When the Atrium building on Via de la Paz sold for $12,150,000 to Jeffrey Seltzer and a joint venture partner in March, Seltzer said that his company targeted properties that included those with high vacancies. He made it clear that the Atrium, which had 42 spaces and only two vacancies, didn’t fit that category. That soon may no longer be true. According to sources within the retail/professional building, up to 50 percent of the tenants are moving or are considering moving owing to significant rent increases. One source said, ‘Most of the people offered leases are vacating,’ referring to about 21 tenants who had month-to-month leases or were waiting to negotiate new leases when the building was bought from Peter Caloyeras. In today’s Palisadian-Post classified ads, Highpoint Capital, Jeffrey Seltzer’s Santa Monica company, is advertising more than 11, 000 square feet of available office space. The building has a total of 34,533 sq. ft., including the garage and common areas. Biodynamics, a 15-year tenant with 4,000 sq. ft., is moving to the Sunset Coast Plaza on Sunset at PCH. ‘We didn’t think the pricing was realistic,’ said owner Parris Ward, who was on a month-to-month lease. ‘Ultimately, the market will decide.’ Tenants have told the Post that new rent being asked is about $5 a square foot. ‘We are increasing rents to bring them in line with the overall market which is currently between $3 and $4.25 a square foot,’ Seltzer said in an interview. The difference between what tenants say they would pay per square foot and what the landlord says he will charge seems to arise because the calculation of office space in the building has been reconfigured. In other words, even though tenants retain the same interior space, a new formula means that landlord will charge them for more space by including common areas. Jeff Pion, Executive Vice President at CB Richard Ellis Brokerage Services, who is the leasing agent for the 881 Alma Real building, said that the Building Owners Management Association (BOMA) changed standards in 1996 to increase what could be called common space and allow owners to charge tenants for that space. ‘As buildings sell, most new owners are measuring by the new standard,’ Pion said. Currently, 881 Alma Real has one third-floor office suite (1,245 sq. ft.) for least at $4.10 a sq. ft. foot. Other office buildings in the Palisades are near capacity and have space renting for considerably less. For example, two offices above Jacopo’s are available for $3 a sq. ft., and an empty office at 984 Monument is $2.25. One tenant in the Atrium building said that the current monthly rent for her 250-sq.-ft. space is $795 and parking is $60. Her new lease puts the square footage at 286 ft. and increases parking to $90. A three-year lease would be $1,214 per month, a one-year lease $1,389 and a six-month lease $1,439. If the lease negotiation is not settled within a 30-day period, the rent would rise to $1,821 per month, she said. Many Atrium tenants told the Post they don’t want to see tenant/landlord disputes in the paper because they don’t feel that it is helpful to either side. ‘They [Seltzer and company] think the current rents are under market,’ one tenant said, ‘and they may not be far off.’ Another tenant commented, ‘It’s his building; he can do whatever he wants.’ Tenants argued that eventually the landlord will either be proven right that demand trumps price for people who want to have an office in Pacific Palisades, or the building may have an abundance of available space for a long period. ‘When we bought the building, we anticipated that 15 percent of the tenants would decide to relocate because of the rent,’ Seltzer said. ‘We’re not concerned.’ He acknowledges that some tenants might be unhappy. ‘What they’re upset about is what the market is,’ he said. ‘We have had a tremendous response from new tenants and are not concerned with turnover vacancy. We’ve already completed two to three deals with new tenants. ‘ Current Atrium tenants signing new leases are promised improvements to the high-rise commercial building, built in 1980. In an interview in April, Seltzer said that ‘over the course of the first year, we will do a full renovation.’ To date, tenants have said that new lights have been installed in the bathroom along with timed air-freshener mists, which have been placed at eye level by the sinks. Two tenants said that they’ve taken blasts to the eyes while washing their hands. More than one tenant commented that the elevator was constantly broken down and that the firemen have had to come to rescue trapped people. Another tenant said that the door doesn’t have a sensor. Asked about this situation yesterday, Seltzer said: ‘We recently finalized our design plans with the architect and plan to commence in the next few weeks with the more than $600,000 renovation of all the bathrooms, new lighting and landscaping fixtures, deck and window upgrade, a full renovation of the elevator cab and painting of stairwells, garage and the building’s interior and exterior.’ Another tenant said the building had problems with mold. ‘Prior to our purchase, the building suffered from some water leakage and that common mold in one or two isolated areas was identified and fully abated,’ Seltzer said. ‘Since that time we have conducted a full analysis of the building and confirmed that the building is totally clean.’ Seltser continued, ‘In the purchase of the building, we fully expected that some tenants would be surprised by the recent increase in market rental rates and that some unfortunately would decide to relocate. This is occurring not only in the Palisades but also throughout all the Westside markets.’
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