Lincoln Property Co. and Rockwood Capital are diving into the South Bay office market with their purchase this month of a 355,000-square-foot office campus in El Segundo.
The property – comprised of three office buildings and two retail properties – sold for $120 million, or roughly $338 a square foot, according to a source familiar with the deal. Seller DivcoWest declined to comment.
Lincoln plans to spend millions on a year-long renovation, part of a strategy to attract technology, media, and entertainment companies to fill the office space that is currently half empty, said Rob Kane, Lincoln’s senior vice president.
Last year, Lincoln picked up a nearly 199,000-square-foot office building at 101 N. Sepulveda Blvd. a block away for $51.6 million, or about $260 a square foot.
Kane said Lincoln will look for similar offices in the market to add to its portfolio.
“We’re trying to grow our presence in El Segundo,” he said. “We think long-term that the market has a lot left to improve.”
But finding new properties could be a challenge. There is little new supply and plenty of competition for what’s out there.
Leasing demand, meanwhile, is on the rise, as fast-growing media and entertainment companies get squeezed out of traditional Westside office markets and executives settle in Manhattan Beach and Hermosa Beach.
“We looked at El Segundo as the natural extension of what’s happening in West L.A. coastal markets,” Kane said.
An Inglewood warehouse that manufactured car parts for 40 years sold last week for $1.95 million and is set to be converted into offices.
According to broker Dario Svidler of Partners Trust Commercial, who represented seller Kristian Abrahamson of Continental Torque Converters, the price of roughly $265 a square foot for the 7,366-square-foot building approached a record for a warehouse in Inglewood.
“The demand from the artist community, the creative community, was extremely strong,” he said. “This property had a ton of value and character.”
Svidler fielded nine offers in just two weeks before signing the deal for 730 Centinela Ave. with design company Kollider Industries, represented by Brian McLoughlin at Voit Real Estate Services.
Part of the attraction was the spaciousness of the building, constructed with a bow-truss-style roof, Svidler said. Also important to Kollider was Inglewood’s central location, with proximity to businesses on the Westside.
“They’re a creative business so they wanted to be in the area but were priced out of Culver City,” Svidler said. “This property, in the condition that it’s in and with the character it has, in Culver City, would have gone for double.”
Despite burgeoning interest for office conversion opportunities, Svidler said Inglewood doesn’t have many warehouses or industrial properties in commercial areas that can easily be repurposed.
A pair of Hollywood apartment buildings sold this month for $24 million to a developer who plans to hike rents by about 30 percent after a thorough renovation.
Universe Holdings picked up a 35-unit building at 1229 N. Mansfield Ave. and a 32-unit site at 1319 N. Mansfield from Interstate Equities Corp., based in Los Altos, said Universe Chief Executive Henry Manoucheri.
The combined price came to about $358,000 a unit.
Blake Rogers, a director at HFF, represented both parties in the deal.
The acquisition marks a return to Hollywood for Universe Holdings, said Manoucheri. His Century City company, which focuses on multifamily investments, purchased its first building there 22 years ago, but hasn’t made a new acquisition in the market in 16 years. Now, as values in Hollywood start to climb, Manoucheri decided to seize a good time to get back in the game.
“We feel that Hollywood is the next West L.A.,” he said. “The area has trended up. It’s going to continue getting better and better.”
The Mansfield building rents are about $1,700 on average, but Manoucheri said he thinks he can push them to $2,500 after upgrading the units, common areas, and exteriors. He plans to spend about $28,000 a unit on upgrades.
Nearby in the market, the new owners of a 26-unit apartment building also have plans to bump up rents. The Wilcox Townhome Apartments recently sold for $13.8 million, or $531,000 a unit, to Pepper Lane Properties.
Staff reporter Daina Beth Solomon can be reached at email@example.com or (323) 529-5225 ext. 237.
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