The industrial sector has proven itself to be a highly resilient asset class that has continued to draw investor interest, even over the turbulent past few years for commercial real estate. While transactions remained at nearly a standstill for the majority of 2024, there was steady demand for well-positioned industrial assets.

Industrial is appealing to investors seeking a hedge against inflation to preserve capital. While still elevated slightly from their historic lows, cap rates are compressed, with most transactions closing at sub-5 percent cap rates in prime markets. It was also the only major product type to see a decrease in loan delinquencies in the fourth quarter, a further testament to the sector’s stability through an evolving economic landscape and unprecedented global events.

READ ALSO: Capital Ideas: Gold Card Plan Can’t Trump EB-5

Yes, there have been persistent headlines of oversupply and softening demand in Los Angeles County and the Inland Empire and attention being driven toward emerging markets in the Southeast and Midwest. That said, Southern California and other Western markets remain critical hubs of commerce and logistics that will continue to benefit from the same demand drivers and fundamentals that have historically propelled these regions. In fact, there are emerging submarkets within these regions with strong growth potential that are attracting businesses, developers and investors alike.

Strong outlook for demand drivers

Even in the face of a new administration and geopolitical uncertainty, Western markets in particular remain a key hub for both global and domestic commerce. In 2024’s fourth quarter, year-over-year volume at Southern California’s San Pedro Bay Port Complex (home to the ports of Los Angeles and Long Beach) was up 19.5 percent, according to Freightos data, and costs per container from East Asia to the West Coast declined 13 percent.

While some investors are still hesitant to make moves amid headlines of rising vacancies resulting from significant deliveries, strong absorption rates indicate that these will likely begin to fall again in 2025. In fact, throughout the Inland Empire, average gross and net absorption rates were up in the fourth quarter as a result of stronger demand.

From an overall economic standpoint, higher employment rates and improving sentiments are signs we will see industrial users making moves. This will create ample opportunity, as many tenants are poised to strategically navigate their own growth and invest in their supply chains this year. At DAUM, we’ve assisted several companies, including retailers and distributors, with expansions this past year and expect this kind of activity to continue.

Opportunities in emerging submarkets

We’re even seeing new and planned construction of state-of-the-art distribution centers and mega-warehouses in historically underutilized areas of the Inland Empire and Los Angeles County that still have ample developable land.

One example of this is L.A. County’s Antelope Valley, which is located just an hour from the ports, north of the city of L.A. and just west of the Inland Empire. With growing business and residential populations, an educated workforce and a business-friendly government, it is poised to continue attracting businesses and represents an area of industrial growth and fertile ground for investment.

Industrial users, including logistics firms and manufacturers, are attracted by the region’s affordability, given that rental rates remain high in submarkets near downtown Los Angeles. Additionally, drayage costs to the Antelope Valley are the same as to Beaumont and Banning and lower than the High Desert, Tejon and the Central Valley.

In fact, DAUM agents recently arranged the sale of 68.5 acres of land in Lancaster—fully entitled for a 1.26 million-square-foot distribution center—to Amazon.

Especially as the logistics industry continues to increase its capabilities of next- and same-day delivery, there remains strong demand for quality industrial space near key population and transportation hubs.

Rick John, SIOR, is executive vice president at DAUM Commercial Real Estate Services.

The post Why SoCal Industrial Still Yields Opportunities appeared first on Commercial Property Executive.

Put another way, even that conservative estimate of the economic damage adds up to about 4 percent of California’s GDP.

That’s the beginning of the context for Rising from the Ashes: Assessments on the Impacts to CRE Post the LA Wildfires, a new report from JLL Research.

As day after day of news video footage from the fire zones showed, the heaviest property damage was to single-family residences, nearly 11,000 of which were destroyed, representing more than half of the SFR stock in the two fire zones (Palisades and Eaton). In addition, more than 300 multi-housing structures were destroyed.

On one hand, the 11,000-odd housing units destroyed or significantly damaged represent just 0.4 percent of the market’s housing stock, yet the estimated 24,000 families displaced by the fires have to live somewhere.

READ ALSO: 5 Overlooked Insurance Gaps That Could Hit Your Bottom Line

And JLL reminds us that Southern California was already a long-term supply-constrained market. As higher-income families relocate to single-family rentals, others will spill over into the multifamily sector. “Already the exacerbation of Los Angeles’ multi-housing supply shortage will result in elevated rent growth in the medium term,” according to the report.

Impact to retail, office, industrial  

Though less publicized, the region’s retail, office and industrial commercial real estate sectors were also hit. About 200 commercial buildings, predominantly retail properties and food-and-beverage establishments, were destroyed. They represent, JLL stated, nearly half of the retail establishments and about one-third of the total retail space in the fire zones.

In the near term, home centers and hardware retailers could benefit. “Longer term,” JLL added, “mixed-use developments may be a way to address both the housing shortage exacerbated by the fire as well as replace the lost retail space, which has not been growing for a long time.”

The fires’ effects on office space are expected to be indirect, potentially by displacing office workers, especially in the professional and technology services sector and the media and entertainment sector.

The impacts on industrial real estate could be more direct, with rebuilding efforts boosting the demand for warehouse space and IOS properties.

Additionally, JLL reported, home appliances, furnishing and day-to-day necessities must be replaced, further bolstering the need for warehousing. “This will help lower industrial vacancies in and around the affected areas, particularly in the San Fernando Valley and San Gabriel Valley markets where total vacancy currently stands at 4.2 percent and 5.8 percent, respectively.”

Given the efforts by the state government to streamline rebuilding, JLL noted, the real challenges lie in physical construction. “Due to significant demand, labor and materials will be expensive, further complicating rebuilding efforts.”

Finally, those generally higher replacement costs for commercial real estate have the potential to make existing buildings more attractive for investors.

The post How Rebuilding From LA’s Wildfires Is Impacting CRE appeared first on Commercial Property Executive.

Long Beach-based engineering and technical services provider Mangan Inc. has signed a 37,000-square-foot lease at Kilroy Realty Corp.’s Aero Long Beach office campus in Long Beach, Calif.

Mangan plans to relocate its headquarters from 3901 Via Oro Ave. to the new office space, with move-in scheduled for November 2025. JLL worked on behalf of the ownership in the leasing deal, while Savills represented Mangan.

Owned and managed by Kilroy Realty, Aero Long Beach is a 957,706-square-foot office campus completed between 1986 and 2000. The complex consists of six buildings located at 3750-3900 Kilroy Airport Way on a 50-acre site.

READ ALSO: Strong Deals and High Prices Keep LA Among Top Office Markets

Over the past 12 months, Kilroy Realty landed more than 15 leases at Aero Long Beach, encompassing more than 141,000 square feet. The property’s tenant roster features SCS Engineers, Canon Inc., DeVry University, Blue Shield of California, SCAN Health Plan and Cushman & Wakefield.

Buildings range in size from approximately 96,000 to 220,000 square feet across two to eight floors, according to the same data provider. 3880 and 3900 Kilroy Airport Way received LEED Silver certification, while the 3760 and 3840 properties were awarded the LEED Gold, CommercialEdge data shows. Amenities include open-air gathering spaces, a fitness center and an Everytable café.

The campus is adjacent to the Long Beach Airport, near Interstate 405. Downtown Los Angeles is 25 miles north.

JLL Managing Directors Jason Fine and Monica Enes worked on behalf of Kilroy Realty, while Savills Senior Managing Director Steve Pisarik and Senior Vice President Bruce Schuman represented Mangan Inc. in arranging the deal.

Los Angeles office vacancy and asking rates

The national office vacancy reached 19.7 percent as of January 2025, a recent CommercialEdge report shows. This represents a 180-basis-point increase year-over-year and a 10-basis-point decrease from the previous month. Los Angeles posted a 16.4 percent office vacancy rate in the first month of the year, lower than the U.S. average.

The national full-service equivalent listing rate was $33.38 per square foot in January. Los Angeles ranked forth among Western markets with highest asking rates, at $42.01 per square foot, trailing San Francisco ($70.56), the Bay Area ($54.38) and San Diego ($42.57).

The post Kilroy Inks HQ Lease in Long Beach appeared first on Commercial Property Executive.

Oceanview Life and Annuity Co., an affiliate of Bayview Asset Management, is the lender. Scheduled to open in phases starting late 2025, West Harbor is currently 80 percent preleased.

Upon completion, the 42-acre area will feature high-end retail, entertainment and dining. Plans call for 117,205 square feet of leasable building space and 204,000 square feet of ground area, along with a 6,200-seat amphitheater. The development represents a $500 million investment into the waterfront community.

The city of Los Angeles and the Port of Los Angeles selected Jerico Development and The Ratkovich Co. through an RFP process. The development will also provide direct waterfront access, including 200,000 square feet of leasable waterside space designated for vessel excursions and other waterfront attractions.

Newmark advised the West Harbor team and arranged the recapitalization by providing an accretive capital solution for the project’s completion and stabilization.

READ ALSO: Why C-PACE Lenders Remain Resolute

The refinancing, structured with a new senior loan and subordinate C-PACE financing, was arranged by Newmark Executive Vice Chairman Bill Fishel, Directors Alethia Halamandaris and Wyatt Strahan, and Associates Anna Sporrong and Broderick Flagg.

This full leverage, non-recourse refinancing of the West Harbor development will provide the time and resources required to bring the experiential retail project to fruition, Fishel told Commercial Property Executive.

Construction financing of this manner of leasehold real estate in any environment is challenging, he added. “The incredible outcome we achieved here belies the decade-plus of work by the Port of San Pedro and the Jerico and Ratkovich teams alongside the thoughtful, differentiated approaches of both Bayview and Petros, pairing existing PACE, bridge and new PACE financings to elegantly effectuate a new waterfront experience for the region.”

In one of South Florida’s largest office deals last year, Bayview Asset Management renewed its 55,071-square-foot office lease at Merrick Park, at 4425 Ponce de Leon Blvd. That deal was led by Colliers Vice Chair Stephen Rutchik and Vice President Tom Farmer, who represented landlord Brookfield Properties.

This week, a 146,901-square-foot grocery-anchored retail center in Los Angeles was financed for $32 million by 21 Alpha Group and Intelligent Design Real Estate through Forbright Bank for Crenshaw Plaza.

The post Los Angeles Retail Project Obtains $62M Refi appeared first on Commercial Property Executive.

The principals of 21 Alpha Group and Intelligent Design Real Estate have obtained $32 million in senior financing through Forbright Bank for Crenshaw Plaza, a 146,901-square-foot grocery-anchored retail center in Los Angeles.

JLL arranged the three-year, floating-rate loan. Proceeds will refinance existing debt, pay for closing costs and support future leasing expenses. 

The property became subject to a $31 million loan in 2020, when the joint venture acquired it in a $33.7 million portfolio deal that also included the retail space at 3540 Slauson Ave., according to CommercialEdge data. Wells Fargo Bank provided the five-year note.

Crenshaw Plaza, up close

Completed in 1967 and renovated in 2004, the five-building Crenshaw Plaza is at 3210 W. Slauson Ave., covering a 5-acre site. The property was 97 percent leased at the time of sale, its tenants having average leases of 9.3 years. 

Vallarta Supermarkets anchors the retail center, occupying 31.5 percent of the gross leasable area under a 15-year lease. The roster also includes Planet Fitness, Foot Locker and AutoZone.

Crenshaw Plaza is at the intersection of West Slauson Avenue and Crenshaw Boulevard, which sees approximately 72,000 vehicles per day. The shopping center is also adjacent to the Hyde Park light rail station, on the Metro K Line. 

JLL Capital Markets Director Spencer Bergthold, Senior Managing Director Charles Halladay and Associate Daniel Skerrett led the company’s Debt Advisory team that brokered the deal on behalf of the joint venture.

Grocery-anchored shopping centers continue to prove their resilience in the market, driven by consistent consumer foot traffic and the demand for convenience-oriented retail experiences. In 2025, the retail sector is expected to undergo significant transformation due to shifting consumer preferences, increasingly oriented toward necessity-based centers.

The post 21 Alpha Group JV Lands Refi for Los Angeles Retail Center appeared first on Commercial Property Executive.

Landrock LP and Pendulum Property Partners have acquired a 16-story, 329,431-square-foot trophy office tower in Glendale, Calif. The Class A asset changed hands at a significant discount from its previous sale, in a deal arranged by Newmark.

Goldman Sachs Asset Management and Cruzan sold the property at 505 N. Brand Blvd. for $56 million, The Real Deal reported. The partners had purchased the building in 2018 for $93.5 million from Principal Real Estate Advisors.

Built in 1986, the tower recently underwent extensive capital improvements totaling $14 million or approximately $43 per square foot. The LEED Gold-certified building also includes 3,500 square feet of retail, as well as an on-site car wash and dry cleaners. The property features a total of 1,153 parking spaces in a multi-level structure.

