First New Class A Office Building in El Segundo Since Recession Breaks Ground — Continental Grand Plaza II
06/17/1998 Category: Leasing and Development
First joint venture of Highridge Partners and Mack-Cali Realty Corporation
EL SEGUNDO, Calif.--June 17, 1998--Dramatic evidence that Southern California's aerospace hub has made a strong resurgence is the groundbreaking today for the $50 million Continental Grand Plaza II, the first new speculative class A office building to go up in El Segundo since early this decade.
The six-story, 237,000 square foot building is the first project of a new partnership formed by El Segundo-based Highridge Partners and Mack-Cali Realty Corporation (NYSE:CLI), a New Jersey-based real estate investment trust (REIT). Highridge Partners, a real estate investment company with a track record of identifying and building value, bought the fully entitled 4.17-acre site along with an adjoining six-story office building in 1991.
"When we acquired Continental Grand Plaza I and this site, office vacancies averaged 25 percent in El Segundo and numerous buildings were completely empty," said John Long, managing partner of Highridge Partners and managing general partner of the newly formed joint venture between Highridge and Mack-Cali. "Today vacancy rates are less than five percent and there is strong demand for office space from the fast-growing companies of Los Angeles' new economy."
Continental Grand Plaza II features fiber optics capability and state-of-the-art technology, all necessary elements to serve the high tech and media companies locating within the Los Angeles Coastal Business Corridor. Long noted that much of the space occupied by aerospace and defense companies ten years ago now houses companies that make up Los Angeles' new economy such as telecommunications, technology, electronics, and international trade. Tenants in the area adjacent to Continental Grand Plaza are clear indications of this trend, he pointed out, citing Oracle, Mattel, Hughes Electronics/DIRECTV, Sun Microsystems, and Japan Airlines among others.
"We believe this is an exceptional project in a great location and allows Mack-Cali to enter the Southern California market in a prudent manner with minimal investment," according to Mitchell Hersh, president and chief operating officer of Mack-Cali Realty. "Our partnership with Highridge and its well-respected co-founders, Gene Rosenfeld and John Long, provides Mack-Cali an immediate reservoir of market knowledge and contacts."
"We had full confidence that the El Segundo area would make a strong comeback because of its unparalleled location, business friendly city government and some of the lowest business and utility taxes in Southern California," said Jack Mahoney, president of Highridge Partners' development arm, Summit Commercial Properties.
Continental Grand Plaza II is only minutes from LAX and the terminus for the 105 freeway that leads quickly to downtown and to the 405 freeway that reaches Long Beach, Orange County and other major area business centers. A Metrorail stop is one block away.
Continental Grand II is the cornerstone of the Highridge-Mack-Cali partnership to develop in infill, niche markets in Southern California that are magnets for the region's new economy businesses.
Under Mahoney's leadership, Highridge and Mack-Cali are employing a research-driven strategy to determine supply/demand ratios in key sub-markets from which it will then target specific development opportunities. The analysis encompasses market conditions, demographics, historic cycles and competitive factors.
Highridge has selected CB Commercial Real Estate Group to direct leasing at Continental Grand Plaza II. The CB team includes Bill Bloodgood, John Ayoob, and Grafton Tanquary. The building offers full floor identity for 20,000-40,000 square foot tenants and is also available for 1,000-square-foot tenants. The building is expected to be completed in June 1999. General contractor is a joint venture of Peck /Jones and OCAmerica Construction.
Mack-Cali Realty Corporation is a fully integrated, self-administered, self-managed real estate investment trust (REIT) providing leasing, management, acquisition, development, construction and tenant-related services for its portfolio. With the completion of the company's pending transactions, Mack-Cali will own 245 properties, primarily office and office/flex buildings totaling approximately 26.9 million square feet and serving over 2,300 tenants. Mack-Cali's properties are located in 11 states, primarily in the Northeast, as well as the Southwest and West.
Closely held Highridge Partners has acquired, developed and managed a real estate portfolio valued at more than $2.5 billion in the past decade. It operates through three core business groups: a Commercial Group that includes Summit Commercial Properties and Metropolitan Development which acquire and develop office, industrial, R&D, retail and redevelopment projects; Haverford Financial Group that provides financial services and opportunistic capital; and a Housing and Leisure Group that includes Western Pacific Housing, Marignan Immobilier Investissements (a French housing company), and Alpine R.V. Resorts.