Aerospace Is Part of Southern California’s DNA and Apt To Propel the Region and World to New Heights
August 27, 2020 3 Minute Read
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The year 2020 has presented extraordinary challenges, but if there could be one positive we can glean from these uncertain times it is this: it has been an incredible year, so far, for space exploration and aerospace – especially in Southern California.
Aerospace, particularly space exploration, is booming. In late July, NASA launched the successor to the Mars Curiosity rover—Perseverance—which was designed and built by La Cañada Flintridge-based Jet Propulsion Laboratory (JPL). On August 2, astronauts Doug Hurley and Robert Behnken returned to Earth two months after successfully launching the brand-new Crew Dragon capsule “Endeavour”—the first manned spaceflight from American soil since 2011. Beyond the historical significance of the aforementioned flight, it is also notable as the spacecraft was designed, built, and operated by Hawthorne-headquartered SpaceX. SpaceX has been one of several private firms that have helped reshape Los Angeles and Southern California’s deep defense and aerospace roots into something that aims for far greater heights.
These exciting events are not a flash in the pan—they are a part of a larger story about LA and Southern California’s deep roots in air and spaceflight. Some may not remember that the space shuttle fleet was born here in Palmdale, or that two stages of the rocket that carried Neil Armstrong, Buzz Aldrin, and Michael Collins to the moon was built here in Seal Beach and Huntington Beach, respectively. Whether you know it or not, aerospace is in SoCal’s DNA.
The region’s aerospace industry has always been one in transition. Between 1990 and 2000, the aerospace sector shed over 155,000 jobs as demand pivoted away from Cold War defense needs, according to CBRE research. But the aerospace scene didn’t stagnate or evaporate—in fact, the opposite happened, and it began to shift toward “value-add” operations, namely in the realm of space. Think “guided missiles and space vehicles.” This sector skyrocketed by more than 400% from 2010 to 2018 in SoCal, according to the California Employment Development Department.
So, what does this mean for folks like us working in the commercial real estate business here in Southern California? Like the burgeoning tech sector, aerospace and defense takes up a staggering amount of both office and industrial space across Southern California. It’s estimated that over 23 million square feet are currently being occupied by aerospace firms—3.3 million square feet of which were leased up in the last five years. While most of these leases have been for industrial space, companies in the sector are also in fierce competition for quality office space with tech-related industries and computer startups.
Aerospace firms have favored clustering around each other—usually due to a rich supply of talent. And, the sector has traditionally not strayed far from their primary source of revenue and contracts: the military. This is why so much leasing activity over the last five years has taken place in parts of SoCal with a large military presence. Take for instance the Los Angeles Airforce Base (LAAFB) in El Segundo. While it lacks a runway, this facility has been a substantial artery for South Bay’s economy and home to the Space and Missions Systems Center (SMC). The SMC program has been a crucial supply line for privately owned aerospace firms, as SMC frequently doles out contracts for various communication, military, and GPS satellite projects.
Along with South Bay, other submarkets across SoCal have seen their share of activity thanks to a military presence, such as Central San Diego (Space and Naval Warfare Systems Command), and the coastal cities of Orange County (the Joint Forces Training Facility in Los Alamitos). These three submarkets alone have accounted for 53 percent of aerospace-related leasing activity since 2015 and include notable deals such as Glenair (529,000 SF), Anduril Industries (155,000 SF), and Safran (145,000 SF) to name a few.
Space has garnered the nickname “the final frontier” for a reason. With it comes an almost limitless realm of potential for SoCal’s booming aerospace scene to keep evolving further. While I doubt my colleagues and I will be trying to lease commercial space on the lunar surface in the near future, one cannot help but look on with some wide-eyed wonder, optimism, and anticipation for the technological triumphs that will be rolled out onto the launchpad, courtesy of a homegrown SoCal company, in the very near future.