READ ALSO: Strong Deals and High Prices Keep LA Among Top Office Markets

The asset is leased to a diverse roster of 19 tenants, with a weighted average remaining lease term of 4.2 years. One of them is Phonexa, a software company that added more than 18,000 square feet to its lease at 505 N. Brand Blvd. in April 2023, bringing the total occupied space to 42,000 square feet across the building’s top three floors.

Other tenants include UnitedHealth Group, CalSTRS, KB Financial Group, Packer, O’Leary & Corson law firm and Martin & Associates, an accounting firm.

The building’s location on North Brand Boulevard provides access to the 134 Freeway. The property is also within walking distance of retail and residential amenities, including The Americana at Brand, a 1 million-square-foot mixed-use property, and Glendale Galleria. Downtown Los Angeles is some 10 miles south.

Newmark team

Newmark Co-Head of U.S. Capital Markets Kevin Shannon, Vice Chairmen Ken White, Rob Hannan, Michael Moll and Laura Stumm, Executive Vice Chairman Kevin Donner, Managing Director Ben Lushing and Director Alex Beaton represented the seller.

Newmark Co-President of Global Debt & Structured Finance Jonathan Firestone, Vice Chairman Blake Thompson and Director Henry Cassiday led market financing alternatives throughout the transaction.

Los Angeles market moves

The sale is another recent example of office assets in the Los Angeles market trading at discounted prices. Earlier this month, a joint venture between Cross Ocean Partners and Palisade Group purchased 4500 Park Granada, a 222,667-square-foot office building in Calabasas, Calif., for $69.4 million from Gemdale USA in a deal also brokered by Newmark. The property previously changed hands in 2021 for $79 million, according to CommercialEdge information.

And late last year, Los Angeles County acquired The Gas Company Tower, a 1.3 million-square-foot office building in the city’s downtown, for $200 million. The property had been sold by Wilmington Trust after a September foreclosure on a $350 million CMBS loan.

In October, Southwest Carpenters Pension Trust acquired Union Bank Plaza, a 40-story, 701,888-square-foot office tower in Los Angeles for $80 million from Waterbridge Capital. The office building had sold for $104 million in April 2023.

The post Landrock, Pendulum Buy LA Office Tower for $56M appeared first on Commercial Property Executive.

On a global level, average net effective costs for prime office space rose by just 0.1 percent compared to the third quarter. The increase was driven by a 0.3 percent growth in gross rental rates and an uptick of 0.2 percent in fit-out costs, moderated by landlord concessions. Overall, the upward trend for the year stood at 1.9 percent.

With a net effective cost to occupier of $206.7 per square foot annually, Midtown Manhattan ranked third among the 35 global markets Savills covers, outpaced only by London’s West End ($277.5) and Hong Kong ($230.4).

The report also highlighted Los Angeles, with a spotlight on Century City. Savills reported that this submarket in particular saw a 5 percent net effective cost-to-occupier growth last quarter.

“With its collections of trophy assets and reputation for safety and extensive retail options, Century City represents one of the best-performing submarkets in Los Angeles,” Henry Gjestrum, JLL research manager in Los Angeles, told Commercial Property Executive.

Nearly 1.6 million square feet of leasing activity has taken place in Century City over the last 12 months, pushing forward the market’s recovery, he added.

Century City is the only market in Los Angeles that has an office tower under construction with a significant amount of preleasing. Office asking rents in this submarket are 81 percent higher than the rest of Los Angeles, according to Gjestrum.

Trophy assets are leading the way in practically every other primary U.S. market, just like in Century City, Jim Schoolfield, managing director at JLL in Los Angeles, told CPE.

“Century City benefits from most tenants being in professional services space where the return to office mandates have been highest,” Schoolfield said.

READ ALSO: Top 100 Office Leases of 2024 Point to Stabilization

Landlords have heavily invested in creating world-class amenities to attract the premier tenants, he added. “Rent growth has been 4 percent from the fourth quarter of 2023 to the fourth quarter of 2024, and the average asking rate is $7.58 per square foot for Class A space, which far outpaces the rest of Los Angeles.”

According to Schoolfield, among the top nine assets in Century City, only 20 full floors are available directly, with a vacancy of 11.4 percent.

“To deal with competing demand, the larger tenants must transact at least 24 months before any lease commencement,” Schoolfield said.

Century City, an outlier

Los Angeles—specifically Century City—is an outlier, according to Eric Segal, MAI, senior managing director of Integra Realty Resources’ Los Angeles office.

“Our data supports the trend highlighted by Savills,” he told CPE. “Century City recorded some of the strongest leasing volumes since early 2020, with intense demand for premium office space driving effective rents higher. This underscores a broader pattern where top-tier assets in key locations thrive, while much of the office sector is still working toward stability.”

Speaking nationally, Segal said the U.S. office market is experiencing a sharp divide.

“While top-tier office buildings in select markets are holding steady or even seeing rental growth, the broader sector continues to struggle with high vacancies and evolving tenant needs,” he said. “The ‘flight to quality’ is real, but it’s happening alongside persistent challenges for aging, outdated office stock that lacks the amenities and flexibility today’s tenants require.”

Miami, New York City lead the way

Nowhere is demand for prime space more evident than in Miami, according to Tere Blanca, founder & CEO of Blanca Commercial Real Estate.

“Demand has been fueled by new-to-market tenants and a growing existing tenant base, sending asking rents skyrocketing,” she told CPE.

In prime (Tier I) CBD properties, asking rates have increased 7.2 percent year-over-year and an astonishing 67.8 percent since the end of 2019, Blanca added. In Brickell, where the only new supply delivered fully leased, prime asking rates have increased by 82 percent since the end of 2019.

“With no new supply expected in the CBD until the end of the decade, we expect owners to continue to mark to market vacant spaces and renew tenants. This will continue to drive healthy rate increases across the CBD market,” Blanca said.

The office sector appears to have bottomed out, with early signs of renewed transaction activity, according to Eli Randel, chief operating officer of Crexi.

“Blackstone’s recent high-profile acquisition in Manhattan suggests the worst may be behind us,” Randel said. “The divide between winners and losers remains stark—amenity-rich, Class A properties continue to attract strong occupancy, while much of the Class C inventory is increasingly becoming obsolete.”

As for national office traffic numbers, Placer.ai reported that nationwide office visits were 40.2 percent lower during January than in January 2019, likely due to a mid-week New Year’s holiday and a polar vortex making travel difficult in many cities.

New York City led for visit recoveries last month, with visits down only 19 percent compared to January 2019. San Francisco ranked last among the cities analyzed, with visits down almost 52 percent.

The rising demand for prime office space is primarily driven by the push for a return to the office, according to Kenneth Salzman, executive managing director & principal at Lee & Associates NYC.

“Many companies’ return-to-office initiatives include offering onsite amenities and securing office locations in desirable areas that address employee conveniences and reduce commute times,” Salzman said. “Midtown Manhattan is a prominent submarket for office space due to its central location, easy access and neighborhood amenities.”

The post Net Effective Office Costs Edge Up appeared first on Commercial Property Executive.

Retail Opportunity Investments Corp.’s shareholders have approved the proposed merger with Blackstone Real Estate Partners X. The all-cash deal, valued at about $4 billion, is expected to close this week.

ROIC and Blackstone affiliates had entered the merger agreement back in November, under which Blackstone would acquire all outstanding shares of ROIC’s common stock at $17.50 per share. The transaction represents a 34 percent premium over ROIC’s closing share price in July 2024.

The retail REIT‘s portfolio included 93 grocery-anchored properties totaling around 10.5 million square feet across Los Angeles, San Francisco, Seattle and Portland, Ore., at the end of September.

Blackstone’s interest in ROIC underscores the positive outlook of necessity-based, grocery-anchored retail. This type of assets will continue to draw attention from both investors and developers, according to Commercial Property Executive‘s 2025 retail outlook.

The Blackstone-ROIC merger, up close

Following the merger’s completion, ROIC will become a privately held entity under Blackstone’s management.

The deal will involve a two-phase process. First, Montana Merger Sub II LLC will merge with ROIC’s operating partnership, Retail Opportunity Investments Partnership LP, according to the Trading Calendar. Then, Montana Merger Sub I Inc. will merge with ROIC, which will remain under Blackstone’s control.

The agreement also includes measures for handling ROIC’s restricted stock awards and long-term incentive program units, ensuring that eligible employees receive fair compensation as the company undergoes a change in ownership.

However, the transaction might still be subject to change, the same source shows. Should a superior offer emerge, ROIC’s board has the right to accept the new proposal and pay Blackstone a $78 million termination fee. On the other hand, Blackstone has guaranteed a $239 million reverse termination fee if it fails to complete the deal under the terms of the agreement.

The post Blackstone’s $4B Retail Deal Gets Green Light appeared first on Commercial Property Executive.

A joint venture between Cross Ocean Partners and Palisade Group has acquired 4500 Park Granada, a 222,667-square-foot office building in Calabasas, Calif. Gemdale USA sold the fully-leased asset for $69.4 million or about $312 per square foot, in a deal brokered by Newmark.

The property previously changed hands in 2021 for $79 million when it was acquired from Rising Realty Partners, according to CommercialEdge information. The asset currently traded at a 12 percent discount compared to its last sale price.

The three-story building sits on a 20-acre site located less than a mile from downtown Calabasas. Downtown Los Angeles is some 27 miles away, while the Los Angeles International Airport is 30 miles southeast.

READ ALSO: Strong Deals and High Prices Keep LA Among Top Office Markets

Completed in 1986, the property also known as The Park Calabasas underwent cosmetic renovations in 2019. Initially, the low-rise served as the corporate headquarters of Lockheed Martin and later as headquarters for Countrywide, operating as a single-tenant building for nearly 20 years. It now houses seven tenants across various industries.

The building features floorplates ranging between 16,670 and 93,170 square feet, six passenger elevators and almost 700 parking spaces. Amenities include an on-site cafeteria and jogging trail, as well as an open space for corporate events and outdoor meetings.

The Newmark team representing the seller included Co-Head of U.S. Capital Markets Kevin Shannon, Vice Chairmen Ken White, Rob Hannan, Michael Moll and Laura Stumm, along with Director Alex Beaton.

Los Angeles office sector remains steady

Greater Los Angeles’ office investment volume in the fourth quarter of 2024 reached $870 million, according to a CBRE market report. Additionally, the metro’s overall vacancy rate as of December clocked in at 23.9 percent.

At the end of last year, Los Angeles County acquired The Gas Company Tower, a 1.3 million-square-foot office building in the city’s downtown, for $200 million. Wilmington Trust sold the asset after having foreclosed in September on a $350 million CMBS loan.

Another notable deal in the area was Drawbridge Realty’s $185 million purchase of Arboretum Gateway, a 225,773-square-foot building in Santa Monica, Calif. Clarion Partners sold the property, which is 100 percent triple-net leased to Universal Music Group.

The post Cross Ocean JV Buys LA Asset for $69M appeared first on Commercial Property Executive.

Healthcare Realty has sold the West Valley Medical Portfolio, comprising 162,554 square feet across three medical office buildings in West Hills, Calif. University of California acquired the assets on behalf of UCLA Health, according to public records.

CBRE arranged the transaction on behalf of the seller. At the time of sale, the portfolio was 94.1 percent leased, with tenants including UCLA Health, Optum, City of Hope, LabCorp and Providence Health & Services.

The facilities are located at 7301, 7325 and 7345 Medical Center Drive, within walking distance of downtown West Hills. Downtown Los Angeles is within 29 miles. Other medical providers in the area include West Hills Smiles and Kaiser Permanente Woodland Hills Medical Center.

READ ALSO: Challenges Create Opportunities, Says MOB Investor

The properties are also adjacent to UCLA West Valley Medical Center, which UCLA Health acquired in March of 2024. That hospital is about 21 miles northwest of UCLA’s main campus in Westwood and includes 260 beds with seven operating rooms.

The 62,369-square-foot facility at 7345 Medical Center Drive, completed in 1985, rises six stories and went through cosmetic renovations in 2010. Dubbed Oak Hills Medical Plaza, the mid-rise has first-floor retail space, with floorplates averaging 10,536 square feet.

The building at 7325 Medical Center Drive, known as Park Hill Medical Plaza spans 43,000 square feet and was completed in 1991. The facility has two passenger elevators and more than 180 parking spaces.

CBRE Vice Chair Chris Bodnar, Executive Vice President Brannan Knott, Senior Vice President Zack Holderman, Senior Director Trent Jemmett, Vice Presidents Cole Reethof and Jesse Greshin, along with First Vice Presidents Angie Weber and Dana Nialis arranged the sale.

