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Kilroy in $35-Million Tower Renovation Project

Make-over of nine-story building in El Segundo is example of rehabilitation amid land shortage.


Kilroy Realty Corp. has started work on a $35-million renovation and expansion of a nine-story office building in El Segundo in the latest example of Los Angeles-area real estate developers rehabilitating major structures because little or no vacant land is available.

The tower at 999 N. Sepulveda Blvd., part of a three-building complex built by Kilroy in 1962, will be new both inside and out by October, Kilroy said. The make-over will add 15,000 square feet to the 123,500-square-foot structure at Imperial Highway.

Demand for office space is strong in El Segundo, which was once primarily an aerospace center but has enjoyed a resurgence among a diverse range of office tenants, said John B. Kilroy Jr., president of Kilroy Realty.

El Segundo is now "one of the strongest markets on the Westside," said Jerry Asher, a managing director at CB Richard Ellis. The office vacancy rate is 7.3%, including sublease space, and average asking rents are $2.31 per square foot per month, according to CB Richard Ellis research.

Kilroy's renovation expenses of more than $250 per square foot are equal to typical costs for an all-new building.

"We're going to see a lot more of the redevelopment of existing properties like this because there isn't any land available for new projects," Asher said. "As interest rates continue to come down, it's going to generate more of this type of activity."

Asher noted the recent successes of other developers in rehabilitating Los Angeles office buildings, including Divco West's 1900 and 1901 Avenue of the Stars buildings in Century City and Arden Realty's Westwood Center.

Los Angeles-based Arden Realty gutted and rehabilitated the 313,000-square-foot Westwood Center at 1100 Glendon Ave. in Westwood. The building was empty when Arden completed construction in January 2000, and by summer it was 90% leased, said Robert C. Peddicord, senior vice president of leasing at Arden.

Kilroy's Sepulveda project will include a redesign described as "a sleek look incorporating machined aluminum, glass and stainless steel," as well as new mechanical, electrical, heating, ventilating and air-conditioning systems, and a large pedestrian plaza with seating and landscaping.

The building interior is being redesigned with the exposed duct work and industrial materials popular with many tenants today, Kilroy said, but spaces with a conventional office appearance also will be available.

Architect for the project is Michael Rogers of HKS Architects in Westwood, who has designed many of Kilroy's Southern California developments. Los Angeles-based Hathaway Dinwiddie is the general contractor and Carter, Romanek of Santa Monica is the landscape architect.

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