Increased military spending continues to spark an expansion of the defense industry in the South Bay, one of the weakest markets in Los Angeles County.


Northrop Grumman Corp. inked a five-year lease for 192,000 square feet at 222 West 6th St. in San Pedro. The lease is one of the largest transactions in Los Angeles signed this year, and it is the second largest South Bay transaction Northrop has executed this year.


"This transaction is representative of a continuing resurgence of leasing in the South Bay by aerospace and defense users," said Tim Vaughan, a senior vice president with CB Richard Ellis Group Inc., who helped represent L.A.-based Northrop Grumman in the deal.


The dollar value of the lease wasn't disclosed, but at market rates of about $2 a foot, the deal would be worth about $23 million to the building's owner, L.A.-based construction giant Tutor Saliba Corp.


The division Northrop Grumman Defense Mission Systems is expanding its presence in the building by about 32,000 square feet. The added space at market rates will cost the company $3.8 million over the life of the lease.


Northrop looked at several alternatives but in the end decided to stay put, said Erik Van't Hof, on-site representative for Pacific Place Associates, a holding company owned by Tutor Saliba.


"We are very pleased," said Ronald N. Tutor, president of Tutor Saliba. "They have been our major tenant and we are very pleased they have agreed to stay and we hope to keep them for all the years after that."


Tutor Saliba built the 265,000-square-foot high-rise, dubbed Pacific Place, in 1988 to originally accommodate a former aerospace firm. The construction company has owned the office building ever since.


Northrop Grumman agreed in June to a four-year, $12.5 million lease for 216,617 square feet in Overton Moore Properties Inc.'s Douglas Technology Center at 445 N. Douglas Street in El Segundo.


That's been welcome news for landlords in the South Bay, consistently one of the weakest office markets in L.A. County. At the end of September, the South Bay market had an average 20 percent vacancy rate and average asking rents of about $2 a square foot, according to Grubb & Ellis Co.


In addition to Vaughan, Northrop Grumman was represented by CBRE's Bill Bloodgood and Stan Gerlach.


Finding Financing
Madison Partners continues to expand into financing sales of commercial buildings that the Century City firm has been brokering.

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