Los Angeles-Area Office Building Changes Hands

A joint venture of AEW Capital Management and North Sea Capital Advisors sold their creative offices in El Segundo for $97.2 million.
101 PCH. Image courtesy of Newmark Knight Frank

A partnership between Nuveen Real Estate and Graymark Capital has purchased a 200,967-square-foot creative office building in El Segundo, Calif. for $97.2 million.

Located at 101 Pacific Coast Highway and known as 101 PCH, the three-story office building was sold by a joint venture AEW Capital Management and North Sea Capital Advisors. AEW and North Sea purchased the property in September 2015 for $52 million, according to Newmark Knight Frank, which represented the seller.

AEW and North Sea recently completed a three-year, $20 million capital improvement at the 1984-built property. Scott Burrin, North Sea’s president who led the renovation process, said they worked from the outside in by installing new drought-tolerant landscaping, electric charging stations, balconies, courtyards and lobbies.

The property is currently 91 percent leased to four tenants including Infineon, a semiconductor manufacturer whose U.S. headquarters accounts for 67 percent of the building, and DTI Services, a web hosting company that occupies 20 percent of the building. The remaining two tenants occupy less than four percent of the property, according to NKF.

NKF’s Executive Managing Directors Eric Lastition and Geoff Ludwig were in charge of leasing the building, while also serving as local experts in the marketing process. NKF’s Co-Head of U.S. Capital Markets Kevin Shannon, Executive Managing Directors Ken White and Rob Hannan and Senior Managing Directors Laura Stumm and Michael Moll represented the seller. The buyers were self-represented.

Adding Value to the Market

According to Shannon, repositionings like the one at 101 PCH and the area’s rising office rents go hand in hand, leading to substantially increased office rents by as much as 50 percent in the El Segundo market.

As for 101 PCH, Hannan said the rents were currently 25 percent below market and that the building had a weighted average lease term of 7.23 years. Shannon added that the new owners will likely see positive returns when the leases expire and as the building continues to appreciate in value due to its build and location.