High office vacancy will remain common for the foreseeable future as businesses… (Arkasha Stevenson, Los…)
Offices in a converted El Segundo manufacturing building formerly occupied by aerospace giant Northrop Grumman Corp. will be rented by data service provider Teradata Corp.
Teradata has agreed to rent a 1950s-era warehouse at 601 Nash St. that Northrop converted to executive offices more than a decade ago. The Ohio company will move there next year from a nearby 20-story tower built in the 1980s.
Teradata's relocation from a traditional high-rise building to a free-standing one-story office building is part of a countywide trend of corporate users moving toward more casual, collaborative atmospheres, real estate broker Scott Steuber of Cushman & Wakefield said.
"They're trying to create a more creative work environment for employees," Steuber said.
The new facility will include a gym with locker rooms and an outdoor gathering space after Teradata finishes preparing the space. It already has such typical creative office features as an exposed bow truss ceiling and polished concrete floors. Northrop also installed a large backup power generator.
"We just could not pass up the improvements offered at 601 Nash that allowed us to stay within our budget and deliver a work environment that will promote employee productivity," said Bruce Langos, chief operations officer of Teradata.
Terms of the lease with landlord Marcus Adams Properties were not disclosed, but real estate data provider CoStar Group said it is a 10-year agreement that begins in June. At local rental rates the deal would be valued at about $16 million.
Northrop has been systematically reducing operations in Southern California to reflect expected cuts in defense spending. In September, Northrop confirmed it had accepted buyouts from about 590 employees in its aerospace division. Most of them were in Redondo Beach, El Segundo and Palmdale.
Burbank Collection getting new owner
The Burbank Collection, a struggling retail center under a downtown Burbank condominium complex, is being purchased by Los Angeles developers who hope to revive it.
The retail property at North 1st Street and East Palm Avenue was completed in 2008 during the last recession and is little more than half occupied. GPI Cos. is buying the 40,000-square-foot complex from developer Champion Real Estate Cos. in a joint venture with KBS Cos. of Newport Beach.
Terms of the sale expected to close this week were not disclosed, but a real estate expert familiar with the Burbank market valued the deal at about $13 million.
The six-story project across a walk street from an AMC theater complex includes 110 condos over the stores.
"The residential sector suffered in the economic downturn," Deputy City Manager Joy Forbes said, and the retail portion of the development "was neglected."
GPI will remerchandise the Burbank Collection, Drew Planting of GPI said, perhaps with entertainment-oriented restaurants and lifestyle tenants such as a gym or yoga studio. GPI also will update the look of the center with new seating, lighting, landscaping and signs.
Current tenants include Barney's Beanery, Pinkberry and Skechers USA.
The mixed-use development was encouraged by the city, which built parking garages and other infrastructure to attract residents, retailers and visitors to downtown Burbank, Forbes said.
The neighborhood appears to be on the upswing, said Jamie Rodgers, head of acquisitions for KBS.
"We think it will continue to grow as more and more people invest in the area," Rodgers said. "We see it moving in the direction of what the Third Street Promenade in Santa Monica is today."
High office vacancy forecast
The office and industrial real estate sectors continue to improve for Southern California landlords, a report said, but high office vacancy will remain common for the foreseeable future as businesses put more workers into less space.
The regional economy has strengthened the last year and enabled some businesses to hire more workers, according to USC's annual Casden office and industrial property forecast.
That has resulted in higher occupancy and rising rent for industrial buildings, while office landlords are seeing rising occupancy and smaller declines in the amount of rent they can charge.
"We predict office market rents to stabilize in as little as six months, but a sustained recovery could be many years off," Casden report author Tracey Seslen said.
Office occupancy probably won't return to pre-financial crisis levels until some of the region's office buildings are taken out of commission or converted to other uses.
"A paradigm shift in the way tenant firms use office space will force landlords and developers to rethink their investment strategies even as the economy improves," she said.