valley recolumn/howard/mike1st/jc2nd BOB HOWARD How real is the San Fernando Valley real estate recovery? Consider the recent sale of Toluca Terrace Apartments in Toluca Lake. The 113-unit complex had been losing between $35,000 and $45,000 annually, but sold recently to a Beverly Hills investment firm for a premium price: $10.5 million. That’s $93,000 a unit, said H. Bruce Hanes, president of Burbank-based Hanes Investment Realty Inc. Hanes built the Screenland Drive complex in 1988 and has managed it ever since. Hanes said what’s most remarkable about the deal is that the buyer is willingly paying top dollar for a property that is losing money. “The fact that the investors know the building has a negative cash flow and are willing to pay that much for a building that is losing $35,000 to $45,000 a year tells you something about this market,” he said. “This is an indication that the competition for large apartment projects in good locations is a white-hot market for investors.” The buyer of the building, a limited partnership affiliated with Beverly Hills-based Francis Property Management Inc., agreed. “We felt very fortunate to get the building,” said John Francis, whose father, Richard B. Francis, heads the company. Francis said the deal makes financial sense because the main reason the building is losing money is that the mortgage, which the buyers are assuming, carries a relatively high interest rate of 9.75 percent. But the mortgage can likely be refinanced at a significantly lower interest rate after November 1999, Francis said. Both he and Hanes said refinancing doesn’t make sense right now because the mortgage carries such a stiff prepayment penalty if it is refinanced before November 1999. According to Francis, his company has been tracking the Toluca Lake property for several years, waiting until the 1999 date drew closer, so it would only have to take losses for a relatively short time before refinancing. But the investors didn’t want to wait any longer because the bidding wars for good properties are heating up and “top-quality buildings like this are getting scarcer,” Francis said. Francis added that smaller investment firms such as his also want to snap up good properties while they can because competition from huge pension funds and real estate investment trusts is getting fierce. Francis and Hanes both cited the property’s location in the Burbank portion of Toluca Lake just across the street from Warner Bros., as another reason it sold for a premium price. “I don’t think you could find a better location,” Francis said. According to Hanes, the deal suggests that investor interest is approaching pre-recession levels. “This is the way the market used to be,” said Hanes, a 33-year veteran of the industry. Prices for apartment complexes are rising at all price levels, according to Raffi Krikorian, managing director of the Encino office of Sperry Van Ness. The brokerage negotiated two recent sales of apartment buildings for a combined total of $13 million, further evidence that the apartment market has rebounded from the Northridge earthquake and recession, Krikorian said. The deals included the sale of the five-building, 200-unit Tarzana Villas for $7.6 million, or $38,100 per unit, and the sale of the 86-unit Tarzana Tennis Club Apartments for $5.5 million, or $64,000 per unit. Tarzana Villas was only on the market a month and was sold despite complicated negotiations that included three different sellers, all individual investors, and five different lenders, according to Krikorian. He said the relatively short time on the market is another indication of increasing investor interest. The per-unit sales prices are higher than those paid for other comparable complexes recently, said Krikorian. Insurer signs interim lease Plans by 20th Century Insurance Co. to consolidate its offices in 1999 prompted the company to sign a 27-month lease, valued at $1.84 million, for its 22,700 square feet in the Warner Gateway project in Woodland Hills, according to David Massie, asset manager at the building. Massie said 20th Century, which has divisions in a number of buildings around the Valley, is trying to time all of its leases to expire on Nov. 30, 1999 in anticipation of its overall consolidation into one centralized location. That search by 20th Century to find a new 400,000-square-foot permanent home in 1999 is one of the largest space requirements on the market right now, and one which developers and landlords are chasing hard to land. As for 20th Century’s new 27-month lease, it is actually a renewal of a lease that was due to expire March 3, 1998, Massie said. So the company in effect extended that lease for another 20 months, a relatively unusual step in a world where extensions are usually in three- and five-year increments. West Valley deal American Express Tax and Business Services has leased a full floor of 17,331 square feet in a $2.4 million deal at the Trillium in Woodland Hills. The firm is relocating from within Woodland Hills and is scheduled to move into the new space by September, according to Grubb & Ellis Co., which represented the landlord, the California Public Employees Retirement System. New life Woodland Hills-based Realty Bancorp began a $13 million refurbishing of the 217,000-square-foot former Baxter Travenol building at the Valencia Corporate Center on June 9, according to Norm Kravetz, president and principal of Realty Bancorp. Kravetz said the four-story building, in the city of Santa Clarita near the intersection of Interstate 5 and Valencia Boulevard, will be “totally rehabbed inside and out” and retrofitted with new earthquake safety features. Kravetz said the building was vacated by Baxter shortly before the Northridge earthquake, in which the building was damaged extensively. He bought it from Baxter last year for an undisclosed sum and has spent the past year planning the rehab. Kravetz expects the project to be finished by the end of the year.

