Real Estate Column—Speculative Projects Flood El Segundo Office Market

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Newport Beach developer CT Realty Corp. has renamed and broken ground on its $8 million speculative redevelopment project in El Segundo, which upon completion will add another roughly 50,000 square feet to the 1 million square feet of spec space slated to come on line during the next six months.

CT Realty Vice President Dave Ball said the project, which involves overhauling the Pacific Technology Center at 601 Hawaii St. that CT Realty bought this year from Eaton Corp. for $4 million, will be known as Hawaii 601.

The former industrial campus, which had been used by an aerospace contractor, is being converted into office space geared to entertainment and high-tech tenants.

The 41-year-old office/warehouse development contained 10 buildings when CT Realty bought it, but nine of those buildings have been demolished. The lone survivor is an 18,000-square-foot structure, around which CT Realty is erecting a three-sided, 30,000-square foot building.

The size of the building, smaller than other office product under construction in El Segundo, will be the secret to CT Realty’s success, Ball said.

“The advantage this building has is not only can it have the identity of a single user, but it’s all one level,” he said.

CT Realty’s project is one of six speculative office projects in the once-hot, but now static El Segundo office market. The others: Continental Development Corp.’s 290,000-square-foot office building at 2301 and 2321 Rosecrans Ave.; Continental’s 25,000-square-foot office building at Rosecrans Avenue and Aviation Boulevard; Opus West Corp.’s 121,000-square-foot office building at 2151 Grand Ave.; Overton Moore & Associates’ 216,000-square-foot building at Douglas Street and Mariposa Avenue; and Overton Moore’s 170,000-square-foot Cross Pointe development at South La Cienega Boulevard and Pacific Concourse Drive.

Conceding that the L.A. office market has softened considerably in recent months, Ball said he thinks he’ll find tenants for his company’s project by the time it’s finished at the end of 2001.

“We’re concerned about (the slowdown), but we feel we have a unique product in a unique market,” he said.


Another Speculator

Also working on speculative space is Striks Properties, which has undertaken a $3 million development in the San Fernando Valley.

Striks is putting up three industrial buildings in North Hollywood. The three buildings 7,786 square feet, 7,946 square feet and 25,316 square feet are scheduled for leasing by fall, according to David Hoffberg of Delphi Business Properties and leasing agent for the property.

“These buildings are tailored to fill a void in a market with an extremely low vacancy rate, particularly for buildings in the moderate size range,” Hoffberg said.

The development, on three contiguous parcels covering 1.8 acres at Bellaire Avenue and Saticoy Street, consists of concrete block buildings with office space and 22-foot clearance.


Leasing Action

Priority Records LLC has signed a 10-year lease for 40,000 square feet in Arden Realty Inc.’s Westwood Center at 1100 Glendon Avenue in Westwood Village. Total consideration was $21 million, according to Robert Peddicord, senior vice president for leasing at Arden.

Priority, a wholly owned subsidiary of Capitol Records a label of the English EMI Group will move 130 employees in its administrative offices and Internet and catalog sales operations from 6430 Sunset Blvd. (the CNN building), where the company has been for 15 years.

Gayle Landes and Troy Holme represented Arden in the deal. Mark Sullivan, an executive vice president at Julien J. Studley Inc., represented Priority.

Sullivan said lease negotiations included rights for signage at the building.

“We would like to pursue significant signage at the property,” Sullivan said. “We’d like it to be building-top; we’d like it to be monument. We know there are municipal hurdles.”

One hurdle is the Westwood Village Specific Plan, which prohibits building-top signage. Sullivan said Priority would pursue the signage through city planning channels, with Arden’s support.

In other Arden news, Sun Microsystems Inc. renewed its lease of 33,000 square feet at the Howard Hughes Center in West L.A. The lease extension is for three years. Michael Pollack, senior portfolio leasing manager, represented Arden. Herb Hafter, vice president at Jones Lang LaSalle, represented Sun Microsystems.

Also at Arden, Pacific Equity Group renewed its lease for 5,048 square feet at Westwood Terrace, 1640 S. Sepulveda Blvd. in West L.A. The extension is for three years. Troy Holme, portfolio leasing manager for Arden, represented both sides in the deal.

Also inking a lease deal recently is Hitachi Automotive Products, which picked up 63,000 square feet of distribution space in Torrance for expansion of its warehousing operations.

The new space is a concrete tilt-up structure at 2929 Maricopa St. The five-year lease is worth $2 million. Todd Taugner of Klabin Co. represented Hitachi in the deal. The landlord, Maricopa Street LLC, represented itself.


VA Project Stymied

The VA West Los Angeles Healthcare Center did not get the support of the U.S. House of Representatives, which passed an amendment prohibiting the use of federal money to carry out development of a 25-year land-use plan at the 388-acre Brentwood campus.

Rep. Henry Waxman, D-Los Angeles, introduced the amendment. He and other community and political leaders had claimed that the VA shut them out of the planning process for the site, which is located at Wilshire Boulevard and the San Diego (405) Freeway.

The most inflammatory aspect of the plan is a proposal to repeal the Cranston Act, which protects 109 acres of the site.

VA officials declined to comment.

Staff reporter Christopher Keough can be reached at (323) 549-5225 ext. 235 or by email at [email protected].

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