Building sets sights high

DOWNTOWN — A new 188,000-square-foot office building completed last month by struggling Maguire Properties is trying to attract tenants with asking rental rates far higher than city averages and even above those in downtown Los Angeles, spurring continued skepticism about its future.

The regional commercial real estate giant, which owns five buildings in downtown Glendale, defaulted on several loans in Los Angeles and Orange counties this month after it posted $380 million in losses during the second quarter, more than double its losses over the same period in 2008.

Maguire’s financial struggles had already raised questions about the potential sale of its newest Glendale property at 207 Goode Ave., which remains empty as local demand for office space has hit record lows. But the firm has set its asking rental rates so high for the building that experts and local brokers doubt the company will be able to fill enough space to pay off lenders without digging into its shrinking cash supplies or selling the building altogether.

While the average asking rent for Glendale office space is about $2.72 per square foot per month, the property’s asking rent per square foot is more than $4 and could be as high as $4.35, depending on building service fee calculations, according to brokers and real estate information firms.

“It’s so far out of the market, we don’t see it leasing for a long, long, long time to come,” said Bill Boyd, senior managing director for Charles Dunn Co. Inc., a real estate firm in Glendale.

Average per-square-foot rental rates in downtown Los Angeles, by comparison, are $3.33 per month, $3.64 in Hollywood and West Hollywood, and $4.15 in West Los Angeles, according to second-quarter statistics from real estate firm Grubb & Ellis.

“They’re not going to get that,” Paul Habibi, a professor of real estate finance at the UCLA Anderson School of Management, said of Maguire’s asking rent for the property. “Four dollars in Glendale, in this market, will not fly.”

Maguire’s asking rent is not set in stone and will likely adjust depending on the market, said Maguire spokeswoman Peggy Moretti.

The company may also be able to get some concessions on the terms of its construction loan, which is set to mature May 1, 2010, because the Texas-based lender for the property, Guaranty Bank, was sold Friday to Banco Bilbao Vizcaya Argentaria, of Spain, Moretti said.