universal/13″/dt1st/jc2nd By DANIEL TAUB Staff Reporter In an apparent victory for homeowners, Universal Studios Inc. has agreed to a 40 percent reduction in the size of its planned expansion project. The revised plan submitted by Universal this month is radically smaller than originally intended. The plan still includes the almost 1.2 million square feet of new studio and office space proposed before, but a 750,000-square-foot theme park on the southeast portion of the studio’s 415-acre property at Universal City has been eliminated. Highrise hotels are also gone, and the number of new hotel rooms was reduced from 3,400 to 1,200. New retail space primarily on CityWalk, Universal’s collection of restaurants, stores and movie theaters has been reduced from 358,000 square feet to 250,000 square feet. The plan for the entire expansion project was reduced from 5.9 million square feet to 3.3 million square feet. “We feel that our original proposal was a real well thought-out and do-able plan,” said Helen McCann, vice president of the master plan for Universal Studios. “But we’re realists.” The reduced plan is now in compliance with a recommendation from county Supervisor Zev Yaroslavsky and City Councilman John Ferraro in early June, which called for a 40 percent reduction in the size of the project, elimination of the new theme park, less hotel rooms and other changes. Other demands by the two lawmakers that will be met under the scaled-back plan include new noise control measures on such attractions as the “Waterworld” show, the elimination of a helicopter landing site, and a new pedestrian and bike path along the Los Angeles River. Also, the project will be completed over 15 years rather than 25, and will be built in two phases. The project is currently up for approval by the city and county planning commissions. Tony Lucente, president of the Studio City Residents Association and one of the project’s most outspoken critics, said Universal is moving in the right direction. “It sounds like they certainly have responded to some of the initial reactions to their plan, and that’s certainly encouraging,” Lucente said. “What we now need to see is some specifics.” The various homeowners groups surrounding Universal City have in the past six months held numerous meetings with Yaroslavsky and Ferraro. They also swamped the public meetings held on the project, with more than 700 people at each hearing. Homeowners expressed no opposition to expansion of Universal’s motion picture and television production facilities, but found the noise and traffic associated with a theme park and hotels unacceptable. Political consultants said Universal erred by failing to attract more neighborhood support. But some said that Universal never expected to garner support for a new theme park and highrise hotels, and may now be proposing what it wanted all along. “What if they put all these extra developments into the plan with the intention of giving them away later?” said one City Hall insider. “Maybe now they’ve gotten exactly what they really wanted.”

disney/14″/mike1st/mark2nd By BOB HOWARD Contributing Reporter Clearly positioning itself for growth, The Walt Disney Co. has purchased the 100-acre Grand Central Business Centre in Glendale, which has housed Disney’s Imagineering theme park division since the unit’s inception more than 30 years ago. Disney bought the business park because leasing slightly more than half of its 2 million square feet of space had become too expensive, according to George Garfield, vice president of corporate real estate for Disney. “Buying this property is something we’ve looked at periodically over the years. We’ve acquired it because we’ve concluded that ownership is more favorable,” said Garfield. Disney has not yet decided whether it will expand into space currently occupied by other tenants when their leases expire, Garfield said. “It’s not clear yet how this will fit into the overall real estate strategy for the company, but traditionally the park has been a place where we have back-filled (occupied space as it became vacant). So if a tenant left, we would certainly consider occupying the space if we needed it,” he said. Neither Garfield nor seller Prudential Real Estate Investors would discuss the sale price. But real estate industry sources said the deal was worth more than $140 million. Glendale Mayor Larry Zarian said the transaction shows a commitment to Glendale that will boost the local economy, as well as that of surrounding communities. “When an important international company decides to buy a major piece of property, it means a tremendous boost to the prestige and the economy of the area,” he said. Grand Central Business Centre, situated on a former airfield that was a storied hangout for Hollywood celebrities in the 1930s, is just northeast of the Golden State (5) and Ventura (134) freeway interchange. Before it was converted into a business park in the 1950s, it was the site for scenes from the 1934 film “Bright Eyes” starring Shirley Temple and was a regular stop for such aviation pioneers as Charles Lindbergh and Howard Hughes, as well as newspaper baron William Randolph Hearst. Disney was among the first tenants at the park when the late Walt Disney established WED Enterprises there, the theme park-design division that later was renamed Imagineering. The Imagineering unit creates all of Disney’s theme park attractions and currently is developing Disney’s California Adventure for Disneyland in Anaheim, Animal Kingdom for Walt Disney World in Orlando, Fla., and attractions for Tokyo Disneyland and for Disneyland Paris. Disney’s purchase of the center is the latest in a series of large real estate transactions involving the Burbank-based company and other entertainment firms in Glendale and Burbank in recent years. Early last year, Disney leased an entire 192,000-square-foot building at 3110 Thornton Ave. in Burbank and in March 1996 the company took about 100,000 square feet at 5161 Lankershim Blvd. in North Hollywood just two of a number of huge Disney leases signed in recent years. Other entertainment-related projects in the works nearby include the 500,000-square-foot animation campus that DreamWorks SKG is currently building on a 12-acre site just south of the Grand Central Business Centre.

