El Segundo has it all: smoke stacks, LAX air traffic, a slice of the most congested freeway in the nation. Oh, and there’s the beach, but you have to traverse a water treatment facility to get there.

But now that list of dubious desirables has been joined by another distinction: a really hot real estate market.

The 5.5-square-mile city of 17,000, which used to be a hub of businesses in the aerospace and defense industries, is being transformed as large older buildings are converted to new uses and millions of square feet of new projects are coming out of the ground.

The change is being driven by property owners and investors who see an opportunity to ride a wave of demand from creative and other businesses for modern, low-rise office buildings.

“For a long time, people’s perception of El Segundo was that it was this back-office community for cheaper rents,” said Jacob Bobek, a principal at real estate brokerage Avison Young. “But the office space there has shifted away from that to opportunities for good work environments in creative office space.”

Landlords and developers in El Segundo have together committed more than $1 billion to update and build out the city’s office market. At least 20 development projects – about half ground-up construction and half major renovations to existing buildings – are in various stages of planning or construction in the area. New construction alone promises to add more than 2.8 million square feet of office space, 133,000 square feet of retail space, 927 hotel rooms and a 115,000-square-foot sports facility. Those additions come on top of renovations to nearly 4.8 million square feet of former aerospace and defense industry buildings that are on the drawing board or have been recently completed.

This bullishness, said developers and brokers working the market, is in large part due to the a solid transportation infrastructure, proximity to executive housing in nearby beach cities, high-performing public schools, a low cost of doing business and the speed with which the small municipality can grant approvals.

Suzanne Fuentes, mayor of El Segundo, said that in the small, business-friendly city, building permits and licenses cost less and take considerably less time to obtain than in bigger, more bureaucratic cities.

“The one big incentive we have is we’re a small town,” she said. “We’re very agile and responsive, and people have generally been very supportive of development in El Segundo.”

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