El Segundo Remains First Choice for E-Tailer

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While plenty of technology companies are still clamoring for space in hot Silicon Beach locales such as Santa Monica, others are content to stay a bit farther afield.

Online retailer JustFab Inc., headquartered in El Segundo, recently reupped its commitment to the area. The fashion subscription service signed a 15-year lease earlier this month for more than 97,000 square feet at 800 Apollo St., a two-story office building just around the corner from the company’s current space at 2301 Rosecrans Ave.

Industry sources estimate the lease, which includes heavy tenant improvement concessions, was valued at about $55 million.

Adam Goldenberg, co-founder and co-chief executive of JustFab, said the company, which merged with online subscription retailer ShoeDazzle Inc. in the summer, had run out of space. Plus, he wanted to consolidate the united companies’ more than 300 employees on one campus.

“The new place is walking distance from our current space, so it worked out well for our employees,” he said. “We love the area we’re in and we think the South Bay is going to be attracting a lot more tech companies in the coming years.”

Landlords Invesco Real Estate of Newport Beach and Second Street Ventures of Burbank are predicting the same. Together, the two firms bought the 800 Apollo property from El Segundo’s Continental Development Corp. in late summer in a $57 million portfolio sale that included four other nearby buildings.

Jack Spound, a principal of Second Street, said the companies plan to spend many millions to redevelop the five buildings into top-tier creative office space.

“We’re putting in significant dollars to change the character of these buildings,” he said. “We’re putting in all new equipment, windows, doorways, lobbies. We’re even putting in locker rooms with showers because we’re finding more and more people are bike riding to work.”

Goldenberg said he expects to get access to the place this summer to begin building out the space and move in before the end of the year. He plans to invest more than $10 million in the space, which will include a full bar, kitchen and outdoor workspaces.

The new space will almost double the tech company’s corporate footprint. JustFab currently occupies about 35,000 square feet in El Segundo and ShoeDazzle occupies 20,000 square feet in Santa Monica.

Pasadena Push

The 20-year-old Barnes & Noble Inc. store in Old Pasadena closed at the beginning of the year, and six tenants are now in line to move into the retail space.

Palo Alto electric car company Tesla Motors Inc. was the first to sign a lease in August for a 3,000-square-foot portion of the 16,000-square-foot space at 103-117 W. Colorado Blvd. The company, headed by local billionaire Elon Musk, has two other L.A. retail locations in Century City and Santa Monica. It does not operate dealerships.

Apparel retailers Scotch & Soda and Splendid also recently signed leases for portions of the space, each for about 2,000 square feet. It’s Sugar, a candy retailer out of Deerfield Beach, Fla., signed a lease for 3,000 square feet. Leases for two more retailers – one a high-end home furnishings store – are expected to be signed to fill out the space in the next week.

Pat Hurst, principal of Redondo Beach brokerage Hurst/Harrigan Associates, represented the landlord, Old Town Partners, in each of the deals. She declined to disclose lease terms for the tenants, other than to say that most of them signed for at least 10 years at rates that were more common in 2006. She said the retailers are scheduled to open by the end of the summer.

“We’ll deliver possession by May 1 and they’ll have 90 to 100 days to do their own construction,” she said.


Lingering Loss

Downtown Los Angeles saw a negative net absorption rate of more than 280,000 square feet last year, and all of that (and more) came from struggling Bunker Hill, according to a report from Jones Lang LaSalle Inc.

In its Skyline report, which tracked Class A and trophy office properties in 43 city centers nationwide at the end of last year, the Chicago brokerage said Bunker Hill had a staggering negative absorption rate of more than 505,000 square feet. At the same time, the 11.4 million-square-foot micromarket had the highest average asking rents, at $39.96 a square foot a year.

Tony Morales, a managing director for Jones Lang LaSalle in downtown, said he thinks Bunker Hill’s drag on the absorption numbers was a residual effect of MPG Office Trust Inc.’s high-profile failure in the area before the company sold the majority of its portfolio to Brookfield Office Properties Inc.

“The majority of the MPG office buildings were on Bunker Hill, and because MPG was cash strapped and in the middle of a sale most of last year, they were not effective in competing for deals. Therefore they lost many tenants,” he said. “I don’t think that’s going to be a statistic you continue to see.”

Staff reporter Bethany Firnhaber can be reached at [email protected] or (323) 549-5225, ext. 235.

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