Playa Vista Raising Area’s Profile, Prices

With the exception of a giant Home Depot, the stretch of Jefferson Boulevard south of Marina del Rey is a rather unremarkable mishmash of auto repair shops, low-rise offices and drab industrial warehouses.

But the profile and property values of this isolated commercial district and surrounding neighborhoods are headed higher now that construction is to finally begin this year on the long-delayed Playa Vista project, where DreamWorks SKG will build a headquarters and production facilities.

Owners of nearby properties in Marina del Rey and Culver City are banking on the prestige and awareness that a Hollywood movie studio and major real estate development will bring to an area that lacks a strong identity.

Investors have been poking around in search of property to buy since November, when DreamWorks and Playa Vista signed an agreement. Local land prices and rents--which have already risen as much as 50% as part of the broader real estate recovery--are expected to climb even higher. In nearby Culver City, industrial broker Bill Goodglick is negotiating to sell a property to a media company for $100 a square foot; it would have fetched just $60 a few years ago.

“There has been kind of a speculative fervor that you often see when a major sea change comes about in any community,” Goodglick said. “I think the Playa Vista project and the DreamWorks addition to that development are an extremely important catalyst to the furtherance of the media and entertainment growth of the area.”

But some property owners and tenants remain skeptical about how much impact Playa Vista and DreamWorks will have outside the boundaries of the project’s carefully planned 1,087 acres south of Marina del Rey.

Daniel Dutil, who owns an auto repair business across Centinela Avenue from Playa Vista, said he doesn’t expect any highly paid studio executives to lease space among the auto body shops and aging industrial buildings that are crammed into tiny lots on the Los Angeles-Culver City line.

“This area is kind of . . . rustic,” said Dutil, whose business occupies a World War II-era Quonset hut. “I don’t think people are going to be jumping up and down here” because of Playa Vista.

It’s easy to understand why some people have tempered their enthusiasm, given the long and tortured history of Playa Vista.

Local boosters have waited for more than a decade since Summa Corp. unveiled plans to build a high-rise city on the site. After Los Angeles developer Robert Maguire assumed control, the project was held up for years as Maguire, lenders and DreamWorks battled over control. After Maguire lost majority ownership of the project, Playa Vista’s new owners wrangled with DreamWorks for months before both groups finally signed an agreement in November.

Real estate broker Steve Solomon recalls working to sell a building across the street from Playa Vista in late 1995 amid the euphoria of DreamWorks’ newly announced plans. But Solomon’s deal fell apart after it became clear that DreamWorks was nowhere near starting to build anything.

“A lot of the building owners felt like brides, and then the groom ran off,” said Solomon, who works for Seeley & Co.

Despite the years of delays at Playa Vista, the area’s commercial real estate market has already begun to change. As Westside commercial rents and property values have soared, tenants--including many from the booming entertainment, multimedia and design industries--have begun looking south to Marina del Rey and Culver City for more affordable space. Already some developers and property owners have dubbed the area the “Lower Westside.”

The Los Angeles International Airport-Marina del Rey area around Playa Vista symbolizes the change that is sweeping through the region. Warehouses have been converted to host such businesses as sound stages, sleek new headquarters for advertising firm TBWA/Chiat/Day and corporate compounds for smaller multimedia and entertainment production firms.

Rents have jumped nearly 60%, while investors who purchased property in the low-$20-a-square-foot range three years ago have turned around and sold the same sites at more than $30 a square foot, said Douglas Marshall, a broker for Klabin Co.

“If Playa Vista goes through, these properties are only going to become more valuable,” said Marshall, who estimates the vacancy rate in the LAX-Marina del Rey tract at about only 5%.

Further out in Marina del Rey and on the southwestern edge of Culver City, property owners said they expect to cash in on the prestige that DreamWorks and Playa Vista--which will eventually include up to 6 million square feet of commercial space and 13,000 housing units--will give the area.

Playa Vista “has really focused more and more companies’ attention on the area,” said developer Lawry Meister, whose firm has renovated a former Marina del Rey aerospace plant into a home for media- and entertainment-related tenants. “Now that DreamWorks is there, the Marina area is now more of a central location. It doesn’t feel like you are so far south.”

Despite adding millions of square feet of space to the market, Playa Vista is not expected to compete directly with nearby commercial projects, which are far smaller in scope and size.

“If [tenants] want sound stages, we are not set up for that,” said Michael P. Russell, vice president of Arden Realty, which owns most of Howard Hughes Center, a 70-acre high-rise office and retail complex along the San Diego Freeway. “They will be getting DreamWorks . . . and other, larger entertainment tenants. Our tenants will be more users of [traditional] office space.”

Directly across the street from Playa Vista, James Deely has rented 3,000 square feet in a former machine shop to store custom-designed furniture. If Deely outgrows the space and has to move to larger quarters, he figures it will be easy to find a firm eager to be a short walk from the new DreamWorks studio.

“We might sublet it to another tenant and get some of those movie dollars,” Deely said.