valleytalk/22″/mike1st/jc2nd Merger Munchies Shareholders of Great Western Bank were celebrating big-time on June 13, when they overwhelmingly approved a friendly merger with Washington Mutual Inc. that awarded them a hefty premium for their stock. But one company that was probably less than thrilled with the development was Abe’s Deli of Northridge, a favorite watering hole for Great Western employees. The deli made a bundle from the army of accountants, lawyers and bankers who descended on the Great Western headquarters during merger talks. “This was the biggest windfall for the owner of the local delicatessen in Chatsworth Abe’s Deli in the history of Chatsworth,” said Great Western CEO John Maher in a recent interview. “The business he got was phenomenal.” Indeed, the Great Western merger provided Abe’s with one of its most profitable periods in recent months, said deli General Manager Jane Brayton. “We were preparing lunches and dinners for over 100 people at a time on an hour’s notice,” she said. “We were also throwing cookies into the oven for them as fast as we could at 200 a shot.” But alas, business has returned to normal, following consummation of the merger. The chance of similar booms in the future is slim, because layoffs are likely to follow at the Chatsworth campus in the months ahead as the two merger partners combine. Chillin’ Out It’s hot in the San Fernando Valley in the summertime, and that means it’s busy at the Iceoplex in North Hills. There are two ice skating rinks at the Iceoplex and air tempetautures on the ice run from 40 to 50 degrees. Perhaps not surprisingly, the rink is a hotspot. “We have leagues booked from 5 in the morning to midnight or 1 a.m.,” says Lisa Sakata, Iceoplex general manager. “We’re turning them away.” During the day, the ice is open for “public session,” and the general public, as well as children’s camps, use the rinks heavily, says Sakata. “We could use another rink,” she says. Airing Differences The South Coast Air Quality Management District can take all the time it needs to become more commerce friendly, as far as Antelope Valley business leaders are concerned. Antelope Valley’s secession from the AQMD becomes effective this month, when it will launch its own agency to monitor air quality. And the new Antelope Valley Air Quality Management District isn’t wasting any time in touting itself as being good for business, while getting in a dig at the AQMD. A brochure distributed by Palmdale and Lancaster touting the Antelope Valley Enterprise Zone boasts: “We’re also the only place in L.A. County not a part of the South Coast AQMD. You’ll find we can be a bit more flexible, so your business can breathe a little easier while staying in Southern California.” Police Riot Call him a cut-up copper, or a laughable lawman. But call him early, if you want LAPD Capt. Alan Kerstein to speak at your next social function or community gathering. A 29-year veteran of the force, Kerstein is commanding officer of the Valley Traffic Division by day, and stand-up comedian at night. He was also recently identified as the “most wanted” public speaker from within L.A.’s police ranks. Kernstein will speak before the Studio City Residents Association July 8 on “How to Avoid a Ticket.” (Our guess: Donuts, donuts, donuts.) A Finn in City Hall Again A familiar face from the San Fernando Valley returned to City Hall last week, when Anne Finn, widow of former L.A. City Councilman Howard Finn, was sworn in as a member of the newly elected Charter Reform Commission. Finn’s election to the commission is somewhat poignant. It was the elimination of her husband’s East Valley district after his death a decade ago that helped sow the seeds for the Valley independence movement which, in turn, led to the recent charter reform drive. Nonetheless, Finn stressed that she is not a secessionist. “The Valley is part of the city,” she said. “I’m a one-world person let alone dividing the city into smaller pieces.” The return to politics does have the 81-year-old Sunland resident thinking wistfully of her late husband. “I wish he were here,” she said. “We could use him now. He was a real creative thinker. I’m not an innovative thinker. I just listen and when things make sense to me, that’s when I act.” Hush-Hush Talks The expansion of Burbank Airport has become such a contentious issue that Burbank and Airport Authority officials have cloaked the whereabouts of their negotiating sessions in secrecy. Burbank, which has been fighting to limit the expansion, held out an olive branch last month when it approached the Airport Authority about negotiating a settlement. That move infuriated some of Burbank’s most vehement anti-expansionists, leading to numerous threats against both sides and the decision to keep negotiating venues anonymous, said Burbank City Manager Bud Ovrom. “We’re not disclosing locations to avoid bomb threats,” joked Ovrom, adding that other less-menacing threats have indeed been received. Airport Commissioner Carl Raggio reported getting several ominous phone calls since negotiations reopened. “I do get the strange calls people telling you what they think of you and then hanging up,” Raggio said.

