Tishman Speyer Loves LA
- Aug 12, 2015
Tishman Speyer plans to get innovative in Los Angeles—again, now that the company has acquired the office building at 555 S. Aviation Blvd., in El Segundo, Calif. The 260,000-square-foot building is in for a makeover.
Tishman snapped up 555 Aviation, located less than two miles from the runways of Los Angeles International Airport, from an unidentified seller which marketed the asset with the assistance of David Hasbrouck of commercial real estate services firm Cushman & Wakefield. Financial terms of the transaction were not disclosed; however, C&W had listed the property at $45 million at one point during the marketing process.
Originally developed in 1966, 555 Aviation is a single-story corporate office facility occupying a 13.3-acre parcel in Los Angeles County’s South Bay region, which is picking up in popularity as the dollar signs in West Los Angeles continue their climb into the stratosphere. Alas, opportunity abounds in El Segundo. Tishman will invest millions of dollars to redevelop 555 Aviation into a state-of-the-art campus designed to fit a progressively popular subtype of the office sector in the Los Angeles area: creative office.
“This building is well situated and represents a rare opportunity to create a dynamic creative campus in the burgeoning South Bay area,” Mark Laderman, regional managing director with Tishman Speyer, said in a prepared statement. “Our strategy will be to enliven and enhance the property with new on-site amenities and improvements, as an increasing number of tenants are seeking a working environment not found in traditional multi-story office buildings.”
Tishman won’t kick off its repositioning program right away; the building is presently occupied by Xerox through 2017. As for rents, there will be nowhere to go but up, as current in-place rent at 555 Aviation is substantially below market rate. And the potential for higher income will only escalate given the increasingly loud cry among a certain set of office users. “We have great confidence in the South Bay office market as technology, fashion and media companies continue to expand here, and as the demand for creative office space increases,” Laderman added.
With an evolution in the office market afoot, it appears the timing is right to lay the groundwork for 555 Aviation’s transformation. In the second quarter, per a report by C&W, “As the lines between creative and traditional office product and users blurred, so did the lines between submarkets. Tenants who once would not consider coming east from the beach submarkets are looking as far inland as Downtown for options.”
Tishman is no stranger to developing coveted creative office space and catering to the TAMI crowd (technology, advertising, media and information industries) in Los Angeles. The real estate company developed the 325,000-square-foot Campus at Playa Vista approximately five years ago and stabilized it with the help of anchor-size leases by technology manufacturer Belkin International Inc. and the University of Southern California’s Institute for Creative Technology. Tishman sold the 97-percent occupied property to Hines Global REIT Inc. in 2013 for $218 million.