Revival Along the Rosecrans Corridor

The string of shopping centers, squat office buildings and parking lots along Rosecrans Avenue seems typical of the South Bay’s suburban landscape. But a barely mile-long strip that straddles the El Segundo-Manhattan Beach border has emerged as one of the area’s hot new commercial districts, where tenants pay top dollar for scarce vacant space.

Once a mundane stretch of office parks, the so-called Rosecrans Corridor now features a lively collection of high-end shops, restaurants and movie theaters. Hundreds of entrepreneurs, high-technology firms and Internet start-ups have moved into space abandoned by the shrinking aerospace industry. The strip includes even some Hollywood glamour: the new Raleigh Manhattan Beach Studios, where television shows “Ally McBeal” and “The Practice” are filmed.

Despite worsening traffic and limited room to expand, the variety of businesses and amenities within walking distance of each other gives the Rosecrans Corridor a unique advantage over rival South Bay commercial centers, real estate observers say.

“It makes for a comfortable, almost downtown-like setting,” said attorney Jeremy H. Stern, who will relocate his expanding law firm within the corridor instead of moving to a cheaper location. “It’s a place where people want to be.”

The Rosecrans Corridor, which is between Sepulveda Boulevard on the west and Aviation Boulevard on the east, is blessed with a strategic location. Business owners like its proximity to Los Angeles International Airport and the 405 Freeway. Shops and restaurants, meanwhile, can tap into the huge pool of affluent consumers who live nearby in Manhattan Beach and other densely populated coastal communities.

The corridor’s office market--which includes more than 2.5 million square feet of space--boasts a vacancy rate of only about 6%, despite some of the highest rents in the South Bay. The area’s largest landlord, Continental Development, plans to break ground soon on a 300,000-square-foot building to meet demand.

Rosecrans’ retail rents of about $30 per square foot per year at the high end top those for Hawthorne Boulevard, the South Bay’s traditional retail backbone. Nevertheless, upscale chains such as Il Fornaio, REI and Bristol Farms continue to open along Rosecrans. A hoped-for make-over of Manhattan Village Mall, which is up for sale, could strengthen the strip’s retail muscle.

Meanwhile, the occupancy rate at the 385-room Manhattan Beach Marriott, which sits in the middle of the corridor, is about 80%.

Rosecrans “came from out of nowhere and attracted a critical mass of restaurants, retailers and entertainment . . . that just didn’t exist a few years ago,” said retail specialist Brent Howell at broker CB Richard Ellis.

The transformation was born out of desperation. In the early 1990s, property owners had to fill acres of space left empty in the wake of defense industry cutbacks and corporate shake-ups. Continental Development, for example, saw its vacancy rate soar to about 40% in 1993 as once-blue-chip tenants such as TRW and Xerox dumped space, according to company President Richard Lundquist.

Continental responded by remodeling its 90-acre office complex to accommodate scores of smaller, faster-growing tenants. Perhaps more important, it added a mix of retailers to the complex, including a Wolfgang Puck Cafe, an 18-screen movie theater, a fitness club and a bookstore. Meanwhile, across Rosecrans, a new shopping center with a Bristol Farms market and a Houston’s restaurant opened its doors.

“We didn’t need any more offices along the street,” said Lundquist, whose project is now almost completely full. “The [office complex] was easier to rent because of the retail.”

Rosecrans’ mix of business tenants and retail shops has proved attractive to area workers. “You don’t have to get in your car to get a sandwich or go shop,” said real estate broker Jim Biondi at Grubb & Ellis.

Even though Rosecrans Avenue has six busy lanes of traffic, office manager Deborah Safarik often walks across it to shop at Bristol Farms. “This place has everything you need, and it’s blocks from the beach,” the Redondo Beach resident said.

The owners of fast-growing MXG Media were ready to leave the area after failing to find the space they needed, when plans for the four-story Media Center at Raleigh Manhattan Beach Studios were announced. MXG wasted no time in leasing about 17,000 square feet in the building, which is scheduled to be completed in early spring.

“We jumped on it,” said MXG Media co-founder and Chief Operating Officer Stuart MacFarlane. “There are a lot of restaurants and a lot of shopping around here. It’s a very people-friendly area.”

The new stores, night life and presence of pedestrians have given the Rosecrans Corridor an urban vitality in the middle of suburbia.

“Years ago, you would rarely see people on the sidewalk,” Lundquist said. “Now, there is a tremendous amount of pedestrian activity. Most people really like that.”

On a recent Friday afternoon, as workers along the Rosecrans Corridor began to depart for home, the stores remained busy, young moviegoers lined up for tickets and cars pulled up in front of restaurant valet-parking stations. In contrast, in El Segundo’s nearby Super Block district, where only a handful of restaurants can be found amid giant office buildings on Grand and Mariposa avenues, the sidewalks were virtually empty.

The difference in amenities and atmosphere explains, in part, why office rents on the Rosecrans Corridor are about 5% to 10% higher than those for the Super Block, brokers say. Landlords typically ask as much as $2.65 per square foot per month for space on Rosecrans.

“They view [the Rosecrans Corridor] as a much nicer environment for their customers to visit and employees to work in than other places in the South Bay,” said broker Bob Healey at CB Richard Ellis.

The success of the corridor has not been lost on El Segundo, which is trying to encourage more restaurants and amenities in the Super Block, home to such Fortune 500 giants as Mattel Corp. But attracting those kinds of businesses is difficult, because they must rely primarily on 9-to-5 office workers, said Jim Hansen, El Segundo’s director of Community Economic & Development Services.

“You really need a weekend component . . . and that’s what the Rosecrans Corridor has,” Hansen said.