Kilroy, JLL Sign 630 KSF Lease for DirecTV’s HQ
- Nov 03, 2011
November 3, 2011
By Nicholas Ziegler, News Editor
The office-leasing market in the Los Angeles area has taken a hit over recent quarters, but sources tell Commercial Property Executive that asking rents are not likely to continue their decline. As proof, just look at the recent signing of direct-satellite broadcast provider DirectTV to a 15-plus year lease of 630,000 square feet for the company’s new headquarters in El Segundo, Calif., adjacent to the Los Angeles International Airport.
Pursuant to a prior lease, the television provider leased approximately 333,000 square feet in two of the three buildings — located at 2240 and 2250 E. Imperial Highway — through July 2014. The new lease extends DirectTV’s lease of these two buildings through September 2027 and provides that the company will lease over time the remaining approximately 89,000 square feet of space within the two buildings not previously leased by DirectTV as the other existing leases expire.
DirectTV will also lease the entire approximately 299,000 square feet of the third building, located at 2260 E. Imperial Highway) which is currently undergoing redevelopment, through September 2027. Occupancy of this building is projected to occur in the fourth quarter of 2012.
The television company contracted the services of Jones Lang LaSalle for the deal, and the real estate services firm then worked with Kilroy Realty Co., the building’s owner. Gary Horwitz, managing director of JLL, told Commercial Property Executive that DirectTV wanted to work “with a reputable and financially strong landlord that had the ability to offer a valuable package of lease concessions.”
“DirectTV viewed this as an opportunity to lock in rates under very favorable market conditions,” he said.
The Los Angeles market, in general, is still one of the strongest nationwide but asking rents for office property fell $0.14 on average from the second to the third quarter in 2011, whereas most other strong markets – Manhattan, San Francisco and Washington D.C., notably – have seen increases in the same pricing.
“Asking rents are likely not to decline further,” Horwitz said. “In some submarkets, we have seen rents increase substantially, such as Santa Monica and other Westside markets, with the presence of technology driving space demand. The El Segundo submarket is flat but stable without much vacancy in quality buildings.”