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Holliday GP Corp. (“HFF”), California Bureau of Real Estate License #01385740.
Stabilized Creative Office Investment Opportunity
OVERVIEW / THE OPPORTUNITYHFF has been engaged as the Exclusive Advisor to extend to qualified investors the opportunity to acquire the fee simple interest in The H (the “Property”), a two-story, +/-122,277 square foot creative office project located in the South Bay submarket of Los Angeles. The Property recently underwent a substantial renovation that included an investment of over $5 million to renovate lobbies, restrooms, and corridors, add a tenant amenity lounge and outdoor collaboration area, and replace traditional tenant suites with open, highly creative workspaces.
The Property’s rent roll is diversified among multiple industries including Technology, Transportation & Logistics, Finance, Insurance and Consumer Goods, mitigating the exposure to industry-specific declines. The durable cash flow benefits from an impressive lineup of credit tenants including Honda, UPS, Expeditors Inc., and Progressive Insurance, with credit tenancy representing over 63% of RSF.
THE H TENANCY OVERVIEW
INFORMATION TECHNOLOGY AND SERVICES
7.0%
LOGISTICS AND SUPPLY CHAIN
62.3%
FINANCIAL SERVICES
11.9%
CONSUMER GOODS
3.8%
INSURANCE
7.7%
APPAREL & FASHION
7.2%
2 HFF
ADDRESS: 19701 HAMILTON AVENUE, TORRANCE, CA 90502
BUILDING SIZE: 122,277 SF
OCCUPANCY: 96%
YEAR BUILT/RENOVATED:
1984/2018
CLASS: A
STORIES: 2
PARKING: 477 ON-SITE PARKING SPACES
PARKING RATIO: 4.00/ 1,000 SF
LAND SIZE: 5.22 ACRES
CEILING HEIGHT: 13’
PROPERTY OVERVIEW
3HFF
INVESTMENT HIGHLIGHTS
OWNERSHIP HAS DELIVERED A REIMAGINED PRODUCT THAT HAS BEEN FULLY EMBRACED BY THE MARKET
• As one of the premium product offerings in the submarket, the Property continues to benefit from the South Bay’s dynamic tenant activity and strong rent growth.
• Since completion of the campus reposition in mid-2018, ownership has seen an increase in occupancy from 57% to 96%.
• In that same timeframe, rents grew over 25%, further validating the proposition that high quality, credit tenants will pay a premium for a superior office experience.
2019THE H
Occupancy: 96%
Lease Rate: $2.60 FSG
FORMER TOYOTA SITE BRINGS NEW LIFE TO TORRANCE
Sares-Regis purchased the site and plans to redevelop a mix of office, retail and industrial businesses.
An estimated 4,000 people could be employed at the new site.
HOUSING
Nearby Home Values: $719,800
EMPLOYMENT
Unemployment Rate: 3.4%
201619701 HAMILTON
Occupancy: 57%
Lease Rate: $1.95 FSG
TOYOTA HEADWINDS
Toyota, the city’s biggest employer, vacated its 101-acre campus in Torrance where it employed 3,000 people.
2 million square feet of outdated office & industrial space is expected to be added to the market’s vacancy.
HOUSING
Nearby Home Values: $563,000
EMPLOYMENT
Unemployment Rate: 4.7%
4 HFF
TORRANCE
ACCESS TO EXECUTIVE HOUSING10 MINUTES - TO REDONDO BEACH 12 MINUTES - TO PALOS VERDES ESTATES 15 MINUTES - TO HERMOSA BEACH 20 MINUTES - TO MANHATTAN BEACH 20 MINUTES - TO LAX
$1,500,000+AVERAGE HOME PRICE WITHIN A 6 MILE RADIUS
HIGHLY EDUCATED WORKFORCE
45%OF RESIDENTS HOLD A BACHELORS DEGREE OR HIGHER (LA COUNTY IS 29%)
PROXIMITY TO EXECUTIVE HOUSING & AMENITIES
• Close proximity to both executive housing and the local tech talent pool have contributed greatly to the South Bay’s emergence as a prime office location at the southern end of Silicon Beach, with historically low vacancy rates and burgeoning tenant demand.
• The Property is located just minutes from some of the most affluent communities in Los Angeles, including Palos Verdes, Rancho Palos Verdes, Rolling Hills Estates, Hermosa Beach, and Manhattan Beach, which have a median home value of $2.0 M and median income of nearly $150,000.
• This executive access has correlated to the Property’s and Torrance market’s ability to quickly rebound from the Great Recession, pushing vacancy rates to historic lows, as decision makers are moving their businesses closer to home.
• Additionally, the Property is located 0.6 miles from the SouthBay Pavilion, 1.65 miles from the Dignity Health Sports Park, and 3.26 miles from the Del Amo Fashion Center, the largest retail hub in Los Angeles outside of Santa Monica and Century City.
