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Northrop to Move Joint Strike Fighter Unit to El Segundo

Commercial Real Estate

Aviation: The building, home to software company Candle, is being considered for a larger JSF facility.

March 26, 2002|BRAD BERTON | SPECIAL TO THE TIMES

Northrop Grumman Corp. will soon move its Joint Strike Fighter engineering group into an 85,000-square-foot floor of an El Segundo office building that also serves as headquarters for software specialist Candle Corp. in one of the largest leases in that city for several months.

Century City-based Northrop's integrated systems division plans to continue to expand and is searching for more office space to serve the group working on a new fighter plane, the F-35.

The Candle building is one of the options being considered for a larger JSF facility, which ultimately could house 1,000-plus employees in 300,000 square feet or more of offices, said Northrop spokesman Jim Hart. Northrop has been using a small office in the Candle building as an employment center, and engineering personnel will begin taking over the four-story building's third floor in early April.

Candle spokeswoman Jessica Boelter confirmed that Candle and Northrop officials are discussing potential transactions under which Northrop would lease most or all of the Candle building or even purchase the property. Such an agreement would require Candle to relocate its headquarters from 201 N. Douglas St., where 400 employees are housed.

Candle is unlikely to move its headquarters more than a few miles from the current home office, Boelter said, and would require about 125,000 square feet of space--less than half of the Douglas Street building's roughly 335,000 square feet.

The computer connectivity specialist founded by software pioneer Aubrey Chernick moved from Santa Monica to El Segundo two years ago.

A Chernick group known as Douglas Property Holding Co. purchased the property.

Real estate consultancy CB Richard Ellis has been advising Candle and the Chernick group. Both Insignia/ESG and CB Richard Ellis have been working with Northrop Grumman on the JSF office search. Representatives of those firms declined to discuss the transaction.

Northrop Grumman's integrated systems division is on the Lockheed Martin-led team (along with BAE Systems) that the Pentagon awarded a $19-billion JSF-related system development and demonstration contract in October.

The JSF is the next-generation fighter for the three primary U.S. military branches as well as the British Royal Navy.

The deal is a large one for El Segundo, which has seen substantial office development in recent months but not a lot of leasing. Hart declined to disclose the rate Northrop will pay, but average rent at the Candle building is $2.35 per square foot per month, according to real estate data provider CoStar Group Inc.

Demand for El Segundo office space peaked amid the dot-com boom in 2000, but has since softened even as several new development projects got underway.

El Segundo is seeing a surge in its traditional aerospace and defense sector now that Internet-related activity has diminished, said Jerry Porter, vice chairman of Cresa Partners, a real estate brokerage.

In fact, the Douglas Street building housed Rockwell International engineers working on the B-1 bomber back in the 1980s.

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