In a move to capitalize on the growing South Bay office market, a JV of The Ruth Group and Roxborough Group has acquired the Gateway Towers in Torrance from Equity Office Properties for $106.25M.
The 443,517 SF Class-A office building at 970 and 990 190th St. is 91% leased and anchored by Herbalife International of America. Gateway Towers is composed of two nine-story buildings.
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Newmark Knight Frank’s Kevin Shannon, Ken White, Scott Schumacher and Guillermo Boisson represented the seller. Newmark Knight Frank’s David Milestone and Brett Green represented the buyer in securing debt, according to a news release.
“The Ruth Group plans to develop the land parcel located between the towers with cool restaurant amenity spaces as well as creative office,” Schumacher said in a news release. “The project and the immediate area are ripe for these amenities which will create a unique competitive advantage for Gateway Towers.”
The purchase comes as the South Bay area of Los Angeles is seeing an influx of commercial development and office rent growth.
In the past four years, South Bay office vacancy has decreased 540 basis points, according to Colliers International's 2018 second-quarter report.
"Similar to West Los Angeles in the past couple of years, the South Bay has managed to defy rental rate expectations, routinely posting year-over-year growth in the 6%-8% range," Colliers Regional Research Analyst Chris Wong wrote.
Wong said most of the office rent growth is happening in the Torrance and El Segundo submarkets as well as the beach cities submarkets in the South Bay.
Shannon, Newmark Knight Frank's co-head of U.S. Capital Markets, said the 190th Street submarket in Torrance where Gateway Towers is located is also seeing a lot of demand from major tenants seeking better regional freeway access and lower occupancy costs.
“This market is primed for future rental growth given current class A asking rates of $2.65 FSG (full service gross rent) at the project versus asking rates ranging from $3.25 to $4 FSG in the nearby central Torrance and El Segundo submarkets respectively,” Shannon said in a statement.
