POP Sound, Clearstone Ventures, Bedford Falls, Pier 59 Studios and Bolthouse Farms.