burbank/dy/18″/mike1st/jc2nd By DOUGLAS YOUNG Staff Reporter Seeking to end costly litigation, Burbank city officials have resumed negotiations with the Burbank-Glendale-Pasadena Airport Authority over plans for a larger terminal complex. The renewed talks, which began June 13 and will run through mid-August, follow 10 months of acrimony, during which no talks were held and the two sides pursued various legal maneuvers. The discussions are focused on resolving the main issues of contention the number of gates a proposed new terminal would have, a proposed night time curfew and limits on passenger growth. Burbank Mayor Bob Kramer, who took the initiative to resume talks in May, said he will give the latest round of negotiations until mid-August to see if there is any measurable progress. Both Kramer and Airport Authority officials were cautiously upbeat about progress in the talks so far, though any agreement that’s reached would still face the additional hurdle of having to receive approval from the Burbank City Council. Kramer, who ran for City Council on a strong anti-airport expansion platform, said his recent move to resolve the issue represents less a change of heart and more a desire to resolve the conflict in a constructive manner. “If there’s anything I’ve learned, it’s that all the name calling and animosity haven’t paid off at all,” he said. “It’s going to be much more beneficial to work out an agreement than to sue each other constantly.” A confidentiality agreement prohibits both Burbank and the Airport Authority officials from talking publicly about the specific discussions at the two meetings so far, on June 13 and June 18. A third meeting has been slated for July 9. “Kramer has set a window to see if we’re making some headway in the next 30 to 60 days (from the initial talks),” said Burbank City Manager Bud Ovrom, one of three Burbank delegates at the recent talks. “He wants to use that time to find if there’s any common ground. If we can’t make a breakthrough in the next 30 to 60 days, it will be back to the courtroom.” Meanwhile, Carl Raggio, one of three delegates from the Airport Authority, was upbeat about the progress so far. “You need to applaud (Kramer) because he’s bringing this to the table where it belongs and wants to come out with something that’s mutually beneficial to everyone,” said Raggio. “I’m encouraged by Mayor Kramer’s attitude towards this.” Kramer said the fact that both sides have agreed to a third meeting should “send a signal to anyone that this hasn’t been a waste of time.” Ovrom was similarly optimistic: “I feel we are making headway and am pretty optimistic about our chances of finding a mutually acceptable solution.” The Airport Authority would like to build a new, greatly expanded terminal with no flight curfew, as many as 27 gates and no cap on future growth in passenger traffic. Burbank officials, on the other hand, would like to impose a 10 p.m.-to-7 a.m. curfew, limit the number of gates to 16 and cap passenger growth to 10 percent over 1996 levels. Neither side had been willing to yield ground until the recent resumption of talks, and instead the two were waging a courtroom battle through a series of lawsuits and counter suits. Burbank spent an estimated $3.5 million in legal fees to fight the expansion last year, while the Airport Authority spent between $1 million and $1.5 million. The Authority has budgeted another $1.2 million for legal expenses this year, and Burbank previously said it has budgeted $3 million for legal fees in 1997. The Burbank City Council, which would have to approve any deal, previously voted 4-1 to let Kramer negotiate on Burbank’s behalf, with the lone dissent vote coming from Councilmember Ted McConkey. But Kramer also insisted on a confidentiality clause as part of the agreement, which means no one on the City Council will know the terms of any compromise until one is announced. Of the four City Council members besides himself, Kramer will have to convince at least two to approve any agreement he reaches with the Airport Authority. Chances are good that Councilmember Bill Wiggins will go along with whatever agreement Kramer negotiates, according to Ovrom. Meanwhile, the agreement must also be acceptable to at least one of two other councilmembers, either Stacey Murphy or Dave Galonski, since McConkey is unlikely to vote for any kind of expansion agreement. “(Kramer) didn’t get any direction from the council over what he should be mediating,” said McConkey. “It seems to me that’s a complete betrayal of what we promised the city of Burbank when we took office.”

fastrack/lsp/28″/mike1st/jc2nd By LISA STEEN PROCTOR Contributing Reporter Chet Huffman brings the same determination to running his family’s business as he does to racing off-road cars in Baja California. “It’s no different than business. I don’t like to lose at either,” he says. The 36-year-old thrillseeker has been shifting Northridge-based Dukes Inc. into ever-higher gears lately. But Huffman who, along with his father, Lloyd, owns Dukes is not pursuing that growth with reckless abandon. In fact, he’s downright conservative when it comes to running the family’s aerospace components business. The elder Huffman taught his son the two seemingly conflicting traits of leisure-time abandon and workplace conservatism by exposing his son to racecars, motorcycles and boats, but also teaching him that the way to grow a company is through internal cash flow, not debt. This practice was begun at Dukes when Lloyd purchased the then-ailing company 25 years ago and has been continued by Chet Huffman, who bought out his father’s partner seven years ago and has kept the company virtually debt-free ever since. This is not an insignificant feat given that Duke’s product is extremely R & D-intensive; and that the company has been dramatically expanding in recent years. Dukes is in the business of designing and manufacturing valves and systems used to control the air temperature and pressure inside airplane cabins. Its main product line consists of valves used to direct heated air from a plane’s engines into the cabin and to various other parts of the plane. Some of the air is produced by the engines themselves, and some is scooped from the outside atmosphere. The air is heated as it passes through the engine and is then funneled through the valves to be used for such things as de-icing the plane and even for air-conditioning the cabin, after being cooled down somewhat. (Air from directly outside the plane at cruising altitudes is too cold to inject directly into the cabin, so it is engine-heated first to warm it up a bit). Dukes had manufactured these valves solely for single-engine piston aircraft until seven years ago when Huffman took over the reins of the company after his father suffered serious injuries during an off-road car race. Since that time, Lloyd Huffman has focused on the engineering aspects of the company and left the actual running of the company to his son. When Chet Huffman came on board, he recognized that the market for single-engine aircraft was beginning to dry up because of product liability issues. “Liability got so bad that the (airplane) manufacturers quit building (the small aircraft),” said Huffman. “We had to reinvent the company because we were so dependent on that segment of the market.” That’s when Dukes began designing the same types of valves for the larger, more-complex business jets. When the company became successful in that area, it took the same technology and applied it to systems on regional aircraft (commercial aircraft that carry up to 