$4.4M Parcel Sale Paves Way for Hyatt at Los Angeles-Area Mixed-Use Project
- Oct 28, 2011
October 27, 2011
By Barbra Murray, Contributing Editor
The sun is shining brighter and brighter on Los Angeles hotel real estate and a transaction between Thomas Properties Inc. and OTO Development L.L.C. has paved the way for the addition of a new lodging destination to the increasingly hungry Los Angeles International Airport submarket. In a $4.4 million transaction, Thomas Properties, the force behind the development of the 47-acre Campus El Segundo in the City of El Segundo, has sold a nearly 2.2-acre hotel site at the mixed-use project to OTO for $4.4 million.
“It’s a very healthy market,” Bruce Baltin, a senior vice president and executive in charge of the Colliers PKF Consulting USA practice in Los Angeles, tells Commercial Property Executive of the LAX area.
OTO will build a 143-room Hyatt Place Hotel on its newly acquired parcel at Campus El Segundo, which Thomas Properties purchased from Federal Express in 2005. The sprawling site is entitled for 1.7 million square feet of additional development for a total of nearly 2.2 million square feet of commercial, retail and community-serving space. Campus El Segundo, located just a half-mile south of LAX’s teeming terminals, sits in an area that was best described as predominantly industrial a decade or two ago, but no longer.
Hovering somewhere closer to the South Bay area than the upscale West Side, El Segundo — its hotel market included — will continue to see compounding benefits from expansion endeavors at LAX. The $4 billion new-construction program at the bustling airport cannot reach completion soon enough, as there appears to be no end in sight to the increasing flow of travelers in and out of the renowned global gateway. El Segundo is sufficiently far removed from the snarling downtown traffic, and considerably less costly than nearby beach communities like Santa Monica. A hotel at Campus El Segundo will attract business and leisure travelers alike.
“Demand is great within close proximity of LAX, and there is a huge commercial base in El Segundo itself,” Baltin says. “It’s one of the strongest submarkets in the Los Angeles area.” And the numbers tell the story. “The greater LAX submarket will end 2011 with an approximately 82 percent occupancy level and an [average published rate] of $96 per-room.” The figures mark respective year-over-year increases of roughly 5.2 percent and 7 percent.
OTO plans to commence development of the new Hyatt Place at Campus El Segundo immediately.