If and when Northrop Grumman Corp. completes its proposed merger with Lockheed Martin Corp., its Century City headquarters will pack up and head east to Lockheed’s Bethesda, Md. home base.
That would leave a 131,000-square-foot-swath of office space in the Northrop Grumman Plaza. But with office space on the Westside being snapped up these days, commercial real estate brokers predict it won’t take long to find new tenants.
“There is big demand for that type of space,” said Doug Jacobson, a principal at Lee & Associates, a West Los Angeles commercial real estate firm. “It wouldn’t mean much more than a blip in the market.
“There is a lot of big tenant movement now that there is some predictability to the economy,” he added.
CB Commercial has the listing for the space at 1840 Century Park East, but it is too early to determine what the merger will mean for the Northrop space, said Hunt Barnett, the company’s first vice president.
Barnett said the lease expires in February of 2000. Lockheed-Northrop could opt to hold onto the space until then, buy out the remainder of the lease or sub-lease it to another tenant.
The two aerospace companies announced July 3 that Lockheed would acquire Northrop for $11.6 billion. Since then, Northrop has not contacted the company about the future of the space, Barnett said.
Northrop occupies floors 12 through 19 in the building. The company headquarters have been in the space since 1984, when the second of the plaza’s two towers was completed. Before that, Northrop was in the first tower at 1800 Century Park East, where it moved to in 1970 from Beverly Hills.
The 2.9-acre site was originally built by Northrop Corp., but it was sold to the California Teacher’s Retirement System in 1990.
The building’s minimum rent ranges between $22.80 a square foot and $24 a square foot, according to Black’s Guide.
Whatever the tenant decides to do, Barnett said, the end of the lease will put the landlord in a good position to establish favorable lease terms. This is because demand for large blocks of office space in the Century City area is growing while little in the way of new space is being built or emptying out, he said.
“There’s not much in the way of large spaces like this rolling over,” Barnett said. “With the market moving up and companies expanding, landlords are increasingly able to set lease terms in their favor. They can get higher prices and things like that.”
Jeffrey Strnad, vice president of LaSalle Partners, a Westside broker, said it took him a few weeks to close a lease deal on a 100,000 square foot space in Century City which had opened up. A couple of years ago it might have taken some months. He said he only expects availability of such spaces to tighten in the next few years.
In the second quarter of 1997, Century City’s office market had an 11.2 percent vacancy rate, which is just above the first quarter’s rate of 10.9 percent, according to Grubb & Ellis Commercial Real Estate Service. In the first quarter of 1996, Century City had a 13.2 percent office vacancy rate.