MOB sector continues to grow

The medical office real estate market is expanding, with a Savills report predicting a 26 percent increase in outpatient demand over the next 10 years. This rise is largely attributed to the aging population, despite current economic uncertainties impacting the commercial real estate sector.

Looking ahead, lower interest rates are expected to fuel medical office building investments. However, the medical labor market is struggling to keep up with the expansion, facing a notable shortage of specialists, particularly physicians and nursing staff.

The post UCLA Health Acquires MOB Portfolio appeared first on Commercial Property Executive.

CapRock Partners has sold West Valley Logistics, a 270,000-square-foot industrial asset in Pomona, Calif. A Southern California-based alternative fashion company acquired the property. Stream Realty Partners and Colliers represented the seller and the buyer, respectively.

The new owner plans to establish its corporate headquarters at the building. CapRock will assist the buyer with interior design and the construction of tenant improvements.

West Valley Logistics came online last month. CapRock broke ground on the project in the second quarter of 2023, financing its construction with a $50 million loan issued by JPMorgan Chase, according to CommercialEdge information.

READ ALSO: SoCal Industrial Market’s Comeback Story

Located on nearly 13 acres at 4200 Valley Blvd., West Valley Logistics is some 30 miles east of downtown Los Angeles. State routes 57 and 60 are less than 4 miles away, while Interstate 10 is about 6 miles from the facility. The Ontario International Airport operates less than 17 miles away.

The LEED-certified, rear-load building features 40-foot clear heights, 28 dock-high doors and two grade-level doors, as well as 240-foot truck courts and 10,000 square feet of office space. There are 130 auto and 45 trailer parking spaces at the property.

Stream Executive Vice Presidents Matt Moore and Wes Hunnicutt, together with Associate Michael Torres, represented the seller. Colliers Senior Executive Vice President Mike Hartel and First Vice President Nick Velasquez brokered the deal on behalf of the buyer.

CapRock’s industrial dealings

CapRock’s industrial portfolio—including its development pipeline—encompasses roughly 19 million square feet across Western markets and Texas, where the company made its first purchase in April.

After a few months, CapRock announced its first ground-up development in the Lone Star State. The three-building campus totaling 518,000 square feet will also rise in the Metroplex.

In the West, the firm marked another premiere in July, with the $81.5 million purchase of a 707,010-square-foot industrial building in Sparks, Nev. This was CapRock’s first acquisition in northern Nevada.

Los Angeles’ sizeable industrial investment scene

Greater Los Angeles’ industrial sales volume totaled some $2.5 billion during the first 11 months of last year, according to a CommercialEdge report. The metro ranked second among the Western markets after the Bay Area ($3 billion), but equaled Phoenix ($2.5 billion) and surpassed the Inland Empire ($1.9 billion).

Although the City of Angels kicked off 2024 with a strong industrial rent growth—being one of the few markets that posted a double-digit increase—the rate in November was 8.1 percent, down from 11 percent in July, the same source shows.

The Southern California industrial real estate market witnessed a resurgence of the owner-user buyer profile, according to prepared remarks by Taylor Arnett, senior vice president at CapRock. One such example was Ardmore Home Design’s October acquisition of the 282,377-square-foot asset it had occupied since 2020. LBA Realty sold the City of Industry property.

The post CapRock Sells Greater Los Angeles Industrial Asset appeared first on Commercial Property Executive.

Los Angeles’ office sector is ending the year with a new supply struggle, while investment activity picked up, placing the market among the most active metros in the country in terms of transactions, CommercialEdge data shows. The increase is paired with one of the highest prices in the nation, as Los Angeles was the third-priciest office metro in the country as of October.

With the rise of office vacancies across gateway markets, Los Angeles has fluctuated throughout the year, showing a slight improvement in September. Despite the difficult office landscape, there were some notable office leases that closed in the metro, with one of them dubbed the largest new office lease signed so far in 2024.

As of October, the metro had 1.5 million square feet of space under construction across 13 properties, representing 0.5 percent of the existing stock—nearly half the national rate of 0.9 percent. The metro only outperformed Chicago’s 0.3 percent among gateway markets. Boston led the fold with 4.3 percent, followed by Miami (2.9 percent), San Francisco (2.3 percent), Seattle (1.3 percent) and Manhattan (0.6 percent).

L.A. office development continues on large-scale projects

When it comes to square footage, the City of Angels’ pipeline outperformed Chicago in absolute numbers, too (1.9 million square feet under construction), as well as Washington, D.C. (2.3 million square feet), while Boston led the nation in this regard also, with 10.4 million square feet underway.

The largest office development currently underway remains the 731,250-square-foot Century City Center, developed by JMB Realty. Rising 37 stories at 1950 Avenue of The Stars, the Class A high-rise’s construction started in August 2023, with completion scheduled for early 2026. The project is financed by a $575 million construction loan provided by Crestbridge.

Another notable project is Echelon Studios’ 388,000-square-foot office component at 5601 Santa Monica Blvd. Developed by BARDAS Investment Group, in partnership with Bain Capital, the creative office and studio will be part of the companies’ two-building, 600,000-square-foot campus project. The development, backed by a $300 million construction financing, commenced construction last month and is expected to come online in April 2026.

Developers started construction on eight projects in the first 10 months of the year, totaling 419,000 square feet. With planned and prospective projects added, the metro’s pipeline reached 2.8 percent of total stock—still below the national figure of 3.2 percent but higher than Manhattan’s 2.5 percent.

Meanwhile, developers delivered 1.2 million square feet of space across 15 properties, with one of the largest being the 331,000-square-foot office building at 444 Universal Hollywood Drive in Studio City, Calif. Developed by NBC Universal, the 11-story Class A+ building was completed in September. The amount of office space delivered in the metro marked a 28.6 percent drop in year-over-year completions.

Los Angeles’ office inventory shows strong candidates for office-to-residential conversions

As developers and office investors struggle with high office vacancy rates and shifting market conditions, the interest in office conversions is picking up across the nation. The Conversion Feasibility Index is a new tool developed by CommercialEdge that shows property-level scores based on a comprehensive list of building features, assessing the building’s potential for residential conversion.

The index showed that in July, Los Angeles had more than 20 percent of its existing office inventory as solid candidates for residential conversions, above the national average of 14.8 percent of total stock.

Some examples of planned office-to-residential conversions include the makeover of 6380 Wilshire Blvd., a 150,246-square-foot office building in the metro’s Wilshire Corridor submarket. Jamison Services, a prolific developer of office to apartment projects in Los Angeles, filed plans last year to convert the 1967-built property intro a 210-unit residential community. CommercialEdge data shows a CFI score of 79 points, making it a Tier II candidate.

Jamison Services is now converting the 18-story South Tower of The Towers on Wilshire office campus, with plans to add 255 residential units and an extra 19th floor. The 217,406-square-foot office property originally came online in 1961 at 695 S. Vermont Ave. CommercialEdge shows a CFI score of 81 points, making it a Tier II property.

Pricey deals put LA among best-performing metros

More than 10 million square feet across 53 office properties changed hands in the metro for a total of $1.8 billion through the first 10 months of this year, with Los Angeles ranking fourth among the best-performing metros in the U.S. The investment volume marked a 30.6 percent year-over-year increase—way above the national average of 4.1 percent but almost the same as last year’s data.

Across peer markets, the metro’s investment activity outperformed those of Boston ($1.1 billion), Chicago ($987 million), Miami ($983 million), San Francisco ($722 million) and Seattle ($668 million), while Manhattan led the rankings with $3.3 billion in sales.

Significant sales included the $185 million acquisition of 2220 Colorado Ave., a 201,006-square-foot office building in Santa Monica, Calif., occupied by Universal Music Group. The property was acquired by Drawbridge Realty from Clarion Partners, after 20 years of ownership.

Another notable deal was the $141.5 million sale of 9536 Wilshire Blvd., a 178,174-square-foot office property in Beverly Hills, Calif. The property is part of Wilshire Rodeo Plaza, a 300,000-square-foot office-and-retail asset spanning an entire city block. The Mateen Brothers, including Tinder founder Justin Mateen, acquired the asset from Nuveen as part of a $211 million deal, marking the largest property deal in this submarket since 2019.

Office assets in Los Angeles traded at an average sale price of $354 per square foot—above the national average of $177 per square foot and higher than the prices recorded in Manhattan ($344 per square foot), Seattle ($263 per square foot) and Washington, D.C. ($225 per square foot). Los Angeles ranked third across the priciest office markets in the U.S., with San Francisco leading ($392 per square foot) and Miami following ($369 per square foot).

Vacancy still on the rise, despite large leases

Los Angeles’ office vacancy fluctuated in 2024, but as of September it stood at 16.3 percent. One significant deal that closed recently is CIM Group’s 198,553-square-foot lease in downtown Los Angeles, at its City National 2CAL, a 1.4 million-square-foot skyscraper. The tenant is Southern California Gas Co., which will use the space at the property as its new headquarters. The deal is the largest new office lease signed so far in 2024.

Cruzan signed a 32,241-square-foot deal at its Wilshire & Pal, a creative office building totaling 110,000 square feet in Beverly Hills. The tenant is global music company Concord, which will move its Los Angeles office to the redeveloped property.

The largest lease extension in the metro remains Snap Inc.’s 467,000-square-foot deal at Santa Monica Business Park. The tenant signed a 10-year commitment at the 1.2 million-square-foot creative office campus, owned by BXP, where it was a tenant since 2017.

Los Angeles is still a coworking hotspot

As of October, the coworking sector in the City of Angels consisted of 6.5 million square feet, ranking as the fourth-largest flex office hub in the country after Manhattan (11.2 million square feet), Chicago (6.8 million square feet) and Washington, D.C. (6.7 million square feet). Other gateway markets with significant coworking footprints included Boston and San Francisco, with 4.8 million square feet and 3.6 million square feet, respectively.

Year-to-date through October, the flex office provider with the largest footprint in the metro was Regus (735,656 square feet), followed by WeWork (709,408 square feet), Spaces (594,194 square feet), Premier Workspaces (517,623 square feet) and Industrious (427,407 square feet).

The latter signed a 19,000-square-foot lease in Century City, Calif., in April at Watt Cos.’ North Tower of Watt Plaza, a 476,120-square-foot office property. The flex office provider entered into a 10-year agreement for a full floor of the property. During the same month, Industrious also opened a new 20,752-square-foot coworking location in Westwood, Calif. The flex office space is at Douglas Emmett’s Westwood Center, a 333,830-square-foot property.

The post Strong Deals and High Prices Keep LA Among Top Office Markets appeared first on Commercial Property Executive.

Los Angeles County has completed the acquisition of The Gas Company Tower, a Class A, 1.3 million-square-foot office building in downtown Los Angeles, for $200 million.

Wilmington Trust sold the asset after having foreclosed in September on a $350 million CMBS loan encumbering the property, according to CommercialEdge information. Brookfield Properties had defaulted on the loan last year.

The county’s board of supervisors approved the purchase in November. The buyer plans to relocate its employees, currently based at the dated Kenneth Hahn Hall of Administration, to the newly acquired tower, Los Angeles Times reported.

READ ALSO: Top California Markets for Office Transactions

JLL Senior Managing Directors Jeffrey Bramson, Sean Ryan and Tom Hall, together with Managing Director Andrew Harper and Director Will Poulsen, led the Investment Sales and Advisory team that arranged the deal on behalf of the seller.

Greater Los Angeles witnessed an office investment volume totaling more than $1.7 billion year-to-date through October, according to a recent CommercialEdge office report. Properties traded at $354 per square foot on average, double the national figure. The market was the second most expensive in California after San Francisco, where assets changed hands for $392 per square foot in October.

Towering over downtown L.A.

The Gas Company Tower is at 555 W. Fifth St., in the Bunker Hill neighborhood, one block from Pershing Square. Completed in 1991, the 54-story building features 27,000-square-foot floorplates, first-floor retail and a five-story underground parking garage. Designed by Skidmore, Owings and Merrill, the office tower most recently underwent renovations in 2018.

At the time of the sale, the LEED Gold-certified asset was 53 percent leased. Major tenants include Southern California Gas Company, Deloitte, Knoll, ArentFox Schiff LLP and Latham & Watkins LLP, among others.

The 1.4-acre property has a transit score of 100, as Pershing Square Metro station and Bunker Hill Station are less than 1 mile away.

The post Downtown LA Tower Trades for $200M appeared first on Commercial Property Executive.

Real Estate Development Associates and Clarion Partners have completed construction on Union Commerce Center, a Class A distribution facility in central Los Angeles.

Located at 3690 E. Union Pacific Ave., the property covers 11 acres and has direct access to key logistical freeways, including Interstate 5 and Interstate 710. Union Commerce Center is convenient to the Ports of Los Angeles and Long Beach, and Union Pacific Railroad. It is also 100 miles or less from all Southern California points.

