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May 28, 2020
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Nuveen Real Estate and Graymark Capital Partner Up in $97 Mil El Segundo Office Buy


Nuveen Real Estate and Graymark Capital have teamed up in the purchase of 101 PCH, a 201k sf, low-rise, creative office building in El Segundo. The building, located at 101 Pacific Coast Hwy, traded for $97.15 mil, or $483/sf.

Built in 1984 and situated on 2.9 acres, the three-story building is 91% leased to four tenants with Infineon, a leading semiconductor manufacturer, occupying 67% of the property for its U.S. headquarters, and web hosting company DTI Services occupying 20%.

The property is ideally located in a highly visible location on Pacific Coast Highway near the major cross street of El Segundo Blvd. In addition to its modern spaces and tenant amenities, it also includes 738 parking stalls in a subterranean parking garage.

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 the seller, a joint venture of AEW Capital Management and North Sea Capital Advisors. NKF Executive Managing Directors Eric Lastition and Geoff Ludwig were responsible for leasing the asset on behalf of the seller and served as local market experts in the marketing process. The buyer was self-represented.

Over the past three years the seller invested nearly $20 mil in capital improvements for a major renovation of 101 PCH, transforming the three-story building into creative office. The project was led by North Sea Capital Advisors President Scott Burrin.

Burrin noted, “We looked to contemporize and reimagine the tenant feel and experience of the property from the outside in, which included new draught tolerant landscape, electric charging stations, balconies, courtyards and lobbies. We also worked closely with Mul-Mac Architecture and the NKF leasing team to design and implement a first-in-market mini-suite concept, giving tenants the feel and benefits of communal space with the privacy and exclusivity of traditional office space; which has been received extremely well.”

Rents in this market have accelerated more than 50% over the last five years, per NKF. With rents at 101 PCH approximately 25% below market and a weighted average lease term of 7.23 years, the new ownership has the opportunity to realize an upside in rents as the leases expire, as well as long-term cash flow and appreciation, according to Hannan.

“El Segundo has clearly established itself as the CBD of the South Bay and is starting to behave like an extension of the lower Westside. With occupancy costs still at least 30% less than markets like Playa Vista and Culver City, El Segundo has tremendous room to run and provides a more proximate work location for the abundance of highly educated and affluent populations residing in the South Bay,” added Stumm.

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