Penthouse offices running on empty

Los Angeles The chief executives at Atlantic Richfield, the oil company once based in Los Angeles, ran their international empire from some of the most regal corporate offices ever created in Southern California.

With Arco's 20-foot ceilings, dark wood panelling and private rooftop helipad, "this was corporate America as people thought of it," said Kent Handleman of Thomas Properties Group, the building's landlord.

That was then. Nowadays, the landlord can't find a renter for the space's 1970s-era sumptuousness.

There are also plenty of other catbird seats for choosy chief executives to pick from.

Penthouse office floors with drop-dead views are vacant in some of the best office buildings in Los Angeles County, a sign of the troubled economic times and the gulf between what landlords think their top-shelf product is worth and what tenants are willing to pay.

Some of these standoffs between prospective landlords and would-be tenants have been going on for years, with no sign of abating.

In the most extreme case, the top two floors of a premier Westwood high-rise have been empty since the building was completed in 1989. A survey by real estate brokerage Jones Lang LaSalle found a score of tall buildings downtown and on the Westside where the penthouses are vacant.

In several of these buildings, the floors just below are also empty.

For instance, the two uppermost (23rd and 24th) floors of a high-rise at 10960 Wilshire Blvd. last occupied by Sony Entertainment are connected by a grand curved staircase, said real estate broker Hunt Barnett, who is trying to find tenants for the space.

If you rent all 50,000 square feet, the landlord will even put the name of your company in big letters on top of the building. The space is not ostentatious, Barnett says, but it has been empty for a year and a half.

The landlord wants $3.95 a square foot per month for the top floors, compared with $2.95 for space on lower levels.

Premium prices

At Center West, the Westwood high-rise completed in 1989, landlord Kambiz Hekmat wants $6.50 a square foot for the 23rd and 24th floors, 35 per cent more than the rent for the floors below, according to real estate data provider CoStar Group.

So far he's had no takers. Owners expect their loftiest offices to fetch premium prices because the views are great and, after all, who doesn't want to be top dog?

Penthouse-level executives interviewed by The Times in the 1980s explained that it was important to keep up appearances.

"People expect the top person to have the top office," said Joseph J. Pinola, then-chairman and chief executive of First Interstate Bancorp, who had the highest perch in the city — 59 floors up — during the ‘80s.

Bragging rights

"It's protocol." Pinola divulged that he, of course, was too busy to look out the window.

When a new skyscraper 13 storeys higher went up nearby in 1989, however, Pinola moved his headquarters and snagged the penthouse at what became First Interstate World Center, retaining his celestial bragging rights.

A real estate broker at the time speculated that skyscrapers reflected a primal militaristic impulse.

"It's important to build your victorious camp on the top of the hill," the broker said.

"Being up high is an extension of men wanting to be big and strong and over six feet tall."

Like the three-piece suit and other signs of corporate power from the Reagan era, the giant imposing office has gone out of style.

Companies' priorities have changed since those years, said Whitley Collins, regional manager of Jones Lang LaSalle. Setting up shop in the penthouse is "a bad statement for companies to make" in this ailing economy, Collins said.

"The last thing you want to do is go over the top on your space. You want to appear fiscally responsible." Collins predicted that most of the penthouse offices empty now will still be empty in a year or two.

"If the economy takes off, maybe someone will reach for a top floor," he said. "But it's not going to happen unless they get a discount."