The Los Angeles International Airport office submarket has more than 3 million square feet of supply, with about a third of that vacant. Still, investor demand remains strong.
This week, a North Sea Capital Advisors-led partnership paid $45 million for a 300,000-square-foot office tower.
The seller, a partnership of the Roxborough Group and the Ruth Group, bought the building at 5901 W. Century Boulevard two years ago. The duo paid $12.7 million for the 15-story property then undertook some upgrades, and leased up the building. They added 220,000 square feet of new leases, and brought occupancy up to 95 percent, according to Newmark Knight Frank, which advised Roxborough and Ruth.
It’s an anomaly in the surrounding area. Newmark’s third quarter market report found that 30 percent of the office space in the submarket is vacant. That’s twice that of nearby El Segundo and trailing only Carson’s 31 percent vacancy rate for the highest in the L.A. metro area. Newmark’s Kevin Shannon, Michael Moore, Ken White, and Sean Fulp led the deal. The North Sea Capital Advisors group represented itself.
The Roxborough and Ruth partnership has been active investors. Last year, the duo paid $107 million for the 443,500-square-foot Gateway Towers office campus in Torrance, with plans to add retail and restaurant space to the property.
The Century Boulevard corridor and area surrounding the airport is dominated by hotels catering to business travelers. While it has 3.4 million square feet of office stock, it’s also historically had some of the highest vacancy rates of any L.A. submarket.
Rents are also cheap compared to neighboring markets.
At $2.25 per square foot, office space is nearly half the price of that in El Segundo; the average for the rest of the South Bay is $3 a foot.