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Thursday, Jun 8, 2023

El Segundo

Call it a big deal for a little city. Next month, Kearney Real Estate Co. will seek approval from the city of El Segundo for a $200 million, 1.1 million-square-foot development on a former Chevron Corp. oil field in the shadow of Los Angeles International Airport. The project is expected to include three to five office buildings, two hotels including a Hilton and practice facilities for the Los Angeles Kings and Lakers. “What’s really great about this project is that it involves high-visibility businesses that are not only high quality but also have high name recognition,” said James Hansen, economic development director for the city of El Segundo. “When I first came here (in 1994), I never thought we’d be able to attract a second Starbucks,” Hansen said. “Now were getting dozens of calls from interested companies.” The proposed Grand Avenue Corporate Center is scheduled for a public hearing before the El Segundo Planning Commission on March 26. If approved by the commission and the City Council, construction could begin as early as this summer, said Laurie Jester, a senior city planner. The developer, Kearny Real Estate Co., is a subsidiary of Morgan Stanley Real Estate Funds. The developer is in negotiations with several potential partners for the project, according to city officials, including the owners of the Lakers NBA basketball team and the Kings NHL hockey team. The Kings are considering buying six acres to build a training center that would include two ice rinks and a basketball court, said Mike Altieri, media relations director for the Kings. The facility would be built by Ed Roski’s Majestic Realty, based in the City of Industry. Roski, co-owner of the Kings, is also building the $300 million Staples Center sports arena downtown that will become the new home of the Kings and Lakers. The Kings currently practice at the Iceoplex in North Hills, and the Lakers practice at the Great Western Forum in Inglewood and Loyola Marymount University in Westchester. Because both teams have long been based in Inglewood, many of their executives and players live on the Westside and would prefer a practice facility there instead of downtown, team officials say. In addition, the new practice facility would be open to the public when it is not in use by the teams. “That’s one of the most exciting parts of the proposal,” said Bill Mason, president of El Segundo’s Chamber of Commerce, who noted that there are no other ice skating facilities in the South Bay. The developers have also proposed building an outdoor roller hockey rink and offices for the Lakers and Kings. The proximity to LAX is also a draw, and last week Morgan Stanley officials signed an agreement with Hilton Hotels to build a 200-room hotel across from the training facility, according to city officials. The heart of the complex, however, would be commercial office space. Officials with Morgan Stanley and Kearney did not return calls for comment. But city officials say the developers are in negotiations with Infonet Services Corp., a data networking company, to build a new 340,000-square-foot corporate headquarters. The company needs to expand from its current offices nearby. The developers also plan to build another 150-room hotel or 180,000 square feet of offices and several parking structures. The site is bounded by Nash Street, Mariposa Avenue, Nash Street and Continental Boulevard. Grand Avenue bisects the property, hence the name Grand Avenue Corporate Center. Jester said the developer plans to build three office buildings if the Kings and Lakers agree to build practice facilities. If not, up to five office buildings will be constructed, she said. Hansen noted that the project is in a “great corporate neighborhood” an area that boasts the headquarters of Mattel Inc., DirecTV Inc. and Quantas Airways. “This is the best possible project for that site,” he said. The former oil field was rezoned for mixed use in 1992 in an effort to revitalize the land. Kearny purchased the land from Chevron last year, and has spent the past several months studying potential developments. Although the El Segundo/Manhattan Beach office market posted an overall vacancy rate of about 16 percent at the end of the fourth quarter, premium office space is scarce, real estate brokers say. Bill Bloodgood, a broker with CB Commercial Real Estate Group Inc., said the premium, or class-A, vacancy rate dropped from 20 percent at the beginning of last year to its current rate of 3.5 percent. El Segundo caught a number of tenants who were squeezed out of the increasingly pricey Westside office market. But now rents are starting to move in El Segundo as well: class-A rents went up about 30 percent last year, with asking monthly rents at $2.15 per square foot. Another office building is slated to break ground in El Segundo soon. El Segundo-based Summit Commercial Properties plans to build a 240,000-square-foot “speculative” meaning construction starts without tenant pre-leasing commitments at 400 N. Continental Blvd. The site is already entitled and Summit plans to break ground in March, according to Ken White, vice president at Summit Commercial.

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