Value-Add Play Wins $64M in Suburban Los Angeles
As demand grows for big blocks of office space, Griffin Capital Essential Asset REIT emptied 2160 Grand Ave. in El Segundo, Calif., and sold the 151,300-square-foot building to SteelWave.
2160 Grand Ave. Image courtesy of Griffin Capital Essential Asset REIT Inc.
Griffin Capital Essential Asset REIT Inc. has sold 2160 Grand Ave., an office building in its metropolitan Los Angeles hometown of El Segundo, Calif., in a transaction valued at $63.5 million. The REIT, which orchestrated the vacancy of the approximately 151,300-square-foot property prior to the disposition, found a new owner in commercial real estate company SteelWave.
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GCEAR had owned 2160 Grand since 2014, when it acquired the property from a foreign investor for $52.7 million months before the REIT’s spinoff from its parent company. The three-story building first opened its doors in 1999 and had been fully leased to BT Infonet before GCEAR decided to place the building on the market to attract hungry value-add investors seeking vacant properties. GCEAR was able to appeal to potential buyers seeking to meet demand for large contiguous blocks of office space by facilitating what it describes as an attractive buyout with the tenant, which had been occupying the building under a lease that would have expired in 2021.
GCEAR relied on Newmark Knight Frank’s Shannon Team to market the asset, as well as for representation in the sale transaction. The firm reeled in a competitive group of hopeful investors, ultimately garnering $420 per square foot for the property.
Spillover demand
The tech and media sectors are driving leasing activity in metropolitan Los Angeles, and with space rapidly disappearing in coveted West Los Angeles, other submarkets are seeing the benefits. As noted in a third quarter report by NKF, tenant interest is growing in less established areas, as large, well-located modern blocks become scarce. The El Segundo submarket was home to two of the largest metropolitan Los Angeles lease agreements in the third quarter. TechStyle Fashion Group and communications and advertising agency Saatchi & Saatchi both signed leases of approximately 80,000 square feet each at Tishman Speyer’s 555 S. Aviation, a recently renovated and repositioned office property.
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