70 passengers and fly routes of about 350 to 500 miles). While the basic valve technology is the same as those used on small aircraft, additional items are required on the valves of commercvial planes. So Dukes can sell those valves for a higher price, and a greater profit. But Huffman has not stopped there. In the last 18 months, he has taken Dukes into the wide-body business, working with large commercial airlines, such as United Airlines Inc., in replacing worn-out valves on their jets. A United Airlines publication distributed in the airline industry stated that the Dukes valve is considered 10 times more reliable than the original valves in its DC-10s and that the valve replacements will save the company more than $2 million in maintenance and replacement costs over the next five years. Huffman estimates the life of Dukes’ valves to be 10,000 to 12,000 flying hours, compared with the industry standard of 3,500 hours. Dukes also recently won a government contract to replace valves on military fighter planes as the original valves fail (Huffman would not disclose the type of plane). This contract is worth at least $20 million and could potentially be worth as much as $70 million over the next 15 years, said Huffman, depending on how quickly the original valves wear out. Huffman has also added a new product to Dukes’ offerings, a digital cabin-pressurization system, which is generating an estimated $5 million more in business a year. Eighteen months ago, the company hired 14 new employees to work on the system, which automatically maintains the cabin’s air pressure at a desired level. The system is a notable advancement from the less-precise system that requires pilots to manually control the cabin’s pressure. Since the hirings, the group (most of which works in Manchester, N.H. because that is where the workers familiar with this technology were located) has won four contracts with large companies such as Boeing Co. and Raytheon Aircraft Co. The contracts have a combined value of at least $8.5 million over 10 years. All this activity has resulted in a near doubling of the company’s revenues in just two years, climbing from $6.7 million in fiscal 1995 to $12.5 million in fiscal year 1997 (which ended in June 30). Based on the current backlog of orders, Huffman predicts revenues for fiscal 1998 will be at least $14 million to $15 million. Customers say one of the company’s biggest assets is its willingness to listen to their needs. “Rather than force something down us that we really don’t want, they listen to us and they still stay competitively priced,” said Steve Walker, senior procurement specialist for Raytheon, which recently inked a $7.5 million contract with Dukes for valves and cabin-pressurization systems to be installed in Raytheon’s fleet of business jets. Walker also praised Huffman’s efforts over the last seven years. “He was green when he started seven years ago, but he has learned the business and grown the business,” said Walker. Huffman’s attitude towards growth will not likely change soon. Despite its growth, Dukes’ size still pales in comparison to most of its competitors which include AlliedSignal Aerospace, Parker Hannifin Corp. and United Technologies’ Hamilton Standard division. “We compete against very large businesses,” said Huffman. “And we’re looking smaller because of all the mergers that are occurring in the industry.” But Huffman views this development with optimism and says Dukes’ competitors are actually becoming some of its best customers. “The larger companies are concentrating less on the individual components and more on the overall system,” said Huffman. So those companies are buying their valves from Dukes and other smaller outfits, rather than manufacturing the valves themselves. Huffman says he doesn’t intend to be swallowed up by the big guys. Instead, he prefers to keep the company in the family a company where his father and brother work in engineering and his mother works in accounting. (A second brother heads up a family-owned aircraft parts distribution business in Golden, Colo.). “We’re approached routinely (with buyout offers) and we’re not at all interested,” said Huffman. “We enjoy what we’re doing and we like the flexibility of what a small business allows us.”

VALLEY EDIT/jc/dt1st PRODUCTION _ note bullets HED: Our One-Year Anniversary One year ago, the San Fernando Valley Business Journal was launched in the firm belief that this community was hungry for business news. We set out to tell the stories that weren’t being told elsewhere from the personalities behind Valley companies to economic forces at work in this increasingly vibrant and diverse area. There’s been no shortage of topics. In fact, the timing for launching a new business publication could not have been better. From the booming entertainment industry to an uptick in home prices, from the battle over expanding the Burbank Airport to the return of speculative real estate development, the Valley has been especially newsworthy over the past 12 months. Consider this quick recap: – Development: The DreamWorks SKG animation headquarters got underway in Glendale, the Porter Ranch commercial project was downsized, tenants were lined up to occupy the former GM site in Van Nuys and Newhall Land and Farming Co. unveiled its ambitious Newhall Ranch project. – Entertainment: The hot film and television industry put Valley sound stages on overload. Disney expanded into Glendale, buying the 100-acre Grand Central Business Centre. And Universal Studios proposed a massive expansion that would turn its property into a destination resort, with new hotels and attractions. – Economics: Valley bankruptcies kept rising, but in many areas home prices started picking up especially in upscale areas near the movie studios in Burbank and Universal City. And the spate of new office and retail projects being proposed held the prospect of reviving the construction industry. – Transportation: Those two perennial Valley issues the expansion of Burbank Airport and the building of an east-west rail line were critical topics of discussion once again. The Metropolitan Transportation Authority’s move to delay Valley rail construction until 2011 was met with vociferous objections from the community, while the city of Burbank was fighting to reduce the size of the planned new Burbank Airport terminal. – Retailing: Bloomingdale’s came to the San Fernando Valley, and Valley malls were reinventing themselves as homes for multiplex theaters with shopping almost a side attraction. Even Cal State Northridge wanted to get into the retailing action by developing the $25 million University MarketCenter project on the site of Devonshire Downs. – Health Care: Four Valley-based health maintenance organizations threatened to leave the city of Los Angeles over its gross receipts tax, saying they were being unfairly assessed for revenues for which they served as an intermediary. The city blinked and agreed to change the tax. One of the HMOs, CareAmerica Health Plans, subsequently agreed to move into a new business center within L.A. city limits in West Hills. – Aerospace: Lockheed began a hiring spree in the Antelope Valley, giving that region’s long-suffering economy a cause for hope. – Politics: The Valley secession movement was blocked by the state Legislature, but the sense of unity created over the issue raised the Valley’s political consciousness in a big way. The wide variety of issues affecting businesses here is convincing evidence that the Valley needs a forum for news told from a business perspective. We’re here to do just that.

