The defense boom is filling El Segundo's buildings

Published July 18, 2026

Two space and defense companies just signed for more than 117,000 square feet in one El Segundo building, industrial vacancy closed 2025 under 2 percent, and the county added 11,000 aerospace jobs in three years.

The short version. In 2026 El Segundo is the center of an aerospace and defense hiring surge. A hypersonic company, Hermeus, is relocating in from Hawthorne and taking 62,552 square feet at 888 North Douglas Street. Space manufacturing firm Varda already signed a 54,749 square foot expansion in that same building. Industrial vacancy here closed 2025 under 2 percent. If you own residential in this city, that is your demand story, and it is the strongest one in the South Bay.

For years the pitch on El Segundo was that engineers actually want to live near where they work. In 2026 that stopped being a nice line and started showing up in the leasing traffic. What follows is the version I see on the ground as a manager, not the version that fits a headline.

Two of the sector's most watched names, one address

Sometimes a single building tells the whole story. Hermeus, which builds hypersonic aircraft for defense customers, is moving into 62,552 square feet at 888 North Douglas Street and carrying those jobs across the line out of Hawthorne. In that same building, Varda Space Industries, one of the SpaceX spinoffs, signed for 54,749 square feet, taking over part of a sublease Beyond Meat had left behind.

Add it up and you get more than 117,000 square feet of high paying, technical hiring landing at one El Segundo address. None of this is warehouse work that commutes in from an hour out. These are salaried engineers and technicians, the kind of tenant who treats a ten minute commute as the entire point of where they live. When a company like Hermeus packs up one city and plants itself in yours, it is telling you exactly where its people are about to start looking for a place.

The number I actually act on

The individual leases are the exciting part. The market number underneath them is the part you can build a decision on. El Segundo industrial vacancy closed 2025 under 2 percent, which in commercial terms is about as tight as a market gets. Underneath that sits the bigger current: Los Angeles County added roughly 11,000 aerospace and defense jobs between 2022 and 2024, with more than 4 billion dollars in venture funding flowing into the sector in 2025.

Trace how that reaches your rent. There is almost no room left to build or lease new commercial space in this city, so the companies fight over the buildings that already exist and keep hiring straight through it. Every one of those new hires has to sleep somewhere. El Segundo is small, its housing stock barely moves, and the people filling these jobs would rather be here than crawl in from forty minutes away. That gives your building a demand floor with very little to do with the broader housing cycle and a lot to do with a defense buildout that is funded years ahead.

The one supply project worth watching

I would rather not hand you only the good news and skip the thing that could bend the math, so here it is. Griffin Capital has pitched a 323 unit apartment project at 1521 East Grand Avenue in Smoky Hollow, with construction targeted for 2026. For a city this size that is a real slug of new units, and it is the single largest piece of residential supply on the table.

I am not losing sleep over it. A project still at the pitch stage is years from handing over keys, and 323 units set against this kind of job growth is not the sort of oversupply that resets rents. Still, it is worth knowing it exists, especially if you are underwriting a purchase or timing a renovation to a specific window. Know where the new supply is going in and you can price around it instead of being caught off guard.

Reading the tenant who is coming

None of this is worth much if you play the turnover the way you did three years ago. With a unit coming vacant, you are handing it into the tightest demand this city has seen, fed by companies that are physically moving in right now. Price it to the market in front of you, not the one you remember, and resist the urge to lock in a below market lease just to fill it fast.

It also pays to know who you are marketing to. The engineer taking a seat at a place like Hermeus or Varda cares far more about a clean, quick, professional leasing process and a short commute than about a rent concession. Present the unit like you understand that, and you will do better than an owner who leans on discounts.

One more thing before you get creative with the business traffic. If you have ever pictured running a unit as a short term rental to catch the visiting engineers, stop and check the rule first. El Segundo prohibits short term rentals citywide, and the only legal path is the city's permitted Home Share program under Municipal Code section 4-16-9. Get that one wrong and it gets expensive, so confirm your own situation with a licensed professional before you list anything.

The through line is simple. You own in a city where the jobs are arriving faster than the homes, and that is about the best position a residential owner can be in. Play it patient, price it to the demand that is actually here, and let the sub 2 percent commercial market do the heavy lifting for you.

If you want a second read on where your specific building sits in all this, that is the kind of thing I am always happy to talk through.

This is general information, not legal or tax advice. Confirm with a licensed professional before you act.

Topics: market, el-segundo, south-bay, aerospace, demand

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Schofield Properties is a family run property management company at 323 Richmond St, El Segundo, CA 90245. We have managed the South Bay since 1972 and personally oversee about 186 doors today. Book a call to talk about your property.