Atrium Project Leasing in Tough El Segundo Market
Real Estate
by Danny King
Developers of the recently completed Atrium at Continental Park in El Segundo have signed the first leases for the 288,000-square-foot project, but there’s still a long way to go.
Continental Development Corp. signed three tenants for the two-building office development at 2301-2321 Rosecrans Ave. They are Heineken N.V.’s Western United States sales headquarters, investment fund managers Wurts & Associates and camera lens producer Egg Solution Optronics. The deals cover 14,500 square feet in the project, which was ready for occupancy at the beginning of the month.
Total consideration for Heineken’s 6,600-square-foot, seven-year deal was $1.5 million. The $2.72 a foot rate is equal to the average asking rent for the El Segundo/Beach Cities office market in the fourth quarter 2001, according to Grubb & Ellis Co.
“It was a new building, and it had the steakhouse,” said Colliers-Seeley International Senior Vice President and Heineken representative J. Eric Lastition, referring to the newly opened Fleming’s Prime Steakhouse and Wine Bar at the base of the 2301 building. Heineken is doubling its previous space at 2101 Rosecrans Ave.
Neither financial terms were disclosed for Wurts & Associates or Egg Solution Optronics, which took 5,400 square feet and 2,500 square feet, respectively.
Given that the vacancy rate for the El Segundo/Beach cities office market was 18 percent in the fourth quarter, up from 5 percent for the year-earlier quarter, Continental’s director of marketing, Carol Sutor, was understandably cautious about filling the remaining 95 percent of the building.
“There aren’t a lot of big players out there,” said Sutor. “It’s more market-driven than in our hands, unfortunately.
Sutor represented the landlord on the Heineken deal, while Bob Inch represented the landlord on the other two. Greg Kirkpatrick and David Kudrave of CB Richard Ellis represented Wurts & Associates, while Egg Solution Optronics was represented internally.
Industrial Strength
Demand for newly constructed Torrance industrial buildings remains strong.
Over the last three months, Los Angeles-based Investment Development Services has signed three leases totaling 186,000 square feet at its newly built Hamilton/Vermont Distribution Center in Torrance. The deals, which totaled $10.2 million, completed the lease-up of the two-building, 231,000-square-foot complex, which was completed during the third quarter of last year.
Panalpina Airfreight, Jardine Logistics and UPS-affiliate Fritz Companies took spaces of 81,500, 42,000 and 62,000 square feet, respectively. Panalpina and Jardine signed seven-year deals while Fritz’s lease was for five years.
The lease deals illustrate how Torrance’s newly-built industrial structures, which are designed with wider docking space and larger truck yards than older buildings, are drawing more logistics companies, according to John Schumacher, senior vice president at CB Richard Ellis.
“The closest market that provides new construction to LAX is Torrance,” said Schumacher, who represented Investment Development Services on all three deals. “For the South Bay industrial market, one of the few consistent parts of our market was airport users moving out of the immediate area to state-of-the art facilities.”
In December, GeoLogistics leased 177,000 square feet at ProLogis Park at 19600 Van Ness Ave. Other Torrance airfreight deals in the last few months include ABX Logistics’ 42,000 square-foot lease and AirPlus Logistics 26,000-square-foot deal.
Close to Home
Two mini-districts of the Los Angeles Unified School District have taken steps to move their administrative offices closer to their constituents.
The LAUSD signed one short-term lease deal in downtown and another longer-term lease in the city of Commerce for its District I and District J offices, respectively. Total consideration for the deals, which total 76,000 square feet, is $8.4 million.
District J, which encompasses 38 schools in communities like Huntington Park, South Gate and Lynwood, leased a 23,000 square foot building at 5800 S. Eastern Ave. in Commerce for 10 years. District I, which is made up of 44 schools in the area in and around Watts, has begun negotiations for a long-term home on a property at 103rd Street and Central Avenue. In the meantime, the district took 53,000 square feet at 611 W. 6th St. (formerly known as AT & T; Center) in a 30-month deal.
“It may be a property the school leases or purchases,” said Trammell Crow Co. Senior Vice President Jonathan Larsen, who, with Lisa St. John, represented LAUSD on both lease deals as well as the property negotiations. Larsen expects to complete either a purchase or a build-to-suit lease deal on the 60,000-square-foot lot, which is owned by AME Church subsidiary Grant Housing Partnership, within the next 18-to-24 months.
In addition to Larsen and St. John, Tom Sheets of Trammell Crow also represented LAUSD on its Commerce deal. Abbey Co.’s Holly Forsythe represented Commerce landlord A.P.-Commerce LLC, while 611 6th St. Associates LLC was represented by Stephen Koile.
Building Bust
The local shortage of housing supply may continue to boost residential values amid the economic downturn, but don’t expect an influx of new development.
Permits for single family housing units in Los Angeles County hit a two-year low in January, according to the Burbank-based Construction Industry Research Board. Just 404 permits were issued for the county, down from 586 in December 2001 and which marked just the fourth sub-500-permit month since January 2000.
Credit the lack of space, according to Ben Bartolotto, research director of the board. “We’re still in something of a recession and there are constraints on development,” he said.
The low is also a result of long memories on the part of housing developers. “The builders are so disciplined in not flooding the market like they did in the ’90s during the last recession,” said Dean Wehrly, senior consultant at Irvine-based real estate consulting firm The Meyers Group.
Staff reporter Danny King can be reached at (323) 549-5225 ext. 230, or at
[email protected].
