EL SEGUNDO, CA-Affiliates of The Krausz Cos. have paid more than $65 million for a pair of office buildings in this South Bay submarket, dramatically raising the San Francisco-based real estate firm’s stake in Southern California even as some signs indicate that the market is flattening out.

One of the buildings stands at 2300 E. Imperial Highway and has about 157,000 sf. The other is at 2101 E. El Segundo Blvd. and has roughly 113,000 sf. Both are fully leased to units of high-tech and defense giants Raytheon and Hughes Space & Communications.

The two buildings were sold by affiliates of Proficiency Capital, a privately held investment group based in Brentwood. The building on Imperial Highway stood vacant for several years after tenant North American Rockwell moved out in the early 1990s, but Proficiency Capital bought it in 1999 for only $9 million and then leased it to Hughes Space & Communications after completing a $10-million renovation.

Though Krausz is based in San Francisco, it has slowly been adding to its holdings in Southern California. Its purchase of the two El Segundo buildings come at a time when prices and rent growth in many Southland markets have weakened in lockstep with the regional economy.

Yet, the El Segundo submarket is faring better than most. A recent report by CB Richard Ellis says that average asking rents in the area have jumped to $2.53 psf from $2.23 a year ago, despite the fact that its vacancy factor has climbed to 8.3% today from 5.7% in mid-2000.

Krausz isn’t the only investor that thinks the area still has upside potential. Last week, GlobeSt.com reported that New York-based Metropolitan Life Insurance Co. has paid $67.2-million for El Segundo’s 239,086-sf Continental Grand Plaza II office complex, marking one of the highest prices ever paid for a commercial project in the area.

A CB Richard Ellis brokerage team of Thomas Bohlinger, John Ayoob and Grafton Tranquary brokered the sale to Krausz. Like Proficiency Capital and Krausz itself, the brokers say they can’t comment on the deal because of a confidentiality agreement.

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