By JV Group Staff
Newmark Knight Frank, a commercial real estate advisory firm, this month completed the $138.5 million sale of 101 Continental, an office tower encompassing 340,000 square feet in Los Angeles’ El Segundo submarket. NKF represented the seller, Phoenix-based VEREIT, Inc. The buyer, Boston-based TA Realty, was self-represented.
“El Segundo has really become part of the West Los Angeles office market during the last few years. Its rental rate growth is among the top three sub markets in LA over the last three years,” says NKF’s Co-Head of U.S. Capital Markets, Kevin Shannon. “Even with this impressive growth it still has room to run given the disparity that remains with other West LA markets.”
VEREIT, Inc. bought the property in 2014 for $98 million, which was leased to Northrop Grumman. When the tenant chose to vacate the building, VEREIT engaged NKF to market the property as a redevelopment opportunity. Thomas W. Roberts, Chief Investment Officer for VEREIT credited the strength of the El Segundo office market and quality of the building as factors that allowed them to achieve the over $400/sf sale price.
The property, 101 Continental, was developed by Continental Airlines in 1972 and upgraded in 2008. The building features floor-to-ceiling glass on each floor with 360-degree ocean views from Palos Verdes to Santa Monica. Northrop Grumman will vacate the building when the lease is up in May 2019. The buyer plans to renovate the building.
Shannon says the marketing process for 101 Continental was highly competitive and reflects an abundance of value-add capital and the scarcity of value-add investment opportunities in gateway West Coast markets.
Laura Stumm NKF senior managing director, said in a statement, that while El Segundo has witnessed a 50 percent increase in rental rates over the past five years, it still trails the rate increases of neighboring Culver City at 68 percent and Playa Vista at 79 percent, “indicating room for further rental rate growth.”