A gated enclave spanning 30 acres in El Segundo where secret aerospace work has been going on for decades will be opened up to laid-back techies and other creative types in a $100-million makeover.
Los Angeles real estate developer Hackman Capital Partners — which last month landed a large Amazon Studios lease at another property — is redeveloping four industrial buildings near Los Angeles International Airport that it acquired from defense giant Northrop Grumman.
The site off Douglas Street features 550,000 square feet of research and manufacturing space that will be converted into an office campus once the military contractor finishes its tenancy in coming months, said Michael Hackman, chief executive of Hackman Capital.
The price of the acquisition has not been disclosed.
Hackman invests in several U.S. real estate markets and has a strong presence in Culver City, where it owns Culver Studios. Amazon, which is beefing up its original content business, is taking more than 280,000 square feet of space there, including at the studio's mansion on Washington Boulevard.
The studio is a landmark where "Gone With the Wind," "Citizen Kane" and other classic movies were filmed. The El Segundo industrial complex, though less famous, is historic in its own right too.
Douglas Street harks back to the 1930s and takes its name from the time Douglas Aircraft Co. made planes for the Navy that were flown in three wars. Among them were World War II-era Dauntless dive bombers, Skyraider dive bombers and Skynight jets, which flew during the Korean and Vietnam wars.
The oldest of the buildings was completed in 1930 as a manufacturing plant for Pickwick touring buses and was later used for making airplanes. It has 50-foot ceilings capped with slanted saw-toothed skylights that provide indirect sunlight. It has an airy, industrial sensibility and a patina of age.
"Nobody wanted that when I started in the business" in the 1970s, Hackman said. "That was considered old and out of fashion. Now those buildings are sought after."
Sought after, typically, by the technology, entertainment, media and other creative businesses that are gradually supplanting the defense giants that used to cluster near the airport.
The willingness of Hackman to invest so much in the Northrop property, a distinctly utilitarian collection of old warehouses south of the airport, speaks to changing tastes in office space. Many financially flush companies are choosing to work in gussied-up buildings from decades far past, shunning the newer glass skyscrapers and suburban office parks that dominated the late 20th century.
Northrop, once based in Los Angeles but now headquartered in Falls Church, Va., bought the El Segundo properties in 1978. The smallest of the buildings is used for airplane testing, but the others have classified uses and are off-limits even to landlord Hackman and his team.
"There are big, dark parts of the buildings we haven't been able to go into just yet," said architect John Wiedner, who is working on the makeover.
His design calls for doing away with the windowless offices and long, dimly lit hallways found in the old buildings and opening the place up. Some walls and doors will be reused, including big sliding "elephant" doors that open wide enough to accommodate passage of airplanes and trains.
"The scale is challenging but also exciting," said Wiedner, a principal at architecture firm Gensler. "How do you carve it up and create a better scale?"
The answer, he says, is to strip off the facades of the buildings and re-skin them with a lot of windows and big roll-up doors to create what Wiedner calls indoor-outdoor space. The developer will add skylights and further open the ceilings to create light wells. The goal is office space that feels new but has unmistakable signs of historical uses.
"Our designs will celebrate vestige industrial keepsakes — bridges, catwalks, railway corridors and exterior stairs," said Gensler designer Brian Glodney, who is also working on the project.
He wants the industrial touches to create a sense of connection between the buildings, which also share a two-acre open space that will be turned into a park-like setting for tenants.
In the process, Hackman could divide the buildings into multiple spaces for rent with separate entrances.
"Clients love privatized entries," Wiedner said.
The aerospace industry is still "vitally important" to El Segundo, City Manager Greg Carpenter said, but companies there have been merging and contracting since the end of the Cold War.
By the mid-2000s, building vacancies prompted the city to try to rebrand itself in the business community as "the next hot tech, biotech and entertainment" center, with some success.
In July, billionaire doctor Patrick Soon-Shiong opened the Chan Soon-Shiong Institute for Medicine at Mariposa cancer treatment center in El Segundo, down Mariposa Avenue from the Los Angeles Lakers' new training facility. Kite Pharma, which was acquired by Gilead Sciences Inc. for $12 billion in August, opened a manufacturing plant in El Segundo last year.
Other businesses moving to El Segundo include professional services firms such as architects and advertising agencies, and new-media entertainment companies such as video game makers and web designers, said Barbara Voss, the city's economic development manager.
Those are the types of businesses Hackman Capital hopes to attract with its unusual buildings and uncommon abundance of open space, Vice President Mike Racine said.
The oldest buildings feature a lot of wooden and other handcrafted parts that "are built like furniture," he said. "You can't build them like that anymore and have them make economic sense."
Northrop will vacate the largest of the buildings by the end of the year and construction will start in the first quarter of 2018, Racine said. The first refurbished offices will be ready in mid-2019, and the makeover should be done about a year later.
Much of the Hackman property is surface parking lots, which might be developed in the future.
El Segundo currently has a price advantage compared with other communities that appeal to creative tenants.
Average asking monthly rents in El Segundo in the third quarter were $3.46 a square foot, compared with $4.43 in Culver City, $5.05 in Playa Vista and $6.10 in Santa Monica, according to real estate brokerage CBRE.
However, the new project will join others in El Segundo competing for tenants seeking creative offices, said real estate broker Thacher Goodwin of Colliers International.
"There is still a large level of defense contractor occupancy, but overall — whether it's repositioning or ground-up construction — every developer and owner is going through some level of creative conversion," Goodwin said, including adding outdoor amenities such as fire pits, ping-pong tables and food trucks.
Hackman will balance its El Segundo work with a project in Culver City, where it just broke ground on Culver Steps, a shopping and office complex on vacant land adjacent to the studio mansion.