Music unit takes over Beverly Hills space

An iconic Beverly Hills office building that became a white elephant in the weak commercial real estate market finally has a tenant.

Sony BMG Music Entertainment will relocate its West Coast headquarters to the former CAA building in January. The diskery, whose U.S. headquarters are on Madison Avenue in New York, is now housed in Santa Monica.

Personnel from Sony’s and BMG’s labels, publishing and licensing will move into the 65,000-square-foot space, which has been empty since CAA left for its new HQ in Century City in 2007. Sony BMG has signed a 10-year lease on the property.

The edifice had few interested parties since the asking price — reportedly $5 per square foot — was mighty steep for a building whose entire first floor consists of lobby space featuring a Roy Lichtenstein painting so huge that it cannot be removed. In addition, it was clearly designed for one company to occupy the entire building, so it was not feasible to convert it into a traditional office building with multiple tenants.

Sony BMG will pay $4 per square foot and cover operating expenses of between $700,000 and $900,000 per year. Sony BMG would not comment on whether it would be making any structural changes to the building.

Designed by I.M. Pei — his first project on the West Coast — and built for $25 million in 1989, the CAA building became so closely associated with Michael Ovitz and his regime that the current CAA chiefs made no secret that their move to new digs in Century City was about making a fresh start. Ovitz remains a landlord of the marble structure at the intersection of Wilshire and Santa Monica boulevards.

A similar motivation to put a fresh face on business could be driving the Sony BMG move. The diskery, which owns labels such as Columbia, RCA, Arista and Epic, has sharply reduced its staff over the last several years as sales have declined, and execs may want to shed some demons at their various spaces in the entertainment complex at 20th and Colorado in Santa Monica. (Prior to merging in 2004, Sony had 150,000 square feet of office space in Santa Monica, and BMG was using 85,000 in L.A.).

Rick Rubin, the chief creative exec at Sony BMG’s Columbia Records, has been quoted as saying he wanted to move the company’s offices even though he works only from his various homes. For a New York Times article last year, he took a reporter to an empty space and the CAA building, touting both options, which led to speculation that Columbia would set up a shop separate from the rest of Sony BMG and become L.A.-based.

There are also some Sony Corp. offices in Santa Monica, but they are not part of the move.

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