Intercontinental Real Estate Corporation, a Boston-headquartered firm, bought a massive creative office complex in El Segundo for roughly $328 million, or $600 a square foot, sources told The Real Deal.
Kevin Shannon of Newmark Grubb Knight Frank and his team represented the sellers, Invesco Real Estate and Second Street Ventures, who received almost six times what they originally paid for the site. They bought the complex in 2013 for a combined $55.8 million, and paid roughly $75 million to renovate it.
The four-building campus, which the sellers finished renovating in 2015, totals 546,833 square feet of office space set on more than 13 acres of land at 800 Apollo Street, 2120, 2121 and 2175 Park Place.
Intercontinental plans to hold onto the property for the long term, Shannon said.
Most tenants at the 98-percent-leased campus are are on long-term leases. Colorado-based healthcare company DaVita has a lease for 185,419 square feet valid through 2026, while online fashion retailer JustFab occupies 133,748 square feet through 2029.
Asking rent for one of the leases signed last year at the complex was $45 a square foot a year, or $3.75 a square foot a month, according to CoStar. While higher than El Segundo’s first quarter average of $2.71, the rate was roughly comparable to other high-end creative office properties in the South Bay.
El Segundo saw the lowest vacancy in the South Bay in the first quarter of 2016, at 12.1 percent, according to a report by Transwestern.
Because the area is seeing record vacancy, Intercontinental believes it will be possible to raise rents at the property, Jessica Levin, the firm’s director of acquisitions, said in a statement. The national firm plans to do so by playing up the asset’s amenities, which include a basketball court, dog park, biking and walking trails, shower facilities, an outdoor fireplace and a parking structure.
“Demand for creative office space in Westside LA is on the rise,” Levin said. “Continuing rent hikes in neighboring markets such as Playa Vista is driving tenants to El Segundo, resulting in a vast migration of businesses to the Rosecrans Corridor. This bodes extremely well for future rent appreciation in this submarket.”
Meanwhile, Invesco is hardly disappearing from the L.A. market. The company recently acquired Runway Playa Vista, a 14-acre mixed-use development, for $475 million, a sale that is said to have sent land values in the area soaring.
CBRE’s Bob Healey and Grafton Tanquary also represented the sellers in the transaction.