REColumnSFV-June/bb/ inches/mike1st/mark2nd Businesses of all sorts are continuing to lease up commercial space in and around the San Fernando Valley. And real estate entrepreneurs are finally responding with concrete plans for new developments. As the economy improves, Chatsworth in particular seems to be regaining its traditional position as a preferred office/R & D; location, as a couple of just-closed lease transactions illustrate. Netcom Systems Inc., which makes high-performance computer networking test equipment and systems, will substantially expand its administrative and production facilities in Chatsworth for the second time in just 14 months this time doubling its space to 50,000 square feet. Privately held Netcom will relocate from about 24,000 square feet to an adjacent building on Nordhoff Street, formerly occupied by CareAmerica Health Plans, within the Nordhoff Business Center. Scott Caswell of Delphi Business Properties represented both Netcom and the property owner, local developer Jerry Katell, in negotiating the five-year, $2.3 million lease. Netcom houses virtually all of its domestic development, manufacturing, administration, sales and marketing activities in Chatsworth. It also has a European operation based in Paris. In another expansion, DreamWorks SKG has leased a 124,518-square-foot office/industrial facility in Chatsworth for general office, production and storage uses. DreamWorks committed to the entire building at 21350 Lassen St. The property’s former long-time tenant the Sanyo Fisher Co. consumer electronics group relocated about two months ago to another Chatsworth facility. Matthew Miller and Jerry Porter of Brentwood-based Metrospace Corp. negotiated the five-year lease on DreamWorks’ behalf, while Tim Foutz and Bill Napier of Encino’s Capital Commercial Real Estate represented the property owner, SBD Group. Valley real estate sources estimated the lease’s value at between $3.5 million and $4 million. More expansions Over in the central Valley, two substantial manufacturing operations have agreed to expand into new digs. Window parts manufacturer Reflectolite Products Inc. will expand, upgrade and relocate from Sun Valley to a 97,567-square-foot industrial building in nearby Pacoima, which it has agreed to lease for 10 years. Reflectolite has leased the building historically known as the Familian warehouse which long-time tenant Familian Pipe & Supply will be vacating in June. Reflectolite plans to relocate around the beginning of September. The 1980s-vintage building at 12685 Van Nuys Blvd. is within the Pacoima Enterprise Zone, in which businesses receive state and local tax incentives. Capital Commercial’s Bob Scullin negotiated the $4.9 million lease transaction on behalf of the property owner Pacoima Partnership II, an affiliate of a family-run business with industrial real estate holdings in Los Angeles and Ventura counties, as well as in Phoenix and Las Vegas. CB Commercial Real Estate Group’s Greg Geraci represented Reflectolite in the lease negotiations. In a similar deal, medical instruments maker Pacesetter Inc. has agreed to expand into a 110,000-square-foot R & D; building that it plans to use for warehousing and office purposes. The pacemaker specialist, a subsidiary of Nasdaq-traded St. Jude Medical Co., will initially occupy about 65,000 square feet, then expand next March into the balance of the Talfair Avenue property in Sylmar, which is adjacent to the company’s headquarters, according to brokerage Grubb & Ellis Co.’s Jim Linn. He and Grubb & Ellis colleagues Todd Lorber, Allen Trowbridge and Steve Valenziano negotiated the five-year, $3 million lease (with renewal options) on the tenant’s behalf. Brett Warner and Larry Twomey of Lee & Associates represented property owner The Telfair Corp., which is controlled by a local family. Developers set plans With tenant activity abounding, developers continue to make plans for “speculative” projects (i.e. those for which construction commences without tenant pre-lease commitments) a clear indication that the Valley’s real estate markets are turning around. Cypress Land Co. is anticipating a final go-ahead from the City of Calabasas on June 12 for a 225,000-square-foot speculative mixed-use project, Calabasas Corporate Center, and expects to break ground on it by late summer, according to project attorney Mark Armbruster. The development at Lost Hills and Agoura roads just off the Ventura (101) Freeway is to include office, light industrial and R & D; buildings, and is slated for completion in the late spring or early summer of 1998. Armbruster noted that Calabasas’ planning commission tentatively approved the project at a May 8 hearing. He declined to disclose the project’s anticipated development cost. Calabasas is already seeing substantial “build-to-suit” (custom-designed) development activity in response to strong demand from corporate and high-tech tenants. Cypress Land, headed by the Harvey family, has primarily focused on the projects in the city of Cypress in northwest Orange County. The company currently has about 275,000 square feet of speculative office, light industrial and warehouse space under construction on about 15 acres there. Prudential Real Estate Investors will break ground in this year’s third quarter on a speculative phase of a Simi Valley industrial park. That phase is designed to contain more than 315,000 square feet. The two new buildings, totaling 184,635 and 132,850 square feet, respectively, will supplement existing facilities at the a 55-acre Tapo Canyon Business Center, where Guardian Medical and Standard Abrasives already collectively occupy more than 200,000 square feet. The industrial park had previously been known as Heritage Oaks and Peppertree South Business Center. CB Commercial’s Barbara Emmons, who is representing the park along with CB’s Darla Longo and Capital Commercial’s Scullin and Foutz, said the Simi Valley market boasts a 6 percent industrial vacancy rate. She added that no large facilities are now available, and that the marketing team is quite bullish about pre-leasing prospects for the new speculative phase. –30–

