In the largest office building trade in the LAX submarket in over a decade, Sunny Hills Management Co. Inc. of West Covina has paid $61.3 million for the Airport Spectrum, a 500,000-square-foot Class A office campus that sits at the entrance to Los Angeles International Airport.
The seller was Miracle Mile developer Decron Properties Corp., whose price was about $125 a square foot for the two-building property at 5757 W. Century Blvd.
Decron acquired the building in 2000 for $20 million. It was less than 30 percent leased at the time, and Decron invested more than $6 million to renovate the façade, modernize the lobby and improve the common areas. That helped lure tenants that include UCLA, Expeditors International and the Transportation and Safety Administration.
It is now 75 percent leased, which is roughly 15 percent better than the average among high-quality properties in the long-struggling market, according to data from CoStar Group Inc.
The LAX office market has performed so poorly that some see hotel conversions as the best use for office buildings. Corona del Mar’s Seaview Investors bought a 12-story office tower at 5933 W. Century last year for $10.8 million and hired Irvine firm R.D. Olson Construction to convert it into a 231-room Residence Inn by Marriott, which cost an additional $44.5 million.
Sunny Hills plans to continue operating Airport Spectrum as an office, and will ramp up efforts to lease the remaining space. The $8 billion modernization of the airport influenced the firm’s decision to purchase, as well as the potential that, as rents rise in Playa Vista and El Segundo, tenants will spill over into the LAX market, said Marc Renard of Cushman & Wakefield, who along with Manfred Schaub and Chris Sinfield represented the seller. The buyer was not represented in the sale.
Compared to nearby El Segundo market, where offices are selling for upwards of $300 a square foot, the $125 a square foot price was seen as a deal, Renard said.
“The strength of the office market in Playa Vista and El Segundo is spilling over into Torrance and it will continue to move south, so a lot of people are betting on the revitalization of the Century Boulevard corridor,” he said.