READ ALSO: Industrial Demand Slips, But Avoids a Slump

Cushman & Wakefield’s John Minervini, Erik Larson, Chris Tolles, and Paul Sims with Cushman & Wakefield are leading the facility’s leasing efforts.

The development comprises a single 253,318-square-foot industrial building with a 36-foot clear height, 35 dock-high doors (with levelers on all docks), a pair of oversized grade-level doors, 41 trailer stalls, an ESFR K-25 sprinkler system, skylights, wide column spacing and ample expandable power. Rail access loading is possible at the location.

Cushman & Wakefield also represented Archer Daniels Midland Co. when the site was sold to REDA in late 2020. Quaker Oats was the previous site owner.

Tribute murals stand out

The Union Commerce Center also includes a recently finished, hand-painted mural. It wraps around a 500,000-gallon, 35-foot tall, 170-foot round water tower, honoring Los Angeles’ cityscape and heritage. The mural also serves the property’s fire sprinkler system.

Local artist Downtown Daniel (Daniel Antelo) produced the mural. Antelo’s artwork has been featured on walls and canvases nationwide. He has also worked for Nike, Kobe Bryant’s family, Marathon Clothing, the LA Rams, Clippers and Dodgers, among other projects.

Including tribute murals in commercial real estate projects is trending. For example, to honor her son, Akesh Yelavarthy, who died from Covid in 2020 at age 30, GI Stone President Sandya Dandamudi commissioned Cinque Smith and Gabriel Moskolis of Lymelite Studio to create a vibrant mural on the side of the leading stone supplier/fabricator’s new building, which is located next door to its longtime headquarters in a largely industrial area near downtown Chicago.

Completed in October, the graphic mural depicting Yelavarthy with his beloved pooch, Chance, enlivens the building, which the firm acquired last year, with plans to redevelop it as an innovative showroom and event space slated to open in late 2025.

“Akesh loved urban art, so this mural reflecting his joy of life and love for his friends is a fitting tribute,” Dandamudi told Commercial Property Executive.

A wall-to-wall, floor-to-ceiling abstract mural pulls all the colors together at Oklahoma City’s BancFirst Tower.

The post Clarion Partners JV Wraps Los Angeles Industrial Project appeared first on Commercial Property Executive.

Gantry secured a $55.9 million loan for the acquisition. The five-year, fixed-rate financing was secured through The Lincoln National Life Insurance Co. and underwritten as a full-term interest-only loan.

The acquisition encompasses 251,000 square feet of leasable space. The shopping center was developed in several phases, between 1981 and 2011. Huntington Oaks comprises 11 buildings spread on some 22 acres.

In 2014, the property became subject to a $60.5 million CMBS loan from U.S. Bank, with Bank of America as a lender, according to CommercialEdge data. That same year, the property also received a $10.5 million loan from BlackRock.

READ ALSO: Underserved Areas Are Grabbing Retail Investors’ Attention. Here’s Why.

Anchored by Trader Joe’s, Marshall’s, Kohl’s, Party City, Burlington and Petco, Huntington Oaks features a diverse mix of regional and national tenants such as Chili’s, Chipotle, Burlington, Chase Bank and Crunch Fitness, among others.

Principals George Mitsanas and Braden Turnbull, and Associate Austin Ridge from Gantry’s Los Angeles office brokered the deal, working on behalf of the borrower.

Huntington Oaks is located at 500-600 W. Huntington Drive, within Los Angeles’ San Gabriel Valley submarket. The retail center is near Interstate 210, which provides direct access to downtown Los Angeles.

Retail dynamics in Los Angeles

Considered a prime destination for tourism and a hub for high-street retail, Los Angeles has an active retail real estate market. Assets traded at an average of $430 per square feet in the third quarter of 2024, according to a recent Kidder Mathews report. The metro also had approximately 1.4 million square feet of retail space under construction, while the vacancy rate clocked in at 5.2 percent, with an average asking rate of $2.96 per square foot.

The post Los Angeles-Area Shopping Center Commands $79M appeared first on Commercial Property Executive.

Blackstone Real Estate Partners X has entered an agreement with Retail Opportunity Investments Corp. to acquire all of its outstanding common shares and debt for $4 billion. The deal is set to be an all-cash transaction and represents a 34 percent premium to ROIC’s closing share price in July of this year.

ROIC’s portfolio is made up of 93 grocery-anchored retail properties. They are located in Los Angeles, San Francisco, Seattle and Portland and total 10.5 million square feet.

In prepared remarks, Jacob Werner, co-head of Americas acquisitions at Blackstone Real Estate, said that the deal reflects the company’s bullish outlook on necessity-based, grocery-anchored retail. Specifically, the company is optimistic on demand for these types of assets in densely populated areas where there are very low levels of new supply.

READ ALSO: Will CRE Market Conditions Improve?

Pending customary closing conditions, including the approval of Blackstone common stockholders, the deal is set to close in the first quarter of next year. ROIC’s Board of Directors has already approved the transaction.

ROIC’s financial advisor was J.P. Morgan and its legal counsel was Clifford Chance US LLP. BofA Securities, Morgan Stanley & Co. LLC, Newmark and Eastdil Secured were Blackstone’s financial advisors while Simpson Thacher & Bartlett LLP was the company’s legal counsel.

The deal is the latest in a series of major Blackstone real estate acquisitions this year. In April, the firm signed a $10 billion deal to acquire Apartment Income REIT. The portfolio comprised 76 multifamily communities primarily in coastal markets.

Also, Blackstone-owned QTS expanded its presence recently with plans for a 3 million-square-foot data center campus in Phoenix. It is set to include 16 buildings of 180,000 square feet each.  

The post Blackstone to Acquire Retail Opportunity Investments Corp. for $4B appeared first on Commercial Property Executive.

John Hancock Real Estate, a Manulife Investment Management’s independent subsidiary, closed on a 22,115-square-foot, full-floor leasing deal at 515 S. Figueroa St., an office building in Los Angeles’ central business district.

The tenant United Way of Greater Los Angeles will relocate on the property’s ninth floor for 15 years, with moving-in scheduled for April 2025.

The deal brings the building’s occupancy rate at 86 percent. Other tenants at the 21-story tower include Manufacturers Bank, Taico Properties, IDS Real Estate Group and IA Interior Architects, among others, CommercialEdge shows.

Newmark worked on behalf of the tenant, while Avison Young represented the landlord.

READ ALSO: Growth in Office Tenant Costs Moderates

John Hancock Real Estate has been the owner of 515 S. Figueroa St. since it came online in 1982. The company is the longest-tenured office landlord in the metro’s downtown area, according to Avison Young.

The 437,787-square-foot Class A building includes seven passenger elevators, floorplates ranging between 20,000 and 22,564 square feet, 9,752 square feet of retail space and 519 parking spots. Additionally, the LEED certified property features a new conference center, fitness center, on-site day care and outdoor courtyard.

The mid-rise tower has access to interstates 10 and 110 and is 17 miles from Los Angeles International Airport and within 25 miles of Long Beach Airport.

Managing Director Ron Burkhardt and Senior Managing Director Steven Salas with Newmark negotiated on behalf of United Way of Greater Los Angeles. Avison Young’s Principal John Eichler and Senior Vice President Tyler Stark represented the landlord as exclusive leasing brokers in charge of the property. The company is also providing property management services.

Recent relocations in Los Angeles

Office vacancy rates in the U.S. remained in the high teens across Western markets, with Los Angeles recording the lowest rate at 16.3 percent as of September, down 10 basis points over a 12-month period, according to a recent CommercialEdge office report. The metro’s average asking rent price stood at $43.04 per square foot, matched by San Diego, securing the third spot across the most expensive metros in the West.

Recent office deals include Concord’s 32,241-square-foot agreement at Wilshire & Palm, the redeveloped creative office building in Beverly Hills, Calif. The global music company will move to its new location in the third quarter of 2025.

In September, Jamison inked a 21,000-square-foot long-term deal at The Harbor Building, in the metro’s Wilshire Corridor submarket. The tenant is women’s fashion label L’AGENCE, that will relocate its headquarters from the city’s Arts District.

The post John Hancock Inks 22 KSF Office Lease in LA appeared first on Commercial Property Executive.

However, office sales closed at a somewhat steady pace. A total of $23.8 billion in investment volume was registered nationally year-to-date through September, with assets changing hands for $171 per square foot on average, CommercialEdge data shows. This only marks a slight decrease compared to 2023’s same time frame, when sales totaled $25 billion. During that interval, properties traded for $198 per square foot.

California’s office transactions volume clocked in at $4.2 billion. About 16.9 million square feet across 159 properties sold for an average of $251 per square foot. The following list shows the leading top markets for office transactions in the state in the first three quarters of the year.

1. The Bay Area

The leading market for transactions in California year-to-date as of September was the Bay Area, which registered more than $1.8 billion in office investment volume. Sales in the metro comprising the San Jose area and the East Bay more than doubled year-over-year. Additionally, the market ranked third nationally, being surpassed only by Manhattan ($2.7 billion) and Washington, D.C. ($2.0 billion).

Despite the considerable growth in investment, office distress is still affecting the Bay Area, with the average price per square foot dropping year-over-year. Assets traded for an average of $278 per square foot in the first three quarters of this year, a significant decline from the $348 per square foot registered during the same interval in 2023.

In September, Behring Cos. purchased 1950 Franklin St., a 446,998-square-foot office building in Oakland, Calif., for only $14.4 million. This means the high-rise changed hands for a little more than $32 per square foot.

2. Los Angeles

Los Angeles remained the priciest market in the state and regionally, with properties trading for $345 per square foot through the first nine months of the year. However, the metro has been surpassed by Austin as the nation's leader in sale prices, with assets averaging $379 per square foot.

Total L.A. sales amounted to just under $1 billion during the same time frame, ranking second in the top markets for office transactions in California. This accounts for less than half of the roughly $2 billion registered in the same interval in 2023. Despite the huge volume shrinkage, the price per square foot increased by nearly $40.

At the beginning of the year, The Regents of the University of California paid $700 million for a pair of office assets dubbed One Westside and Westside Two. Hudson Pacific Properties and Macerich sold the recently redeveloped buildings totaling about 687,000 square feet.

3. San Diego

Despite San Diego being a hotspot for investors, the metro’s average price per square foot year-to-date as of September was $196, the lowest compared to the other major markets in the state and this ranking, but still above the U.S. figure. On average, properties traded for nearly half the price registered during the same period of 2023.

Total sales in the market reached $447 million, marking an almost 34 percent drop year-over-year. One of this year's most notable transactions was Breakthrough Properties’ purchase of a 65 percent stake in Callan Ridge, a two-building life science development. The fully leased property traded for $236 million.

4. San Francisco

Rounding out the top markets for office transactions in California is San Francisco, where office sales in the first three quarters of the year totaled $339 million. This marks a 40 percent decrease year-over-year, as investments reached about $571 million in the same interval of 2023.

Assets in the metro traded for an average of $268 per square foot, a considerable decline from the $321 per square foot registered during last year's same interval. In September, SC Properties paid $37.5 million—about $160 per square foot—for San Mateo Gateway Center, a 235,000-square-foot office campus. The complex changed hands for less than half of its pre-pandemic price.

The post Top California Markets for Office Transactions appeared first on Commercial Property Executive.

Ardmore Home Design has acquired a 282,377-square-foot industrial asset in the City of Industry, Calif., for $59.9 million. LBA Realty previously owned the property, according to CommercialEdge data. JLL and HRS Commercial represented the seller and the buyer, respectively.

LBA had purchased the asset for $31.7 million in 2016, the same source shows. The new owner, a luxury wholesale furniture manufacturer, has been fully leasing the facility since 2020.

The building debuted in 1981 and underwent an overhaul in 2019 which included renovations to the roof, interior and exterior paintjobs, as well as the full refurbishment of interiors. The property features clear heights ranging between 24 and 30 feet, 34 dock-high loading doors, two ground-level loading doors and 28 trailer stalls.

READ ALSO: Lower Rates Signal Increase in Industrial Sales

The facility also encompasses roughly 15,000 square feet of office space and about 10,000 square feet of mezzanine storage, as well as a shipping and receiving office measuring some 4,000 square feet.

Located on some 13 acres at 918 S. Stimson Ave., the property is about 20 miles east of downtown Los Angeles and roughly 33 miles northeast of The Port of Long Beach, Calif., whose handled annual trade is valued at $200 billion.

The JLL team representing LBA Realty included Senior Managing Director Patrick Nally and Director Makenna Peter, as well as Senior Managing Director Mark Detmer and Senior Director Evan Moran. HRS Commercial Vice Presidents Rick Sherburne and Kyle Sherburne spearheaded the negotiations on behalf of Ardmore Home Design.

