Los Angeles-based aerospace and defense contractor Northrop Grumman Corp. has signed the biggest South Bay lease by price and square footage in the last year.
The company’s 10-year lease for the 333,000-square-foot Continental Tower in El Segundo, signed June 18 with landlord 101 Continental Partners LLC, is valued at about $120 million.
Northrop will begin moving into the 1970s building in phases starting in autumn. By July 2009 it will fully occupy the building at 101 Continental Blvd., said Eric Lastition, a senior vice president at Colliers International, who represented the landlord in the deal.
101 Continental Partners is a partnership of commercial real estate developer and manager Barker Pacific Group Inc. of Los Angeles and Prudential Real Estate Investors, a unit of insurance behemoth Prudential Financial Inc.
Michael Barker, managing director of Barker Pacific, declined to comment beyond acknowledging that the 16-story building had been “fully leased.”
It was put on the market in May 2007 as a multitenant property. A $40 million renovation began in June, but Lastition said that once aerospace companies became interested in the property it was apparent that some of the renovations would need to be modified. Upgrades are planned for the lobbies, elevators and corridors as well as landscaping.
Northrop needed more office space for its defense contracting business.
“It reflects the need for expanded space to meet our customers’ requirements,” said Brooks McKinney, a Northrop spokesman.
McKinney said that the integrated systems division, along with the company’s information technology sector and some corporate offices will be housed at the building. Northrop has several facilities in El Segundo and employs about 5,000 people in the city.
The lease deal starts just below $2.81 per square foot per month on a full-service gross basis. In the South Bay, the average full-service gross asking rent was $2.46 per square foot per month last quarter, and it was $2.70 in El Segundo-Beach Cities, according to Grubb & Ellis Co. data.
Geoff Ludwig and Greg Walsh of Colliers also represented the landlord. Northrop was represented by David Kudrave of CB Richard Ellis Group Inc.
Thomas Woes
It has been a rough month on Wall Street for L.A.-based office landlord Thomas Properties Group Inc.
Thomas’ stock price has dropped 17 percent in the last month to close at $8.45 on July 29. Year-to-date, Thomas has lost 22 percent of its value. Shares hit a low of $7.40 on July 24.
While the real estate sector has been hit hard in the current down economy, Thomas which owned 13 million rentable square feet as of 2007 has been hit harder than some of its competitors.
According to Roy Ophir, director of research at Matrix USA LLC, a financial firm that covers Thomas, the company’s small size is the culprit.
“In turbulent times like we are experiencing now, investors will pay a premium for larger companies under the theory that they have more staying power,” said Ophir, who rates the company a “sell.”
For comparison, Maguire Properties Inc., another local publicly traded office landlord which owned about 20 million square feet of space as of 2007 has not been hit as hard as Thomas. Maguire’s stock has dropped 11 percent in the last month. And that’s amid some investor uncertainty since founder and former CEO Robert F. Maguire was ousted in May.
Thomas is the developer of an $800 million studio and office complex in North Hollywood for NBC Universal Inc. The company is also working as an adviser to NBC Universal, a unit of General Electric Co., on the development of its 390-acre Universal City property.
A Thomas spokeswoman declined to discuss the stock price.
Downtown Listing
A 12-story, senior housing community at 740 S. Olive St. in downtown L.A. has been put on the market. The 1922 building is listed along with an adjacent parking lot for $53 million. The 309-unit building is owned by an unnamed limited partnership that consists of local investors.
It is 100 percent occupied, said Kitty Wallace, of Sperry Van Ness, who has the listing.
Staff reporter Daniel Miller can be reached at
[email protected]
or (323) 549-5225, ext. 263.
