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5/02/19
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Boston-based TA Realty closed on a large LA-area office buy, paying $138.5 mil for 101 Continental, a soon to be vacant office tower totaling 340k sf ($407/sf) in El Segundo. The property was sold by Phoenix-based VEREIT Inc.
VEREIT purchased the property for $98 mil in 2014, at which time the building was 100% leased to Northrop Grumman. When the tenant decided to vacate the building, VEREIT elected to sell the property as a redevelopment opportunity.
Developed by Continental Airlines in 1972, and significantly upgraded in 2008, 101 Continental has provided critical headquarters functionality for the past 46 years and is well designed and fully flexible to accommodate future tenant demand. The building features floor-to-ceiling glass on every floor and provides unobstructed, 360-degree ocean views from Palos Verdes to Santa Monica. Northrop Grumman will be vacating the building upon its lease expiration in May 2019, at which point the buyer intends to commence a comprehensive building renovation.
NKF’s Co-Head of U.S. Capital Markets Kevin Shannon, Executive Managing Directors Ken White and Rob Hannan, and Senior Managing Directors Laura Stumm and Michael Moll represented VAREIT in the transaction. TA Realty was self-represented.
“Based on the strength of the El Segundo office market and the quality of the building, we were able to achieve over $400/sf sale price. Disposing of this property decreased office exposure and strengthened VEREIT’s portfolio,” said Thomas W. Roberts, Chief Investment Officer, VEREIT.
“The marketing process for 101 Continental was highly competitive and a reflection of the abundance of value-add capital and the scarcity of value-add investment opportunities in gateway West Coast markets,” said Shannon.
“The opportunity to acquire a vacant Westside office asset of this caliber is extremely rare,” added Stumm. “TA Realty’s repositioning of 101 Continental will provide much needed creative inventory to a quickly tightening ‘Class A’ El Segundo office market. While El Segundo has experienced a 50 percent increase in rental rates over the past five years, it still trails the rate increases of neighboring Culver City (68 percent) and Playa Vista (79 percent), indicating room for further rental rate growth.”
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