Ardmore’s expansion in the City of Industry

In 2016, Ardmore inked a full-building industrial lease at a 128,810-square-foot facility also in the City of Industry. At the time, the firm was consolidating and relocating its operations from three different warehouses.

After four years, the company relocated once again, more than doubling its footprint in the process. Upon settling at the Stimson property, Chris DeWitt, co-founder & CEO of Ardmore subsidiary Made Goods, said in prepared remarks that the new space allows the firm to respond to its clients quicker.

Los Angeles industrial investment solid across Western markets

During the first three quarters, industrial assets across nearly all Western markets traded for more than the national average of $130 per square foot, according to a CommercialEdge report. Central Valley was the exception, with industrial properties going for $129 per square foot year-to-date through September.

Los Angeles properties sold for $297 per square foot—more than double the national average—during the first nine months of the year, the same source shows. Still, the City of Angels fell short compared to the Bay Area ($476 per square foot) and Orange County ($319 per square foot).

The metro’s total industrial investment volume clocked in at $2.2 billion year-to-date as of September, CommercialEdge shows. Los Angeles surpassed Phoenix ($1.9 billion) and the Inland Empire ($1.5 billion) but was overshadowed by the Bay Area ($2.7 billion).

In August, a joint venture between Staley Point Capital and Bain Capital Real Estate paid a combined $42.6 million for the acquisition of a 162,000-square-foot asset in Fullerton, Calif., and a 70,000-square-foot facility in Chatsworth, Calif.

The post LBA Realty Sells LA Asset for $60M appeared first on Commercial Property Executive.

Concord has leased 32,241 square feet at Wilshire & Palm, a redeveloped creative office building at 9171 Wilshire Blvd. in Beverly Hills, Calif. JLL negotiated on behalf of Cruzan, the landlord, while CBRE represented the tenant.

The global music company, which supports more than 125,000 artists and songwriters, plans to move from its current Los Angeles location at 5750 Wilshire Blvd. to Beverly Hills in the third quarter of 2025. Concord will occupy the entire sixth floor and penthouse of the building.

Concord is headquartered in Nashville, Tenn. In addition to Los Angeles, the company has offices in New York, Miami, London, Berlin and Melbourne.

A creative office building in Beverly Hills

Built in 1959, Wilshire & Palm was redeveloped by Cruzan after the firm acquired it in April 2018 for $69.3 million from Manulife Investment Management, according to CommercialEdge data. The seven-story, 110,000-square-foot office building features 6,000 square feet of street-level retail and a total of 202 parking spaces in an underground garage.

READ ALSO: Enhancing Work Environments Through Creative Offices

Dennis Cruzan, founding partner of Cruzan, said in a prepared statement Concord was the prototype media tenant they had in mind when they redeveloped the building. The music company’s penthouse space will consist of indoor/outdoor workspaces while the sixth floor will feature open workspaces, collaboration areas and listening rooms with hi-tech acoustics.

JLL’s Bryan Dunne and Danny Rainer represented Cruzan. Paul Haskin and Jeff Gerlach of CBRE negotiated on behalf of Concord.

Active office market

The Beverly Hills office market has been active in recent months. In August, e-commerce fashion retail firm Fashion Nova purchased 407 N. Maple Drive, a four-story, 175,000-square-foot office building, from Tishman Speyer in an $118 million all-cash transaction for its global headquarters. Fashion Nova will move its more than 500 employees from its current headquarters in Vernon, Calif., to the Beverly Hills building by the end of the year.

And, in July, the Mateen Brothers bought Wilshire Rodeo Plaza, a 300,000-square-foot property with Class A office and retail space, from Nuveen, for $211 million. It was the largest property transaction in Beverly Hills since 2019, according to The Wall Street Journal.

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No two brokers, even those working in the same industry vertical in the same market, have the exact same method of building meaningful client relationships. That’s why one of the hottest topics at this year’s Society of Industrial and Office Realtors’ Fall event was sharing the best tips and tricks on how to do so.

One panel at the Los Angeles conference, titled “Retaining Tenant Rep Clients in Today’s Ultra-Competitive Environment,” featured some of the nation’s top brokers. Each one was asked a question and then had their answer compared to the same question prompted to ChatGPT.

Reinforcing relationships

The first question of the panel, asked to Michael Feuerman, managing director at Berger Commercial Realty, prompted him to explain how acting as a fiduciary reinforced his client relationships. In response, he explained that being a fiduciary means many things, including putting the client’s needs before your own. Feuerman told a story about how, in one instance, shielding a client from a potentially irresponsible tenant lost him two large fees. But, years later, he still represents that client due to their trust in him.

“It means giving advice that sometimes isn’t in the broker’s best interest,” Feuerman explained. ChatGPT, on the other hand, gave more summarized and generic advice, telling brokers to explore alternatives to deals.

READ ALSO: SIOR’s CEO to Step Down

Another question, posed to Walter Robinson, president at Robinson Commercial Real Estate, similarly explored the importance of long-lasting client relationships. When asked how he cultivates relationships beyond business transactions, Robinson explained how he takes it to the next level.

“My clients are my friends and my friends are my clients,” he said. In one instance, instead of arranging a client lunch, he initiated a family dinner. But, it’s important to note that not all clients want to get to that level. It’s important to treat people how they want to be treated. And ultimately, it’s a win-win.

“Keeping clients is easier, less expensive and more fun than getting new clients,” Robinson said.

ChatGPT had interesting thoughts as well, but again, more generic. The AI recommended community involvement, sending a gift or expressing shared interests with clients.

Maintaining connections outside of new deals

Bo Hargrove, principal & vice president at Rich Commercial Realty, is more focused on relationship building than prospecting. A lot of technology for brokerage is centered around finding new clients. But Hargrove was posed a question about how he uses technology to strengthen his existing ones.

“You have to have a good CRM,” he said. And what does his CRM do to help him retain clients? A lot.

Hargrove has a list of contacts’ birthdays harbored in his. And every birthday, they get a message. He explained that, as you get older, less people start wishing you a happy birthday, so it’s always nice to receive one. And the open and respond ratio is about 90 percent.

“Another low-hanging fruit that we use is Google alerts,” Hargrove said. Whenever something happens with a client, he wants to be the first to know. That way, he can continue to stay in touch and pick up the phone to give those clients a call about whatever the news may be. But, he pointed out, the key is the phone call. E-mails don’t have the same significance.

For this question, ChatGPT also had some good ideas: hosting virtual events, electronic signature management, and scheduling software and calendar links to make things easier on both ends.  

Taking steps outside of just the transaction to strengthen client relationships is key. For another question, Patrick Sentner, executive vice president with Colliers, was asked about how he reinforces relationships with existing clients.

“Proving loyalty,” Sentner said.

Sometimes, this means not pitching for a competitor’s deals, or even turning down business that comes to the door. Other times it’s putting together a great proposal on an existing client relationship to continue to show the value that is being brought to the table to win future business opportunities. Because ultimately, broker-to-client relationships are far more nuanced than a one-time transaction.

ChatGPT’s answer? More generic, again. This time, the AI recommended providing key insights or sponsoring events for the client. But, as the brokers noted, you can always go deeper than that.

The post SIOR Special Report: Retaining Clients for the Long Haul appeared first on Commercial Property Executive.

Dubbed Arboretum Gateway, the 225,773-square-foot building was developed in 1999. The six-story asset is situated in the city’s media district at 2220 Colorado Ave., at the epicenter of Silicon Beach.

This part of Southern California is renowned for being home to media companies. Netherlands-based UMG N.V. is a world leader in music-based entertainment.

READ ALSO: Innovative Solutions for Return-to-Office Challenges

The property has two UMG-operated recording studios, several state-of-the-art conference facilities with cutting-edge AV, secure parking with direct elevator access, an onsite food commissary and coffee bar, collaboration areas and outdoor decks.

Newmark represented Clarion Partners in the sale. The team included Kevin Shannon, co-head of U.S. capital markets; Alex Foshay, executive vice chairman & head of international capital markets; as well as Vice Chairmen Ken White, Rob Hannan, Laura Stumm and Michael Moll.

Long-term commitments

UMG holds a long-term lease at Arboretum Gateway, the third-largest signed in the market since 2021, after Snap and Hulu.

Snap Inc., the parent company of Snapchat, has extended its stay there in January when it signed a 10-year lease extension for more than 467,000 square feet across eight office buildings at the Santa Monica Business Park, a 21-building, 1.2 million-square-foot creative office campus owned by BXP. It is less than 2 miles from the UMG’s headquarters.

Other major tenants in the vicinity include Starz, AMC Networks, Amazon, Roku and Sony.

It is now part of a Drawbridge Realty national portfolio that includes more than a dozen Southern California properties, including buildings occupied by tenants in Westlake Village, Orange County and San Diego County.

Last month, RBC Wealth Management signed a seven-year lease within Uplands Corporate Center, a two-building Class A office campus in Austin’s Southwest submarket. Drawbridge Realty owns the 291,448-square-foot property.

The post Drawbridge Realty Pays $185M for Universal Music HQ appeared first on Commercial Property Executive.

Waterbridge Capital has sold Union Bank Plaza, a 701,888-square-foot office tower in Los Angeles. The property traded for $80 million.

The buyer, Southwest Carpenters Pension Trust, acquired the Class A asset through Washington Capital Management. The ownership intends to occupy a part of the building and lease the remaining space.

Newmark negotiated on behalf of the seller and also advised Washington Capital Management.

READ ALSO: Investors Find Office Bargains

The 40-story office building previously traded last year, when Waterbridge purchased it for $104 million from KBS, in a deal also facilitated by Newmark. At the time, the company received a large lease termination payout from Union Bank, after the tenant merged with U.S. Bank and relocated to U.S. Bank Tower.

A high-rise in downtown LA

Completed in 1967, when it became home to its anchor tenant Union Bank, the property features a retail plaza totaling 27,157 square feet and a parking ratio of 1.5 spaces per 1,000 square feet.

Union Bank Plaza went through a $65 million renovation program completed in 2021. The tower now features a redesigned lobby, an upgraded conference center that can accommodate up to 60 people and a renovated outdoor plaza that includes work spaces, fire pits and multiple seating areas. Additionally, the iconic building features six on-site eateries, coffee bars as well as dry cleaning, valet and carwash services.

Union Bank Plaza’s tenant roster includes ZWP International, Mitsubishi UFJ Financial Group and Raftelis, among others, according to CommercialEdge data.

Located at 445 S. Figueroa St., in the city’s central business district, Union Bank Plaza spans a full city block and has access to interstates 10 and 110. Los Angeles International Airport is 21 miles away.

The Newmark team included Co-Head of U.S. Capital Markets Kevin Shannon, Vice Chairs Ken White, Rob Hannan, Laura Stumm and Michael Moll, Co-President of Global Debt & Structured Finance Jonathan Firestone, Executive Managing Director Bill Bloodgood, Senior Managing Director Chris Benton and Managing Director Anthony Muhlstein.

Pricy office deals boost Los Angeles investment volume

Metro Los Angeles led the nation for sale prices as of August, with office assets sold at an average of $437 per square foot, a recent CommercialEdge report shows. The metro’s office sales volume reached $828 million, placing Los Angeles sixth among the best performing markets in the U.S. The vacancy rate clocked in at 16.7 percent, up 100 basis points over a 12-month period.

One of the metro’s recent deals was Fashion Nova’s $118 million acquisition of a 175,000-square-foot office building in Beverly Hills, Calif. The company is moving its global headquarters at the property that was sold by Tishman Speyer.

The post Downtown LA Office Tower Trades for $80M appeared first on Commercial Property Executive.

Jamison has signed a 21,000-square-foot long-term lease with women’s fashion label L’AGENCE at The Harbor Building, a 246,000-square-foot office property in Los Angeles’ Wilshire Corridor submarket. JLL negotiated on behalf of the landlord.

L’AGENCE will use the space as its new corporate headquarters and will relocate from the city’s Arts District. Notable tenants at The Harbor Building include Create Advertising Group, Heaven Tours, Concept Arts, Community Films and Harbor Dental Care, according to CommercialEdge.

Built in 1956, The Harbor Building is a marble and granite six-story property at 4201 Wilshire Blvd. that features 42,000-square-foot floorplates, 13-foot ceilings, 4,708 square feet of retail space and 220 covered parking spots. The full-block property was initially constructed for J. Paul Getty’s Tidewater Oil Co.

The office building went through cosmetic renovations in 2018 and is under Jamison Services’ ownership since 1997, when the company acquired it for $3.9 million, CommercialEdge data shows. In 2018 the asset became subject to a $30 million loan originated by PNC Bank, according to the same source.

The JLL team arranging the deal for Jamison included Vice President Greg Astor and Senior Vice President Ben Silver.

Large office commitments in LA

The Harbor Building is part of the Park Mile neighborhood, close to the Metro Wilshire/Western station. The approximately 2-acre site is 5 miles from downtown Los Angeles, 9 miles from Glendale, Calif. and within 13 miles of Los Angeles International Airport.

