The County of Los Angeles has temporarily agreed to buy the Tower from the gas company, a leading office skyscraper in downtown Los Angeles, for $ 215 million in a sales of foreclosure.
The price is a significant reduction compared to its estimated value of $ 632 million in 2020, which highlights the amount of the central offices values in recent years.
The Council of Supervisors must always approve the agreement, that the County real estate officials discreetly but aggressively negotiated. If it is finished, the purchase could move the workers and public services of existing county offices, including the famous Kenneth Hahn Hall of Administration, which dates from 1960, according to several familiar people with the transaction which asked that they are not appointed in order to discuss confidential negotiations.
The county began the reasonable diligence process of the property examination for possible structural problems or other problems before finalizing the transaction, which could take two to three months, according to sources.
In a declaration to the Times, the county said that he had submitted a non -binding “letter of interest” for the tower.
“Because we see price reductions once in generation for commercial real estate in the city center, as guards responsible for public funds, the county makes its reasonable diligence and assesses the possibility of acquiring goods in the Civic Center area, such as the gas company,” said the press release.
The Janice Hahn supervisor, who is the daughter of the longtime supervisor Kenneth Hahn, said in a separate declaration to the Times that she was not fully aboard the acquisition.
“I am uncomfortable with the fact that the county comes from the front by buying this skyscraper until I understand the full plan of the CEO that I have not yet seen. I am definitely against the county services to move from the only civic center in Los Angeles, “she said.
The Tower of the Gas Company represents “an opportunity for generational investment to acquire an active trophy at an exceptional base,” said Andrew Harper, a real estate broker JLL, in May, when JLL was hired to market ownership. JLL refused to comment on the current sale on Tuesday.
The 52 -storey tower at 555 W. 5th St. was largely considered to be one of the most prestigious office buildings in the city when it was made in 1991. It has around 1.4 million square feet of space on a 1.4 acre site at the Bunker Hill base.
In recent years, the downtown office market has turned against the owners, as many tenants have reduced the imprint of their office in response to the COVID-19 pandemic, when it has become more common for employees to work remotely.
Last year, the owner of the Gaz Tower company, a subsidiary of Brookfield Asset Management Ltd., was lacking on his debt and the property was put on a receiver, in which a representative appointed by the court took custody of the building to help the creditors to recover funds which they lent to Brookfield. The building has around $ 465 million in current loans.
High interest rates have weighed on prices by making it difficult for owners to refinance debt and pushing them to fast sales or seizures. Some tenants in downtown Los Angeles have expressed their concern in recent years than the streets have been less safe than before the pandemic and have left for other local office centers, including Century City.
The gas company tower was renovated in 2023 and the tower is currently half rented to tenants, including the Southern California Gas Co., the financial consulting firm Deloitte and the law firm Latham & Watkins, according to the supplier of real estate data Costar.
The office position in downtown Los Angeles was more than 30% in the second quarter, CBRE IMMOBILIER BROKERAGE saidMore than triple, the level generally considered as a healthy balance between the interests of the tenant and the owners.
The fall in downtown values attracts the attention of buyers who seek to seize goods at a low point on the market, said Petra Durnin, responsible for market analysis in Ruge Dom Amel, who is not involved in the agreement.
“Unhappy situations can create opportunities for others with money,” said Dunin. “The city center has already crossed boom and bust cycles and has always reinvented itself.”
A 52 -story office tower nearby previously belonging to Brookfield at 777 S. Figueroa St. should be sold at a considerably reduced price of $ 120 million, or $ 117 a square foot, the The commercial observer reported. He came to sell for around $ 145 million a few months ago, but the agreement collapsed.
In his declaration to the Times, the county said that he was considering the tower of the gas company as an alternative to the seismic modernization of its properties in the city center. The county has 33 installations What engineers say are vulnerable to the collapse during a major earthquake, including Kenneth Hahn Hall of Administration, which has been the seat of the Government of the County of Los Angeles for six decades, which has housed the offices of hundreds of employees and the five supervisors of the county.
Last year, the county prompted To improve the 33 vulnerable buildings during the decade, an ambitious company which, according to experts, would cost hundreds of millions of dollars.
