Located just south of Los Angeles International Airport, the 11.6 million-square-foot office submarket has evolved from being merely a traditional corporate office hub with Chevron, Boeing, Northrop Grumman, Raytheon, and Mattel to becoming a more diverse occupier base led by creatives over the past decade. With homegrown companies such as Beyond Meat, GoGuardian, and Prodege, as well as fashion-oriented companies like TechStyle (formerly JustFab), NYX Cosmetics, and Dermastore all incubated locally, El Segundo has increasingly become an extension of Silicon Beach.

Due to this newer leasing demand from startups in tech, fashion, video games, and digital media, as well as its proximity to executive housing in Manhattan Beach, Hermosa Beach and Redondo Beach, over $3 billion in office property sales have occurred since 2015 as institutional capital has increasingly sought out acquisition opportunities in the area. As a result, it is no surprise that average rents in El Segundo, over the same period of time, have enjoyed the largest rise of any office submarket in Los Angeles.

While all this recent activity has been exciting for the submarket, it should be noted that office availability in El Segundo at year-end 2020 was over 23%. This is expected to rise as some legacy corporate occupiers continue to downsize within the market. In addition, newer projects and creative office conversions are expected to continue to add office supply, which could increase availability even further.

Nevertheless, we expect El Segundo to continue to grow and attract companies from the rest of Los Angeles and elsewhere as its high quality of life, laidback work-live-play lifestyle, and lack of a gross receipt tax—compared to the City of Los Angeles—remain highly attractive to companies looking to grow.