Earlier this month, JLL assisted on the largest new office lease signed so far this year in the metro: landlord CIM Group inked a 198,553-square-foot deal at City National 2CAL, a 52-story office tower in Bunker Hill District. The tenant is Southern California Gas Co., which will relocate its headquarters to the 1.4 million-square-foot property.

CIM Group also inked 2023’s largest new office lease at the same building. In December 2023, law firm Sheppard Mullin also committed to 119,217 square feet at City National 2CAL, relocating its headquarters.

The post Jamison Inks HQ Relocation in Los Angeles appeared first on Commercial Property Executive.

The 1.4 million-square-foot, 52-story tower at 350 S. Grand Ave. in the Bunker Hill District will serve as the utility company’s new headquarters. SoCalGas will be relocating from its namesake downtown Los Angeles building, Gas Company Tower, where it has been since its opening in 1991.

Geno St. John from CIM Group’s in-house office leasing team represented the owner in partnership with Peter Hajimihalis and Hayley Blockley from JLL. Clay Hammerstein and Danny Rees from CBRE represented the tenant.

SoCalGas is the largest gas distribution utility in the U.S., serving approximately 21 million consumers across 24,000 square miles of Central and Southern California.

Since purchasing the property in 2014, CIM Group has undertaken a capital and operational improvements program at City National 2CAL. The entrances and plaza levels have been renovated to enhance the lobby’s appeal and improve pedestrian connectivity.

READ ALSO: Here’s a Surprising Shift in Remote Work’s Appeal

In addition to CIM Group’s ongoing capital and operational improvements, the company remains dedicated to sustainability. In 2023, City National 2CAL was recertified as LEED Platinum for another five years. The building also received the UL Verified Healthy Building Verification Mark for Indoor Air and Water, along with Fitwel®, ENERGY STAR, and WiredScore certifications.

Some ‘signs of life’ in the office sector

Eli Randel, Crexi’s chief operating officer, told Commercial Property Executive SoCalGas Co.’s new headquarters lease at CIM’s City National 2Cal shows some signs of market life. However, it’s a short downtown-to-downtown move for SoCalGas and doesn’t necessarily signal a significant trend.

“It illustrates the tenant’s desire for more modern amenity-rich space, with SoCalGas also retaining building signage rights,” Randel said. “Large companies continue to exhibit a commitment to the traditional office environment but recognize a space level-up might be appropriate to accommodate employees and clients better.”

According to Crexi’s marketplace data, there’s been a recent rise in Class A interest in the Los Angeles office. Since the beginning of 2023, asking lease rates have held relatively steady at around $2.50 per square foot per month.

“Effective rates dropped at the end of 2023 (potentially corresponding to fewer Class A amenity-rich spaces being scooped up) but have since rebounded—meaning that Class A spaces are back to playing a more prominent role in the market,” Randel said.

Separating ‘trophies’ and ‘trainwrecks’

Sonnet Hui, vice president & Los Angeles general manager, Project Management Advisors, told CPE that Southern California Gas Co. signing this substantial lease in Bunker Hill signals that office leasing activities are picking up now.

“Tenants are shopping for much better deals,” Hui said. “Right now, office vacancies are higher in DTLA than in the last recession (2009). The Los Angeles office market is at an inflection point where we’re seeing the bottom of the market, and it’s finally starting to pick up in certain cities steadily. This means that the office market is incredibly competitive, separating the Class A from the Class B and Class C asset types: the trophies vs. the trainwrecks.”

She said long-standing tenants are sufficiently motivated to look elsewhere when long leases are up for renewal, and brokers are aggressive in offering multiple attractive options.

“Tenants are looking for better locations, better rents and better amenities for their employees,” according to Hui.

“Companies are also looking for buildings that offer more sustainable features as tenants and employers focus on their employees’ health and wellbeing. This is a good incentive for commercial office landlords to upgrade their facilities and grab the attention of potential tenants. Savvy landlords that invest in upgrading their facilities will likely attract new, better, and larger tenants.”

Cole Martinez, principal of Unispace, said: “In today’s challenging office market, Southern California Gas Company’s landmark lease serves as a reminder that, even when times are tough, business still needs to get done—and that business gets done in the workplace.”

“For downtown Los Angeles, this lease is an example of a good opportunity to capitalize on within the market. It also demonstrates a concept that has been in doubt since the shift to remote work: companies still require office space to conduct their business and continue day-to-day operations, and these offices continue to serve as the foundation of company culture for employees.”

READ ALSO: Los Angeles Office Market Still Pricey

According to Martinez, Southern California Gas Co.’s relocation to the Bunker Hill District of DTLA from its namesake tower also demonstrates a commitment to continuing to have a footprint in DTLA, a critical milestone as downtown areas grapple with identity crises around the country. “Ultimately, SoCal has always had great market fundamentals, and an office lease of this size in DTLA shows that we can expect resiliency in the office market for 2025,” Martinez added.

Adding green space

Beyond renovating the interiors of the SoCalGas building, CIM Group played a key role in the extensive transformation of The Yard—a 1.5-acre central courtyard and performance plaza shared with 1 CAL and the Omni Los Angeles Hotel.

The park-like plaza features expanded, welcoming public green spaces with gathering spots on the lawn, enriching the audience experience during outdoor Grand Performances.

This SoCalGas lease follows CIM Group’s December 2023 lease to Shepard Mullin for 119,217 square feet at City National 2CAL, which marked Downtown Los Angeles’ largest new office lease transaction in 2023.

The law firm will relocate its headquarters at the property starting mid-2025 and will occupy floors 39 through 42 and some 7,000 square feet on the plaza level. JLL represented the owner, while CBRE worked on behalf of the tenant.

According to CommercialEdge data, the landlord acquired the 52-story office tower, formerly Two California Plaza, in a seven-property portfolio transaction in February 2014.

The post CIM Group Signs HQ Tenant in Los Angeles appeared first on Commercial Property Executive.

RCB Equities and Real Estate Development Associates LLC have secured a $115 million loan to acquire the 1 million-square-foot Puente Hills Mall in City of Industry, Calif. The partners plan to redevelop and revitalize the mostly empty property made famous in the 1985 film “Back to the Future.”

Hankey Capital provided the non-recourse, three-year floating rate financing in a deal arranged by JLL. Managing Director Mark Wintner led the JLL Capital Markets Debt Advisory team.

The joint venture purchased the mall from Kam Sang Co. of Arcadia, Calif. Kam Sang had acquired it in 2014 for $100 million, public records show.

READ ALSO: How Malls Are Adapting to 21st Century Needs

While they did not disclose specific plans for the mall, RCB Equities and REDA noted they are committed to revitalizing the property and plan to work closely with the City of Industry to formulate a redevelopment plan that aligns with the city’s long-term vision.

Mall redevelopments have become more common in recent year as owners of struggling enclosed retail shopping centers convert their properties to mixed-use or lifestyle centers, often adding more experiential offerings, health and wellness facilities or multifamily components. Others incorporate office space, hotels or self-storage facilities. In Greensburg, Pa., The Cordish Co. redeveloped a former department store at the Westmoreland Mall into a casino.

Back in time

Puente Hills Mall occupies 56.4 acres at 1600 S. Azusa Ave. in the Gateway Cities submarket of eastern Los Angeles County, south of Pomona Freeway. Downtown Los Angeles is some 21 miles northwest.

A key scene in the “Back to the Future” movie was shot in the mall’s parking lot, which was doubled as the Twin Pines Mall, where Marty McFly traveled back to the future in a DeLorean time machine. A JC Penney store was clearly visible in the background but that chain retailer is long gone, along with Macy’s, Sears and many other stores.

The mall opened in phases between 1974 and 1975; at the time, it housed 125 stores and services across nearly 1.2 million square feet. However, the retail property only had about 10 tenants in late December, according to dailymail.com. Current tenants include an AMC Theater, Round 1 entertainment and bowling center and Champs retail store.

The post RCB Equities JV Lands $115M for ‘Back to the Future’ Mall appeared first on Commercial Property Executive.

Fashion Nova will be moving into a new global headquarters in Beverly Hills, Calif. The e-commerce firm purchased the four-story, 175,000-square-foot office building in an $118 million off-market, all-cash transaction from Tishman Speyer.

Fashion Nova will move its more than 500 employees from its current headquarters in Vernon, Calif., to 407 N. Maple Drive by the end of this year.

The company will occupy two floors in the building that previously served as offices for Fandango. The remaining tenants on the roster include Studio by Tishman Speyer, a coworking space; Mosaic Media Group, a talent management and production company; and Citi Private Bank, according to Women’s Wear Daily.

READ ALSO: Investors Find Office Bargains

Built in 2003 on a 1.8-acre lot, 407 N. Maple Drive holds the LEED Gold-certified designation, as well as an Energy Star label. The property has 480 parking spaces in a three-level subterranean garage. The asset had been under Tishman Speyer ownership since 2005, when the company acquired it for $70.7 million, CommercialEdge data shows. The property became subject to an $83.6 million loan in 2019, provided by Deutsche Bank, according to the same source.

Launched in 2006, Fashion Nova then extended to the online medium in 2013 with the opening of its e-commerce platform. The company now plans to expand globally with offices in New York, London, Hong Kong and Sydney.

Cushman & Wakefield brokers Mike Condon Jr., Erica Finck, Reid Gratsch and Kylie Rawn represented Fashion Nova in the transaction.

Creating collaborative spaces

Founder & CEO Richard Saghian said in prepared remarks that the new headquarters will provide a perfect backdrop for collaboration and innovation, leading to a creative workplace environment. In turn, the space will help emerging designers, brands and founders to hyperscale their growth through the Fashion Nova platform.

Part of that will come through the new Nova Social Club, a private, by-invitation-only collaborative space. The club will include a fitness studio, wellness spa, content and podcast studios, screening room, meditation and yoga garden, cosmetic micro-treatment bar, organic culinary offerings and a showroom.

The Nova Founders Lab, an incubator-accelerator, will provide emerging companies the opportunity to access Fashion Nova’s state-of-the-art infrastructure across marketing, technology, production, sourcing, operations and fulfillment.

Beverly Hills action

Fashion Nova isn’t the only company active in the Beverly Hills market this summer. Last month, the Mateen Brothers bought Wilshire Rodeo Plaza, a 300,000-square-foot property with Class A office and retail space, from Nuveen, for $211 million. It was the largest property transaction in Beverly Hills since 2019, according to the Wall Street Journal.

Los Angeles remains a relatively pricy office market. Year-to-date through July, a total of $617 million in office assets traded across metro L.A., at an average of $430 per square foot, according to a recent CommercialEdge report.

The post Tishman Speyer Sells Beverly Hills Office for $118M appeared first on Commercial Property Executive.

A joint venture between Lendlease and Aware Super has secured $316 million in construction financing for Habitat, a 454,000-square-foot mixed-use development in Los Angeles.

Upon completion, the property will comprise a 253,000-square-foot office building and a 260-unit community, as well as 2,900 square feet of retail space.

Barings and Counterpointe Sustainable Real Estate provided the funds that also include C-PACE financing for the development’s sustainable elements.

READ ALSO: Los Angeles Office Market Still Pricey

Lendlease and Aware paid $92 million for the 3.5-acre development site in 2020. At the time, the project was estimated at $600 million.

SHoP Architects provided design services and Steinberg Hart served as the architect of record for the office facility, while A+I mapped out commercial interiors. The building will feature 50,000-square-foot floorplates and 14-foot slab heights, as well as folding glass walls.

Amenities are slated to include private outdoor terraces on levels three through six, on-site retail and restaurant space, a gym and a 1-acre park landscaped with regional fauna. Moreover, the building will provide locker rooms with showers and end-of-trip facilities for cyclist commuters.

Targeting net zero

In line with its commercial real estate decarbonization strategy, Lendlease will implement a 125kW solar array at Habitat, as well as 64 dedicated electric vehicle parking spots, 222 secured bike parking spaces, natural ventilation and lower-carbon concrete. 

The firm is targeting LEED Platinum for Habitat’s commercial building—which would be the first new creative office office structure in Los Angeles to achieve such certification— and LEED Gold for the residential component. 

Habitat will rise at 3401 S. La Cienega Blvd., proximate to La Cienega / Jefferson Metro Station. Downtown Los Angeles is roughly 8 miles northeast, while Los Angeles International Airport is 7 miles southwest.

Greater Los Angeles’ office pipeline totaled 2.6 million square feet of under-construction space in June, according to a report by Cushman & Wakefield. The figure was slightly higher than the one registered a year ago, when 2.4 million square feet were underway.

The post Lendlease JV Lands Financing for $600M LA Mixed-Use Project appeared first on Commercial Property Executive.

