Los Angeles-Area Creative Office Building Is on the Market

Thursday, March 21, 2019

HFF, on behalf of the owner, is marketing a two-story, 121,047-square-foot creative office project located in the South Bay submarket of Los Angeles. The property, known as The H, recently underwent a substantial renovation that included an investment of more than $5 million to upgrade lobbies, restrooms and corridors; add a tenant amenity lounge and outdoor collaboration areas; and replace traditional tenant suites with open, highly creative workspaces. The property’s rent roll is diversified among multiple industries and sectors that thrive off the coastal vibrancy. Industries represented include technology, transportation and logistics, finance, insurance and consumer goods, as the diverse tenant mix mitigates the exposure to industry-specific declines. The durable cash flow benefits from an impressive lineup of credit tenants, including Honda, UPS, Expeditors Inc. and Progressive Insurance, with credit tenancy representing more than 63 percent of the rentable square footage.

The two-story building is situated on 5.22 acres at 19701 Hamilton Avenue in Torrance. As one of the premium product offerings in the submarket, the creative office property for sale continues to benefit from the South Bay’s dynamic tenant activity and strong rent growth. Since completion of the campus reposition in mid-2018, ownership has seen an increase in occupancy from 57 to 96 percent. In that same timeframe, rents grew more than 25 percent, further validating the proposition that high-quality credit tenants will pay a premium for a superior office experience.

Creative Office Project Investment Highlights

  • Proximity to Executive Housing and Amenities:  Close proximity to both executive housing and the local tech talent pool have contributed greatly to the South Bay’s emergence as a prime office location at the southern end of Silicon Beach, with historically low vacancy rates and burgeoning tenant demand. The office building for sale is located just minutes from some of the most affluent communities in Los Angeles, including Palos Verdes, Rancho Palos Verdes, Rolling Hills Estates, Hermosa Beach and Manhattan Beach, which have a median home value of $2 million and median income of nearly $150,000. This executive access has correlated to The H’s and Torrance market’s ability to quickly rebound from the Great Recession, pushing vacancy rates to historic lows, as decision makers are moving their businesses closer to home. Additionally, the property is located 0.6 miles from the SouthBay Pavilion, 1.65 miles from the StubHub Center and 3.26 miles from the Del Amo Fashion Center, the largest retail hub in Los Angeles outside of Santa Monica and Century City.
  • Rapidly Escalating South Bay Market Fundamentals:  As rents have rapidly escalated along Silicon Beach, there has been a steady migration southward of tech and other high-quality tenants, which has driven up South Bay rents by almost 50 percent since 2013. Strong fundamentals in the South Bay, coupled with the property’s ability to attract best in class tenants, will provide The H with significant long-term growth.
  • Attractive Relative Value:  The H presents a significant value when compared to best-in-class coastal opportunities in other locations throughout Los Angeles. When compared to recent core office trades in West LA (Santa Monica, Playa Vista, El Segundo and Culver City) trading between $700 and more than $1,400 per square foot, the South Bay market offers an attractive relative value.
  • Centralized, Transit-Oriented Location:  The I-405 and the I-110 freeways are two blocks away from the property, and State Route 91 and Pacific Coast Highway are in close proximity as well, providing direct access to executive housing and a large labor pool. Los Angeles International Airport (LAX) is only 20 minutes from the creative building for sale, providing tenants with easy access to one of the busiest airports in the world. For tenants that prefer not to drive, the Harbor Gateway Transit Center, a major bus station and a stop along the LA Metro Silver Line, is one mile away.

For more information on this commercial real estate listing or any other office properties for sale in Southern California, please contact Andrew Harper in HFF’s Los Angeles office.  To view HFF’s current real estate investment listings, please click here to be directed to HFF’s property search page.

Holliday GP Corp. ("HFF") is a real estate broker licensed with the California Department of Real Estate, License Number 01385740.

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