Nuveen Real Estate has teamed with Graymark Capital to pay $97.15 million for the 200,967-square-foot 101 PCH office building at 101 N. Sepulveda Blvd. in El Segundo, Calif.
The seller is a joint venture between AEW Capital Management and North Sea Capital Advisors.
The asset is 91 percent leased to four tenants, with Infineon, a semiconductor manufacturer, occupying 67 percent of the property for its U.S. headquarters, and web hosting company DTI Services occupying 20 percent.
Over the past three years, the seller invested nearly $20 million in capital improvements for a major renovation of 101 PCH, transforming the three-story building into creative office.
“AEW and North Sea Capital Advisors executed a tremendous repositioning of 101 PCH in El Segundo, one of Los Angeles’ hottest markets,” said Kevin Shannon, co-head of U.S. capital markets at Newmark Knight Frank, which marketed the asset on behalf of the seller. “Rents in this market have accelerated more than 50 percent over the last five years, largely driven by the repositioning and value-add initiatives of assets like 101 PCH.”
Built in 1984 and situated on 2.9 acres, the three-story building is ideally located in a highly visible location on the Pacific Coast Highway near the major cross street of El Segundo Boulevard. In addition to its modern spaces and tenant amenities, it also includes 738 parking stalls in a subterranean parking garage.
“With rents approximately 25 percent 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 of this attractive, functional and well-located asset,” said Rob Hannan, executive managing director at Newmark Knight Frank.
“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 percent 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 Laura Stumm, senior managing director at Newmark Knight Frank.