Toymaker Mattel has expanded its metro Los Angeles office footprint with the acquisition of 2160 Grand, a 167,767-square-foot office building in El Segundo, Calif. The property traded for $59.2 million, according to public records. The seller was New York Life Real Estate Investors.

The asset previously changed hands in November 2019, when SteelWave and Barings acquired it from Peakstone Realty Trust for $63.5 million, CommercialEdge data shows.

In 2020, the duo took out a $69.6 million loan from New York Life Real Estate Investors. The lender foreclosed on the property last December, when the venture still had about $53.1 million in unpaid debt, public records show.

READ ALSO: Have Cap Rates Peaked?

The three-story creative office property, also known as Grand + Nash, came online in 1999 and underwent renovations in 2022, according to The Registry. The building features floorplates averaging 52,350 square feet, modernized lounge with a cafe, espresso bar, seating and meeting area, as well as a fitness center.

The facility also has modern communal spaces and rooftop decks on the second and third floors. Additionally, the property has room to build and create standing sets.

Located on more than 6 acres at 2160 E. Grand Ave., the building is close to the Los Angeles International Airport and less than 18 miles from downtown Los Angeles. The property is also within walking distance from Mattel’s global headquarters at 2031 E. Mariposa Ave.

L.A. office deals are picking up

Metro Los Angeles registered $287 million in office sales year-to-date as of June, according to the latest CommercialEdge office report. Assets traded for an average of $362 per square foot, more than double the $172 national figure. The market’s vacancy rate during the same month was 17 percent, 350 basis points higher year-over-year.

However, transactions are picking up. Last month, The Mateen Brothers have bought the mixed-use Wilshire Rodeo Plaza from Nuveen for $211 million, in the largest property deal in Beverly Hills, Calif., since 2019.

Other recent notable deals include Worthe Real Estate Group, QuadReal Property Group and Stockbridge Capital Group’s acquisition of The Burbank Studios for $375 million. The venture repurchased the asset from Warner Bros. Discovery.

The post Mattel Expands Playground With $59M Purchase appeared first on Commercial Property Executive.

A joint venture of Staley Point Capital and Bain Capital Real Estate has acquired two industrial properties for a combined $42.6 million. It acquired a 162,000-square-foot facility in Fullerton, Calif., and a 70,000-square-foot warehouse in Chatsworth, Calif.

Van Law Food Products sold the Fullerton asset for $30.1 million, according to CommercialEdge information. Siegel & Associates sold the facility in Chatsworth.

The news comes on the heels of the duo’s disposition of two Orange County assets for $53.3 million last month.

READ ALSO: CRE Midyear Outlook: The Calm After the Storm

The Fullerton facility features 26 dock-high loading doors and concrete truck courts, as well as temperature-controlled improvements. It is fully leased to the previous owner. Completed in two phases in 1958 and 2007, the warehouse is at 2335 Moore Ave., close to the Fullerton Municipal Airport and 7 miles from downtown Anaheim.

The other building came online in 1988 and is a manufacturing facility fully leased to Moog, an aerospace and defense company, according to CommercialEdge. The property is at 21339 Nordhoff St., some 28 miles from downtown Los Angeles and 30 miles from Los Angeles International Airport.

This deal marked the joint venture’s fifth purchase year-to-date, bringing the total to $87 million in acquisitions, all in West Coast infill industrial assets.

Two high-performing markets

Los Angeles and Orange County were among the best performing markets across the U.S., especially in terms of industrial investment volume. Los Angeles assets traded for $311 per square foot on average this year through June, with volume totaling nearly $1.6 billion, the latest CommercialEdge industrial report shows. Orange County had $651 million in deals, with assets changing hands for $340 per square foot on average.

In March, Blackstone Real Estate sold a 3 million-square-foot industrial portfolio for $1 billion or $332 per square foot. Rexford Industrial Realty purchased the 48 properties in separate transactions, which included sellers Blackstone Property Partners, as well as Blackstone Real Estate Partners and Blackstone Real Estate Income Trust.

The post Staley Point, Bain Capital Buy 2 SoCal Assets appeared first on Commercial Property Executive.

Construction on the 11-building project began in 2017. By May 2023, CANR was fully leased.

Tenants include DrinkPAK, LA North Studios, Illumination Dynamics, US AutoForce and Amazon, according to CommercialEdge data. The buildings also include office space.

The joint venture partnered with the city of Santa Clarita to also construct and open the Needham Ranch Parkway, which was part of the 250-acre development. It provides motorists an alternate route between Newhall Avenue and Sierra Highway.

“Construction of the Parkway was part of the development agreement with the city and was funded by TCC; this type of agreement is often commonplace with major development projects of the size and scale of CANR,” Philip Tsui, senior vice president at TCC, told Commercial Property Executive.

“In our case, the parkway was the main street arterial that provides direct access to the buildings in the project.”

LA North has a ‘deep and talented’ labor pool

Needham Ranch has filled the demand for modern, Class A logistics space in the Santa Clarita Valley, and more specifically in the L.A. North industrial submarket, which continues to see demand from industrial users because of the area’s deep and talented labor pool and the overall quality of life in the Valley, according to Trammell Crow.

READ ALSO: Top Mid-Atlantic Markets for Industrial Transactions

Oltmans Construction Co. served as the general contractor for CANR. The project’s architect was HPA Inc. and the civil engineer was Alliance Land Planning & Engineering.

A CBRE team of Craig Peters, Cameron Merrill, Doug Sonderegger, Sam Glendon and Richard Ramirez marketed and leased the facilities.

Earlier this summer, Trammell Crow signed China-based wholesale distribution company JW Fulfillment to a full-building lease at Arsenal Trade Center, a 1 million-square-foot logistics center at 99 Callahan Blvd. in Sayreville, N.J.

LA’s industrial market is ‘resilient’

Mark Detmer, senior managing director at JLL Capital Markets told CPE the Los Angeles and Inland Empire industrial markets are showing signs of resilience, with an increase in demand for space and a slowdown in the development pipeline.

“While investors closely monitor leasing market fundamentals, the lending market remains relatively constrained,” Detmer said. “Nonetheless, certain segments of the market show encouraging signs as new capital forms for acquisitions and treasury rates begin to stabilize.”

“With the market approaching a turning point, we anticipate a stronger and a brighter outlook on the horizon for the Los Angeles and Inland Empire industrial market,” Detmer added.

Industrial asset prices in LA rise

This comes at a time when the industrial development pipeline nationally has shrunk for six consecutive quarters, according to CommercialEdge. That followed two years of record-level deliveries.

Demand for industrial assets remained strong in Southern California, with the average sale price of an industrial property up 12.9 percent over 2023, CommercialEdge data shows. This attraction comes mainly from the Ports of Los Angeles and Long Beach—by far two of the busiest in the nation for volume.

Rent growth in Southern California’s ports has recently come into question. Newmark Managing Director of National Industrial Research Lisa DeNight recently pointed out that there has been a clear connection between that hyperinflationary rent growth in Southern California and an ascendancy of these more attractively priced but very easily accessible inland intermodal hubs in the Southwest, such as Salt Lake City, Las Vegas and Phoenix.

Another headache in Southern California ports is electricity as the Port of Los Angeles’ transition to green technology “is on the blink,” according to The Wall Street Journal.

Cranes and other cargo equipment as well as crucial automated gates there are getting knocked out during some power surges and lulls due to the port’s dependence on the electric grid.

Operators there are wondering how they can achieve a mandate to phase out diesel-powered machinery by 2030 when today’s power supply is so unreliable.

Seven consecutive occupancy losses in LA

In Los Angeles, CommercialEdge reported that industrial rents were $14.80 per square foot in June, up 12 percent year-over-year, and the vacancy rate was 7.7 percent. The national average is $8.04 per square foot, with a 6.1 percent vacancy rate.

Earlier this year, Rexford paid $1 billion for 3 million square feet across 48 properties in Los Angeles and Orange County. The seller was Blackstone.

The Inland Empire has seen a surge of new supply in recent years; however, Los Angeles and Orange County are very constrained by the availability of land, CommercialEdge reported.

Meanwhile, Cushman & Wakefield reported that the second quarter of 2024 marked the seventh consecutive quarter of occupancy losses in L.A. Its overall vacancy rate increased 90 basis points quarter-over-quarter and 240 basis points year-over-year to 4.5 percent in the second quarter of 2024, the highest recorded rate in the past decade.

Nine quarters ago, L.A. reported a sub-1 percent vacancy rate, according to Cushman & Wakefield; now, vacancy rates are above 3.5 percent in every submarket except L.A. North, where it was 2.5 percent in the second quarter. Two markets are over 5 percent, a rate not recorded in the past 10 years.

Cushman & Wakefield also reported that construction activity in the L.A. industrial market hasn’t slowed. At the end of the second quarter of 2024, there were 52 properties under construction market-wide, totaling 7.2 million square feet. All but three properties are being developed on a speculative basis.

Of the buildings being built on spec, only two have been preleased as of the second quarter of 2024, leaving 96.2 percent of the 6.8 million square feet under construction without tenant commitments thus far.

“If leasing activity doesn’t continue to add velocity, the surge in new vacant supply will likely push vacancy higher,” Cushman & Wakefield said in its report, with eight buildings totaling 2.2 million square feet having completed construction in the second quarter, of which only 15.4 percent was preleased.

The post Trammell Crow, Clarion Wrap Up SoCal Industrial Park appeared first on Commercial Property Executive.

The Mateen Brothers have bought the mixed-use Wilshire Rodeo Plaza from Nuveen for $211 million. This is the largest property transaction in Beverly Hills, Calif., since 2019, according to The Wall Street Journal. Tinder founder Justin Mateen and his brother Tyler Mateen joined brother-in-law Pouya Abdi to purchase the Class A office and retail asset. JP Morgan provided acquisition financing, with Quantum Capital Partners advising on debt for the buyers.

The 300,000-square-foot office and retail property, located at 9536 Wilshire Blvd. and 131 S. Rodeo Drive, spans an entire city block and includes three six-story office and retail buildings along Wilshire Boulevard, between Rodeo and Camden drives, as well as a three-story office building along Rodeo Drive. The Mateens plan to rebrand the iconic Golden Triangle business center as “One Rodeo.”

All bets on luxury retail in Beverly Hills

The new ownership plans to nearly double the high-street retail space and spend around “the low tens of millions” to enhance the buildings, shift from short-term leases to long-term, and are considering different uses for the office space and the rooftop, such as a hotel or a members-only social club, the brothers told Commercial Property Executive. However, the repositioning is targeting luxury retail and office tenants alike.

READ ALSO: Standout Deals Energize LA Office Market

Office properties in Beverly Hills have held up a bit better than the overall Los Angeles market, where vacancy topped 24.4 percent this year, according to Cushman & Wakefield. Still, more than a fifth of Beverly Hills office space was vacant as of the second quarter, up from 11.2 percent at the same time in 2019, The Wall Street Journal reported. Retail, meanwhile, has an occupancy rate well north of 90 percent.

Current tenants at the property include Merrill Lynch/Bank of America and UBS, as well as entertainment companies William Morris Endeavor and Encore Recordings. The Golden Triangle is a renowned tourist destination, a prime retail corridor also known for its top-tier offices, high-end hotels and fine dining.

Late last year, in another noteworthy deal involving Beverly Hills office, Skanska cashed in roughly $71 million for a brand new, 50,148-square-foot asset.

The post Nuveen Closes Beverly Hills’ Largest Deal in 5 Years appeared first on Commercial Property Executive.

An industrial property in the Chatsworth neighborhood of Los Angeles has traded for $41.5 million. Center Capital Partners, Authentic Capital Group and TPG Angelo Gordon acquired the 153,900-square-foot building from NBP Capital.

The De Soto property previously changed hands in 2017 for $23 million. The asset was fully leased at the time of the current sale by two tenants, including Align Aerospace, whose lease will expire in 2028.

The single-story building, dating from 1983, is on about 6.7 acres at 9401 De Soto Ave. The warehouse features 28- to 31-foot clear heights, 12 dock-high loading positions, six ground-level doors, 21,000 square feet of office space and a fenced, concrete yard.

Buying industrial assets in urban infill markets

The trio of buyers are all active CRE investors. Center Capital Partners is a private equity real estate firm, while Authentic Capital Group is a private real estate investment firm. TPG is a global alternative asset management firm, founded in San Francisco in 1992, with $224 billion of assets under management. 

The deal is part of a larger initiative by Center Capital Partners and Authentic Capital Group to acquire a portfolio of core-plus to value-add industrial assets in urban infill markets.

READ ALSO: Cracks Show in Port Industrial Markets

The rapid rise in interest rates over the past two years has put upward pressure on stabilized yields and driven down valuations, Center Capital Partners Vice President Blake Bowie said in prepared remarks. He further noted that the current environment means an opportunity to acquire assets at a significant discount to replacement cost, with 9401 De Soto, which is in the San Fernando Valley, as a good example.

