Michael Ross, a senior vice president in the Downtown Los Angeles office of Colliers, says that the property's location, adjacent to both the Air Force and Aerospace Corp. campuses, is a major draw for tenants. Occupancy at the building has remained at 100%, and for several years there has been a constant queue of tenants with ties to the defense industry lined up to get into the building, Ross notes. "There are few properties located this close to the Air Force Base and tenants like being able to walk across the street and visit their clients," he says.

Fred Cordova, also a senior vice president in the Colliers Downtown L.A. office, adds that the property has maintained a sustained occupancy as the South Bay office market has remained very stable relative to other markets within the Los Angeles Basin. Rents in the El Segundo market have risen 20% per year over the last few years as the submarket "continues to benefit from rapidly rising rents on the west side and tenants seek more affordable alternatives," Cordova says.

The South Bay market is weathering the current downturn better than other markets, due in part to a high concentration of defense-related businesses in the area, according to Michael Soto, regional analyst with PGP Valuation. "Defense spending has reached a 10-year high, and local aerospace and defense-related companies will be reaping the benefits for years to come," said Soto. "We expect sustained demand for office space from defense companies for at least the next decade."