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Northrop Grumman Agrees to $120 Mil South Bay Office Deal

Northrop Grumman Agrees to $120 Mil South Bay Office Deal

A major office lease in LA’s South Bay region was just announced, as aerospace firm Northrop Grumman Corp agreed to take the entire 333k sf Continental Tower building, situated at 101 Continental Blvd, just east of Sepulveda Blvd in El Segundo. The 10-year transaction reportedly has a total value of around $120 mil, which divides out to an average rent of about $3/sf/mo. However, the actual rent was not given out, although it was reported elsewhere that the lease has a starting rate of $2.81/sf/mo. The 16-story high-rise was built in the 1970s and had previously been occupied by Xerox for 20 years.

"This lease removes a large chunk of space from El Segundo's 11.2 msf office inventory, bringing vacancy to approximately 10 percent, the lowest office vacancy rate El Segundo has experienced since 2000," said Eric Lastition, Senior Vice President of Colliers International's South Bay office. "In addition, this transaction continues to push rental rates in El Segundo. Rates have seen a marked increase over the last 12 months."

According to Lastition, "Colliers was originally marketing Continental Tower as a multi-tenant building. The project was just commencing a complete renovation when we were fortunate to attract this long-term tenant for the entire building."

Lastition along with Geoff Ludwig and Greg Walsh, also of Colliers International's South Bay office, represented the property owner, Barker Pacific Group and Prudential Real Estate Investors. David Kudrave of CB Richard Ellis represented Northrop.

"The South Bay office market is weathering the current downturn better than other markets within the LA Basin. With lower average rents and (greater) economic diversity than surrounding markets, the South Bay is less dependent on one industry and it will probably be one of the better performing office markets locally over the next year or so," said Michael Soto, Regional Analyst with Colliers International.

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