57%MEDIAN INCOME
THAT IS
ABOVE THE LOS ANGELES MEDIAN
5HFF
INVESTMENT HIGHLIGHTS
RAPIDLY ESCALATING SOUTH BAY MARKET FUNDAMENTALS
• As rents have rapidly escalated along Silicon Beach there has been a steady migration southward of tech and other high quality tenants, which has driven up South Bay rents by almost 50% since 2013.
SOUTH BAY ASKING RENTS VS VACANCY
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
$1.50
$1.75
$2.00
$2.25
$2.50
$2.75
$3.00
VacancyAsking Rents (PSF)
Asking Rent Vacancy %
• Strong fundamentals in the South Bay, coupled with the Property’s ability to attract best in class tenants, will provide The H with significant long-term growth.
6 HFF
TORRANCE
SUBURBS
18-hour cities continue to attract millennials and jobs as the development and application of technology has evened the playing field with gateway cities. Initially drawn to the attractive basis, investors are realizing higher returns by identifying and acquiring assets in the most prime corridors of employment and retail growth.
Investors are also giving suburbs a fresh look, as millennials begin to come of age and plan to live in detached homes. However, these millennials will likely prefer “diet urban” locations that are more compact, close to transit, and have more mixed use on their nearby Main Street.
7/10 ULI TOP U.S. MARKETS TO
WATCH
18% HIGHER EMPLOYMENT
GAINS THAN 24-HOUR CITIES
#1 LA AREA
RANK FOR INVESTMENT
18% GEN Y RESPONDENTS EXPECTED TO LIVE IN DETACHED SINGLE
FAMILY HOME IN 5 YEARS
0 LARGE SCALE OFFICE DEVELOPMENTS IN
SOUTH BAY
18-HOUR CITIES
• There is an opportunity for an investor to increase near-term rents, as the in-place rents for the tenants expiring through 2021 are 26% below market, including UPS and Honda. Both tenants have been in occupancy over nine years, they have a history of renewing at the Property, and both have FMR options.
$0.00 $0.00
$2.18
$2.48
$0.00
$2.72
$0.00
$0.00 $0.00
$2.94
$0.00 $0.00 $0.00
$2.84 $2.90
$0.00
$3.07
$0.00
$0.00 $0.00
$3.46
$0.00
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
% o
f GLA
Exp
iring
Rent
(PSF
/ Y
ear)
% GLA Expiring Base Rent Upon Expiration Market Rent of Expiring GLA
THE H MARK TO MARKET RENTS
7HFF
ATTRACTIVE RELATIVE VALUE
• The H presents a significant value when compared to best in class coastal opportunities in other locations throughout Los Angeles.
• When compared to recent core office trades in West LA (Santa Monica, Playa Vista, El Segundo, and Culver City) trading between $700 and over $1,400 PSF, the South Bay market offers an attractive relative value.
CENTRALIZED, TRANSIT-ORIENTED LOCATION
• The I-405 and the I-110 freeways are two blocks away from the Property, and State Route 91 and Pacific Coast Highway are in close proximity as well, providing direct access to executive housing and a large labor pool.
• Los Angeles International Airport (LAX) is only 20 minutes from the Property, providing tenants with easy access to one of the busiest airports in the world.
• For tenants that prefer not to drive, the Harbor Gateway Transit Center, a major bus station and a stop along the LA Metro Silver Line, is one mile away.
190th Street
Port of Los Angeles
Los Angeles International Airport
Harbor Gateway Transit Center
T O R R A N C E
H E R M O S A B E AC H
PA LO S V E R D E S R E D O N D O
B E AC HM A N H AT TA N
B E AC H
8 HFF
INVESTMENT HIGHLIGHTS (CONT’D)
9HFF
ANDREW HARPER
Managing Director
T. 310.407.2139
CA License #01319640
MATT McROSKEY
Associate
T. 310.407.2131
CA License #01934089
MATT FISHER
Analyst
T. 310.407.2121
CA License #02012875
TODD SUGIMOTO
Managing Director
T. 310.407.2111
CA License #01264139
STEVEN PASKOVER
Director
T. 310.407.2134
CA License #01936051
STEVE SOLOMON
Managing Director
T. 424.294.3434
CA License #00956150
KRISTEN BOWMAN
Vice President
T. 424.294.3413
CA License #01951586
Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, “HFF”), HFF Securities L.P. and HFF Securities Limited (collectively, “HFFS”) are owned by HFF, Inc. (NYSE: HF). HFF and its affiliates operate out of 26 offices and are a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets platform including debt placement, investment advisory, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF.
HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.
HFFLP.COM
LAX
Manhattan Beach
Rancho Palos Verde
Port of Long Beach
Port of Los Angeles
INVESTMENT ADVISORS
DEBT ADVISOR
MARKET LEASING
