Ocean West Capital Partners has acquired Smoky Hollow Flex Campus, a 152,000 square foot flexible industrial building, in an off-market deal. Situated on 5.1 acres in the Smoky Hollow neighborhood of El Segundo, the property sits in one of Southern California’s most desirable industrial areas.
The 1960s period building currently features a brick facade, roll-up loading doors, ceiling heights ranging from 15 feet to 36 feet, and a parking ratio of 2.0/1,000 square feet, and it is on a contiguous block. Ocean West plans to execute a capital improvement plan to modernize the property to better serve the needs of the aerospace and defense industries, which are established in the area, and emerging technology, science and technology industries. of life and entertainment. The improvement plan will include exterior improvements, new landscaping, parking facilities, building systems, outdoor recreation areas and the construction of a new building.
In recent years, the Smoky Hollow submarket has become a hub of innovation with tech startups, creative businesses and light-industrial users flocking to the area, which offers significantly lower rents than neighboring markets. from the Westside. In addition, there is huge support from local leaders. In 2019, the City of El Segundo published a plan to develop nearly 3 million square feet of creative office, industrial buildings and public facilities through 2040.
This has created many opportunities for properties like Smoky Hollow Flex Campus. In addition to demand for office space from technology and entertainment companies and the existing aerospace industry, industrial users are voraciously seeking available space, which has become even more scarce over the past two years. Mid-2021, Marcus & Millichap found that the market would exceed pre-pandemic activity with the industrial vacancy rate down 40 basis points to 2.9%.
Growth in e-commerce due to the pandemic, along with record port cargo volumes and safety stock upgrades, are driving demand for industrial space. As a result, Los Angeles will continue its reign as the market with the lowest industrial vacancy rate in the United States. At the same time, new construction activity is down compared to the five-year average. This year, 4.4 million square feet will be delivered to the market, increasing the industrial park by 0.5%. That’s down about 400,000 square feet from the five-year average. About 60% of the product under construction is already pre-let.