El Segundo is trying to reinvent itself as a tech-friendly business hub, but it’s bread and butter remains industrial real estate. And with that sector continuing to experience steady gains, Hackman Capital Partners has acquired an industrial warehouse in the city, property records show.
The West Los Angeles developer paid just under $15.3 million for the 55,000-square-foot property at 401 Coral Circle. The deal comes out to $277 per square foot. The two-acre site also has 100 vehicle spaces.
The seller is an LLC connected to Primary Color Systems Corporation, a signage and display fabricator that is consolidating its Coral Circle operations to a location in the Orange County city of Cypress. The LLC bought the property in 2005 for $6.9 million.
Representatives for Hackman could not be reached for comment.
The firm has had tremendous success repurposing properties as creative office space in emerging tech haven Culver City. But the new property in El Segundo doesn’t appear to be positioned for such a conversion.
That’s not to say that it couldn’t go in that direction in the future, especially with the attention El Segundo has been getting lately.
Last week, city officials unveiled a plan to rezone a 120-acre swath of its industrial Smoky Hollow neighborhood to attract creative office tenants.
Industrial real estate is still surging according to recent data. The national vacancy rate hit an all-time low in 2017, which was the first year that rent growth outpaced all other commercial sectors, according to real estate trading platform Ten-X.
The firm predicted that the market would continue to tighten through this year on the back of 10 million square feet of absorption, and marked L.A. as a particularly good market for investment. That’s thanks in part to increased demand for cloud computing data centers and the cannabis industry.
A number of major players have scooped up industrial space over the last few months. Warehouse giant Prologis announced a $8.4 billion deal this week for its industrial portfolio spanning 71 million square feet.
The Blackstone Group paid Cabot Properties $1.8 billion for an industrial portfolio totaling 22 million square feet in late December.
Despite the success, not everyone is convinced. Self-proclaimed “Grave Dancer” Sam Zell, known for his affinity for distressed properties, told Bloomberg this week that developers are building too much industrial space around the country. Demand can’t keep up, he said.