When people talk about the AI boom, they talk about OpenAI, Anthropic and San Francisco.
Southern California does not have those companies.
But we may have the next part of the boom.
The factories that turn AI into drones, aircraft, spacecraft, robots and defense systems.
Anduril just made a $1 billion bet on that future.
The $1 Billion Bet
Anduril plans to open a huge new campus in Long Beach and Lakewood in 2027.
The numbers:
- $1 billion investment
- 1.18 million square feet
- 5,500 direct jobs
- 435,000 square feet of industrial
- Thousands of additional construction and service jobs
Anduril uses AI to build physical products for the military. That requires engineers, assembly lines, testing areas, power, loading and a lot of real estate.
This is what the next AI boom may look like in Southern California.
Why Southern California?
- Aerospace talent
- Defense companies
- Manufacturing buildings
- Access to the ports
- A history of aircraft and satellites
AI is now moving to companies that use it will need places where they can actually build things.
Southern California has that base.
Anduril employs about 7,000 people across 35 locations. Roughly half are already in Southern California.
Its Costa Mesa headquarters is a former Los Angeles Times printing plant.
El Segundo
Anduril did not choose El Segundo.
It chose Long Beach and Lakewood.
The El Segundo boom is spreading across the region.
There are a lot of small companies coming into the area.
Varda Space Industries leased about 205,000 square feet in a building that started as an aircraft factory in the 1940s and later became Mattel’s research center.
Hermeus, which is developing high-speed aircraft, moved its headquarters from Atlanta to El Segundo.
A 1956 industrial building at 1920 East Maple Avenue recently sold for $79 million - $740 per square foot.
The building houses an Equinix data center.
Buildings in these areas are becoming very valuable.
El Segundo is like the Beverly Hills of Industrial.
Investor Details that valuable:
The new companies want industrial and flex buildings with high ceilings, power, loading and room to test or assemble products.
They do not necessarily want traditional office towers.
You need the type of building the boom actually needs.
We may not build the next ChatGPT here.
But we could build the aircraft, drones, robots, spacecraft and defense systems that AI controls.
It also creates a much bigger real estate footprint that needs millions of square feet of industrial and talent.
The Operator Takeaway
I would not buy a random office building and call it an AI investment.
I would look for the buildings these companies cannot easily replace:
- Industrial or flex space near aerospace talent
- Heavy power
- Loading and high ceilings
- Room for testing and assembly
- Locations near LAX, the ports and existing defense companies
The opportunity is not be owning the next Anduril.
It may be owning the factory, lab or powered building that the next 10 defense companies will need.
That is the hidden AI boom no one is talking about that I think exists in Southern CA.
I'm researching the market to make better investment strategies. I'm sharing what I find along the way with other investors to have discussions, debates and help make better decisions.
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