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Anthem Blue Cross Relocation to Create Rare 32-Acre Site in High-Demand Part of Los Angeles

Woodland Hills Tract Holds 26 Acres of Already Cleared Parking Area
August 1, 2018
Health insurer Anthem Blue Cross is on track to create one of the largest open parcels in the San Fernando Valley of Los Angeles by planning to leave its longtime office tower and cut its space by more than half at a nearby complex.

The move will leave vacant its current 14-story office tower in Woodland Hills, CA, that sits on six acres adjacent to a 26-acre surface parking lot that Anthem owns and had listed for sale last year. The combined 32 acres of cleared space, surrounding grounds and a tower creates a relatively rare opportunity for development in the nation's second-largest city, according to CoStar data.

A low-density property with oversized parking like Anthem’s in Woodland Hills is prime for development, especially given allowances outlined in local development plans, said Stephen Basham, senior market analyst covering the Southern California region for CoStar Market Analytics.

“It’s one of the few areas in Los Angeles with land and the possibility for large-scale development and the political willpower welcoming increased density," Basham said. "That’s what makes it one of the most interesting spots in L.A. over the next decade."

The move comes amid a surge in demand for the Warner Center in Woodland Hills, an affluent suburban neighborhood at the foothills of the Santa Monica Mountains in the west San Fernando Valley that has single-family homes, high-performing schools, a Westfield shopping center and a growing office market.

Anthem reached a deal for more than 169,000 square feet at the new site, called Campus at Warner Center, composed of two six-story, Class A office buildings at 21215 - 21255 Burbank Blvd., with the joint venture between real estate developer and owner Lincoln Property Co. and investment manager Angelo, Gordon & Co.

Anthem is downsizing from 448,070 square feet at 21555 Oxnard St., where it has occupied the entire building since 1977, according to CoStar research. Its lease there, with landlord T & A Warner Center Investors LLC in Beverly Hills, expires next year. T & A Warner Center has not listed the building for sale.

“In late 2019, we will be relocating our Woodland Hills office to a newer, more modern building located a few blocks away,” an Anthem spokeswoman said in an email to CoStar News.

Anthem plans to backfill space at Campus at Warner Center that is being vacated by Turbo Tax creator Intuit Inc. The software maker is moving out of 170,000 square feet in that building and reducing its space to about 53,000 square feet in Los Angeles real estate investment trust Douglas Emmett Inc.’s high-rise Warner Center Towers, at 21650 Oxnard St. Intuit said it is shedding unused space and is not laying off any employees.

“Obviously losing Intuit was not a positive,” said Kent Handleman, senior vice president at Lincoln Property who represented his firm, which is a co-owner of the building Anthem is moving into, in the negotiations. “So this deal [with Anthem] is a home run. It’s extremely meaningful to this project. It really makes the investment kind of hum here, having such great name and great credit tenant.”

Anthem’s relocation reflects a significant reduction in space for the health insurer. The spokeswoman didn't comment on why the firm is reducing its square footage by more than half in this market.

The health insurer's 26-acre parking lot adjacent to its longtime Oxnard Street tower was listed for sale with real estate brokerage Savills Studley last year. The company didn't comment on how the property is being marketed and whether Anthem vacating the adjacent office building could affect any sale of the parking lot.

There has been a flurry of development plans on land in Woodland Hills’ Warner Center area since the implementation of the Warner Center 2035 Plan, which allows for 30 million square feet of commercial development and 20,000 new residences.

Mall of America developer Triple Five Group is under contract to purchase the 47-acre former Rocketdyne site in Warner Center for $150 million and plans to build a large mixed-use development there.

Meanwhile, shopping center developer Westfield Group was approved to develop residences, hotels and an entertainment venue as part of its $1.5 million Promenade expansion.

  For the Record: Corey Davidson, Liron Nelik and David DiPietro of Savills Studley represented Anthem Blue Cross in the transaction. Kent Handleman led the negotiations for Lincoln Property Company.

Jacquelyn Ryan, Los Angeles Market Reporter  CoStar Group   
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