citywalk/34″/1stjc/mark2nd By DAN TURNER Staff Reporter Seeking to draw more local customers, Universal Studios Inc. is undertaking a major tuneup of its CityWalk attraction to put a greater emphasis on nightlife and entertainment. Last month, a cigar club/sports bar opened its doors at the stylized supermall on the hill, and this fall will mark the arrival of a superhero-themed restaurant. Next year, expect the arrival of a Sega GameWorks arcade/nightclub. CityWalk’s new and coming attractions are part of an effort to revitalize the retail attraction, which four years after its launch is as popular as ever among tourists even if its appeal among locals appears to be lagging. “I know that the restaurants up there do very well, but the retail shops are hurting,” said Dick Carter, senior retail associate with Beitler Commercial Realty Services. “Given that you have to pay $6 to park your car, and most of the merchandise up there isn’t much different from what you’ll find at your local mall, why pay that much just to go shopping?” The high cost of parking, and a relative lack of unique entertainment offerings that would compel locals to keep coming back, are cited by analysts as the biggest drawbacks to an otherwise highly successful venue. Universal has no intention of eliminating the parking fee. But its new management recognizes that local dollars represent an important part of Universal City’s income stream. “We want CityWalk to be a place where both locals and tourists are comfortable in the context of each others’ worlds,” said Larry Kurzweil, a Universal senior vice president who became the mall’s general manager in February. “We don’t want it to be too tourist-themed, but we want it to have the things tourists are looking for.” CityWalk is Universal Studios Hollywood’s equivalent of Disneyland’s Main Street U.S.A., a retail and entertainment corridor through which theme park visitors must pass before reaching the main attractions the studio theme park and the Universal Amphitheater. The key difference between CityWalk and Main Street is that visitors don’t have to visit the park or pay any kind of admission (except for parking) to patronize CityWalk. On any given day, a flood of foot traffic passes through CityWalk in the morning and evening hours as people head in and out of the theme park, or the adjacent Universal Amphitheater. They pass a blinking, oversized wonderland of L.A. kitsch: A three-story electric guitar in front of the Hard Rock Cafe, a neon King Kong climbing the Sam Goody music store, and a space ship crashing through the wall of a comics and collectibles store. Universal Studios Hollywood spokesman Eliot Sekular said that approximately 10 million people visited Universal City last year and about half of those did not visit the studio theme park. Merchants report mixed results in their four years at the mall. When asked whether sales have increased from year to year, responses range from “absolutely,” to “sales seem to fluctuate with the tourist trade,” to “sales have kind of died down since the first year CityWalk was open.” The range of responses seems keyed to one factor: Whether or not the store caters to tourists. Claude Woods, assistant manager of the Nature Company store at CityWalk, reports a sales decline since 1993. He attributes the change to the high cost of parking and the fact that many locals stopped making return visits to CityWalk after the initial hype of its first year died down. The Nature Company is a 132-store chain of nature- and knowledge-oriented stores that aren’t known as tourist stops. But David Palley, manager of Captain Coconuts a gift shop specializing in plush toys, caps, mugs and other tourist-oriented merchandise thinks his store is in one of the best locations in the country. “Tourist traffic here is unsurpassed,” he said. “Probably one of the only better places to be would be Disneyland.” Restaurants appear to be an unqualified success. The mall’s Gladstone’s, for one, is among the top-grossing restaurants in L.A. Also getting plenty of patronage from locals and tourists is the 18-screen Universal City Cinemas the biggest movie theater in L.A. County in terms of the number of seats. It also is believed to be the county’s top-grossing cinema. The emphasis on tourists, however, steams homeowners, who claim that when Universal was seeking government approval to build CityWalk, it promised a desirable destination for locals and tourists alike. “The idea of CityWalk being a quaint, community-oriented destination is not what happened,” said Tony Lucente, president of the Studio City Residents Association. “It’s turned into more of an entertainment, tourist kind of place.” It has also failed to live up to its promise as both a retail and entertainment venue, according to some retail analysts. “The entertainment element up there has to be brought up a few levels, so you’re taking it out of the realm of a gloried strip mall and making it a (location-based entertainment site),” said Kevin Skislock, director of investment research at L.H Friend, Weinress, Frankson & Presson Inc. who specializes in location-based entertainment a buzz-phrase for suburban attractions that usually combine retail and entertainment elements. “There’s clearly potential for the new management team to max that site out further, particularly on the entertainment side of the equation,” he said. Enter Kurzweil, who is intent on both increasing CityWalk’s local appeal and turning up the volume on entertainment. Kurzweil, who has built brands for the Olive Garden restaurant chain and Nestle SA, says his primary duty is to boost awareness of the center, but he also emphasizes his intention to broaden the mix of offerings at CityWalk. The mall’s second phase, which has not yet begun, calls for development of about 100,000 square feet at the east end of the existing 200,000-square-foot center. Universal officials say they don’t have a date for construction to begin. In addition, Universal is seeking approval for a $3 billion project that will more than double the developed land at Universal City and add a considerable portion to CityWalk in addition to the already approved second phase. Kurzweil is currently assessing the various options for new stores and attractions at the center, looking for things that will appeal to as wide a consumer base as possible. At least one major entertainment offering is in the works. Sega GameWorks, a chain of themed video arcade/mini-theme parks being developed through a partnership between Universal, Sega Enterprises Ltd. and DreamWorks SKG, is expected to open an outlet in Universal City some time in 1998 although no leases have yet been signed, according to GameWorks spokeswoman Melissa Schumer. Meanwhile, a new sports bar/cigar club/grill called the Hollywood Gaming Grill opened last month. And Universal is teaming with Marvel Entertainment Group Inc. and Planet Hollywood Inc. to build the first Marvel Mania, a themed restaurant based on Marvel’s comic book characters being constructed in a strategic location with entrances facing both CityWalk and Universal Studios Hollywood. While parking costs are blamed for limiting CityWalk’s appeal to locals, observers point out that in some ways they add to the center’s appeal. Some consumers feel safer at CityWalk than other urban malls because the parking fees decrease its appeal to low-income people and panhandlers. “Not just everybody comes up there,” said Carter with Beitler Commercial. “If they can’t afford the $6, it precludes a certain group of people from patronizing CityWalk.”

valtalk/mike1st/mark2nd High-Flying Mascot Most baseball teams have an arsenal of sluggers and pitchers at their disposal to help clinch games. But Lancaster’s JetHawks minor league team has something a bit more impressive: an FA-18 fighter jet. The plane was donated by NASA last month and is on permanent display outside the team’s new 4,500-seat stadium. At one point, the plane was test-flown over the aerospace-rich Antelope Valley. “Right now, we call it an airplane on a stick,” says Melinda Mayne, a spokeswoman for the team, referring to how the fighter is mounted. Will the aircraft which still has the ability to fly ever be called back into action? With a record of 26 wins and 26 losses, the California League team might just need to call it in from the bullpen. Unwanted Attraction Everyone knows the film industry is good for L.A.’s economy, even if local film shoots sometimes cause traffic tie-ups and crowds in some neighborhoods. But one recent run-in with movie makers in Sherman Oaks has local residents saying, “Enough is enough.” In this case, it isn’t Walt Disney Co. or Warner Bros. or even one of the smaller independents that’s causing the stir. Instead, it’s some players from Hollywood’s seedier side, namely, the porn industry. It seems a porn producer has rented a house east of Sepulveda Boulevard to use for its movie shoots, since renting a house is much cheaper than renting a film studio, says Richard Close, president of the Sherman Oaks Homeowners Association. The problem is, the actors are shooting their scenes a bit too publicly, in the view of local homeowners. “Usually, they’re smart enough to keep the blinds shut,” said Close. “But with the hot weather lately, they were opening the windows and blinds.” Close declines to reveal the exact location. “If the address is publicized, it will not only be a problem for the neighborhood with the inhabitants, but also with all the looky-loos,” Close says. Relief Afoot The average pair of feet is pounded by 8,000 to 10,000 steps per day leading some 55 million people to consult doctors about foot problems each year. North Hollywood’s Interactive Health aims to capitalize on all that podiatric misery. The company has just introduced the “Rolling Foot Soother,” a massager designed to relieve stress, tension and pain by kneading tired soles and toes. There is a strong correlation between healthy feet and overall physical health, the company asserts. But bear in mind, foot fitness doesn’t come cheap. The foot-soothing device retails for $229. Get the Popcorn It was only a matter of time a very short matter, in fact before someone found a way to make money off the violent but botched bank robbery at Bank of America’s North Hollywood branch in late February. That’s right, MVP Home Entertainment Inc. is raking in the bucks these days with one of its newest releases, titled “North Hollywood Shootout: Terror in the Streets of L.A.” It may not be the perfect “date” video, but MVP’s homemade documentary must be appealing to someone. The video is a compilation of TV news footage of the shootout and subsequent scenes and interviews shot by producer James Strauss. Since it first hit the streets in early March, “Terror in the Streets” has sold between 70,000 and 80,000 copies at $14.95 a pop, said MVP spokeswoman Meredith Emmanuel. One of the video’s biggest buyers to date has been police officers themselves, she added. Still, that fact was of little use when Emmanuel was recently pulled over for speeding and attempted to worm her way out by mentioning MVP’s latest production and its positive portrayal of the L.A.P.D. “He said, ‘That’s great,’ and we talked about the whole thing, but he still gave me the ticket,” she said, noting that the officer fined her $136 for driving 42 miles per hour in a 35 mile-per-hour zone. So, what kind of an encore can we expect now from MVP? It’s none other than “Heaven’s Gate: A California Culticide,” due out in stores this month. The Church Defense How do you prevent your city from being overrun by adult bookstores, porno parlors and sex shops? Build a bunch of churches. That was the suggestion given by one member of the Santa Clarita City Council last month. The council was considering an ordinance which later was given preliminary approval to disallow sex shops from being built within 1,000 feet of any school, church, park, residential neighborhood or other adult business. Councilman Carl Boyer, obviously not a fan of sex stores, suggested that, under the new ordinance, a sudden proliferation of religious institutions could keep the city smut-free. “I think we could become very church-friendly,” Boyer was quoted as saying in The Signal, adding that the city could promote the building of new churches every 2,000 feet along Sierra Highway and other major streets. Boyer also suggested moving quickly to designate public parks wherever possible. Ironically, Santa Clarita need not worry about being overrun by sex stores only one adult business currently operates within city limits.