The San Fernando Valley is one of the hottest industrial submarkets nationwide for leasing activity, according to CBRE, though it experienced negative absorption of about 469,000 square feet in the first quarter of this year. Even so, the valley’s industrial vacancy rate is a tight 1.4 percent, and with only about 523,000 square feet under construction, vacancy will probably remain low.

Industrial still king

CBRE National Partners’ Michael Longo and Barbara Perrier, as well as Bennett Robinson, represented the buyers in the deal. Longo noted that local industrial valuations are down, but hardly out.

“While values have adjusted from their highs, industrial is still the preferred product and continues to perform,” Longo told Commercial Property Executive.

Long gone are the 3 percent caps of 2022, he said, but vacancy remains low, demand is strong and rents continue to grow.

“There are few sellers in today’s market, but when available, high-quality industrial buildings in good infill locations are holding their values and getting strong investor interest,” Longo said.

The post TPG Angelo Gordon JV Pays $42M for LA Industrial Asset appeared first on Commercial Property Executive.

While still strong, industrial real estate markets near major U.S. ports have recently recorded cooling demand, along with rising vacancy rates and sluggish rent growth, or even rent contractions.

In that, the port markets are much like the broader American industrial market in the post-pandemic era, though port markets have extra factors to worry about—wild cards, in some respects—such as the potential for supply-chain disruptions, geopolitical tumult such the attacks on shipping in the Red Sea, and labor challenges.

“A couple of things are going on, especially at the larger port markets,” Jason Price, Cushman & Wakefield’s head of logistics for the Americas and for industrial research, told Commercial Property Executive. “Those markets saw some of the most substantial increasing in prices until early ’23. Now they’re the first to see rental rate declines, especially Southern California, where rents really skyrocketed, and were pretty much among the highest in the nation.”

In the wake of a historic industrial boom

As the pandemic waned in 2021 and ’22 and imports boomed, logistics companies and other users ramped up their industrial capacity in hopes of needing that in the future, Price added. That was especially the case in port markets, as healthy consumer demand (“revenge spending”) spurred imports to record levels. In many markets, the pipeline and industrial completions followed.

“But now, with more normalized import totals, we’re finding that some of these occupiers are not needing that space, so they’ve been putting some of it on the market,” Price also said.

During the first quarter of 2024, the largest U.S. port industrial markets recorded 436,000 square feet of negative absorption, compared with 13.3 million square feet of positive absorption the same quarter a year earlier, according to Cushman & Wakefield data. Vacancy rates have been edging up slowly in recent quarters for those markets, coming in at 5.5 percent in this year’s first quarter, or roughly comparable to all U.S. industrial markets, whose first-quarter vacancy average was 5.7 percent.

Goods still flowing through U.S. ports

Though demand for port industrial space is down, that isn’t the case for the volume of goods flowing through U.S. ports. The first-quarter TEU (20-foot equivalent units) volume to U.S. ports was 11.4 million, the highest since the third quarter of 2022, Cushman & Wakefield reported.

That dynamic—higher shipment volume but lower demand for industrial space—seems counterintuitive, but Price pointed out that tenant inventory management is becoming more efficient, which enables doing more with less to cut costs amid today’s high-rent environment.

READ ALSO: Mastering Supply Chain Challenges

Though port-market industrial is still relatively healthy, various exogenous shocks will continue to impact global container shipping even as the worst of the pandemic-era shocks fade, according to Brian Marks, a senior lecturer in the Economics and Business Analytics Department at the University of New Haven, and a logistics expert. One looming possibility later this year is the possibility of a strike impacting East Coast ports.

“You also have issues in the Middle East severely impacting shipping transit time, and a weather issue, a drought, impacting the Panama Canal,” Marks added. “The shocks have increased not only transit time, but also costs.”

One way for shippers to deal with higher costs is to continue their drive to use space more efficiently, which could pose a continued headwind for absorption of port-market industrial space.

Who’s winning next?

Another open question for U.S. port markets is whether East or West Coast ports will have the relative advantage as international shipping and manufacturing patterns change. The ports of Southern California are still by far the largest in terms of volume, Newmark Managing Director, National Industrial Research, Lisa DeNight pointed out, and even as manufacturing shifts from China to other east Asian nations, that part of the country will maintain its connections across the Pacific.

Southern California industrial markets aren’t the only ones that will benefit from the steady flow from east Asia to the U.S., however, DeNight said.

“There has been a clear connection between that hyperinflationary rent growth in Southern California and an ascendancy of these more attractively priced but very easily accessible inland intermodal hubs in the Southwest, such as Salt Lake City, Las Vegas and Phoenix,” DeNight said.

READ ALSO: Extreme Weather and Industrial Resiliency

Even so, East Coast port markets are poised for long-term growth as well for different reasons, she noted. One is the diversification of sources for manufactured goods, and the U.S. ports to which they go. Businesses learned all too well during the pandemic that putting all of one’s logistics eggs in one basket is a recipe for trouble. More goods from south Asia or even Africa will mean more shipments to East Coast ports, especially the Southeast.

Also, the growth of U.S. manufacturing in the Midwest and Southeast will support port growth in those regions, as those operations need imported parts and ports from which to export their goods.

“The ecosystem that’s emerging in the Southeast and Midwest favors both kinds of an import and export emphasis on Southeast ports,” DeNight said. “But I’m also bullish New York and New Jersey as a safe shore for industrial investment in particular, because of the extreme supply constraints there.”

The post Cracks Show in Port Industrial Markets appeared first on Commercial Property Executive.

Worthe Real Estate Group, QuadReal Property Group and Stockbridge Capital Group have repurchased The Burbank Studios, a 685,000-square-foot studio and office campus in Burbank, Calif. Warner Bros. Discovery sold the 27-acre property for $375 million, or approximately $547 per square foot, public records show.

In addition, Warner Bros. provided $281.3 million in seller financing and will continue to occupy space at Burbank Studios as primary tenant.

Worthe and Stockbridge had originally purchased the property from NBCUniversal in a $249.6 million portfolio deal in 2007, according to CommercialEdge data. The partners then sold it to Warner Bros. in 2023.

READ ALSO: Los Angeles Office Market Still Pricey

Carrying the address 3000 W. Alameda Ave., The Burbank Studios features eight existing sound stages, production and creative office space. The property is situated in the city’s Media District, near the main studio lots and corporate headquarters of Disney, Comcast NBCUniversal and Warner Bros.

The new owners have ambitious plans for the campus, starting with the construction of five new sound stages, each ranging from 18,000 to 20,000 square feet.

Two decades of deals

In 2019, Worthe and Stockbridge started negotiating a property exchange with Warner Bros., transferring The Burbank Studios in return for four Warner Bros. properties: the 30-acre Warner Bros. Ranch on Hollywood Way and sites at 4001 W. Olive Ave., 3903 W. Olive Ave., and 111 N. Hollywood Way. This transaction closed in 2023.

The $1 billion agreement allowed Warner Bros. to continue leasing the four properties, while Worthe and Stockbridge moved forward with constructing Second Century, two new office buildings on the 7 acres they retained in the deal, with designs by Frank Gehry. Additionally, they planned to redevelop the 30-acre Warner Bros. Ranch with 16 new soundstages and a 320,000-square-foot office complex.

When construction of the Second Century project began in 2019, the developers secured a $594.2 million construction loan from The Blackstone Group, according to CommercialEdge data.

Further financing was obtained earlier this year, in a transaction led by Wells Fargo and Morgan Stanley. The $475 million fixed-rate CMBS loan was the first single-asset, single-borrower note of this kind to close since early 2022.

The post Warner Bros. Sells Burbank Studios for $375M  appeared first on Commercial Property Executive.

In the first five months of 2024, Los Angeles’ office market continued to struggle with new supply, while the metro’s under-construction pipeline was still on a downward trend, according to the latest data from CommercialEdge.

Despite the development activity slowdown, Los Angeles kicked off 2024 with a significant office transaction and an approximately 500,000-square-foot long-term lease involving Snapchat’s parent company.

As of May, Los Angeles had 2.6 million square feet of office space under construction across 14 properties, representing 0.8 percent of the existing stock—below the national average of 1.4 percent.

The City of Angels’ relative-to-stock pipeline size was also below those recorded in similar metros, such as Chicago’s 0.5 percent, Washington, D.C.’s 0.8 percent and Manhattan’s 1.4 percent. Boston led the rankings with 4.9 percent.

Continuing 2023’s development trends

For square footage, Los Angeles’ development pipeline outperformed the one of Chicago (1.8 million square feet), while Boston led the nation with 14.1 million square feet. Manhattan (6.7 million square feet), San Francisco (5.7 million square feet) and Washington, D.C. (3.3 million square feet), also registered large pipelines.

The top three largest office projects underway in the metro includes JMB Realty’s Century City Center, the 731,250-square-foot Class A office tower rising 37 stories at 1950 S. Avenue of the Stars, scheduled to come online in early 2026.

The second largest development is the 370,000-square-foot Harbor-UCLA Medical Center, an outpacient facility set to include hospital, research and support facilities in Torrance, Calif. The Class A medical office property will come online in September 2026.

Construction on the 331,000-square-foot NBC Universal Office Building in Studio City, Calif., is expected to wrap up soon, with delivery anticipated in July. The 11-story office project is part of NBC Universal’s Evolution Plan, a mixed-use campus at Universal Studios that will include office, conference facilities, employee centers, screening rooms and food service facilities.

Los Angeles office prices still high

Year-to-date through May, 740,108 square feet of office space changed hands in Los Angeles for a total of $261 million, with properties trading at an average of $368.00 per square foot. Across similar markets, Washington, D.C., led with $999 million in office deals, followed by Boston ($761 million), Manhattan ($570 million) and Chicago ($223 million).

Los Angeles was one of the priciest office markets in the nation, followed by San Francisco ($352 per square foot), Miami ($339 per square foot), Washington, D.C. ($321 per square foot) and Manhattan ($300 per square foot).

Significant deals since the start of the year included Dublin-based Flutter Entertainment’s $70.5 million acquisition of 9000 Wilshire Blvd., a 50,148-square-foot building in Beverly Hills, Calif. Completed in 2023 by Skanska, as its first project in the metro, the asset was sold in January this year.

Another notable office investment was the $50.3 million sale of The Annex, an 118,330-square-foot property. LaSalle Investment Management sold the two-story asset to Westside Neighborhood School, a private school.

Los Angeles office market lands large lease

In January, Snap Inc. signed a 467,000-square-foot long-term extension at Santa Monica Business Park. The 10-year commitment comprised eight buildings at the 1.2 million-square-foot creative office campus owned by BXP.

Other leases in the metro included Kilroy Realty’s 12,000-square-foot long-term deal with tenant Com2uS at Sunset Media Center, a 22-story building in Hollywood. The Korean video and mobile game developer used the space to relocate its North American corporate headquarters.

At the end of May, the metro had 4.3 million square feet of coworking space, maintaining its position as second largest flex office hub in the U.S. after Manhattan (8.1 million square feet). Other gateway cities with notable coworking footprints included Washington, D.C., and Chicago, with 3 million square feet each, and Boston with 2.4 million square feet.

Los Angeles’ share of coworking space as percentage of total leasable office space reached 2.2 percent—surpassing the national average of 1.8 percent.

Coworking sector attracting flex office providers

Year-to-date through May, the flex office provider with the largest coworking footprint in the metro remained Cubework, with locations totaling more than 1.6 million square feet. The company was followed by WeWork (885,058 square feet), Regus (751,695 square feet), Spaces (594,193 square feet) and ReadySpaces (524,715 square feet).

In April, Industrious expanded its Los Angeles coworking footprint with two new spaces. At the end of May, the company’s locations totaled 493,159 square feet.

The post Los Angeles Office Market Still Pricey appeared first on Commercial Property Executive.

Newmark brokered the transaction. Vice Chairmen Jay Luchs and Bill Bauman, alongside Executive Managing Director Kyle Miller, represented both parties.

At the time of the deal, The Park at Cross Creek was fully leased to 14 tenants. PacificWest Asset Management Corp. will manage and operate the shopping center.

The Park at Cross Creek became subject to a $34 million loan from UBS Bank USA back in 2020, according to CommercialEdge data. The next year, Deutsche Bank provided a $37.7 million loan, the same source shows.

READ ALSO: Charting Luxury Retail’s Course in the New Economy

Completed in 2019, The Park at Cross Creek encompasses six buildings on some 6 acres. The property also includes a learning garden run by Big Green, a playground, an equestrian facility, a lounge area with rocking chairs and an open-air event space.

Anchored by a 24,529-square-foot custom-built Whole Foods Market, the retail center also features a mix of tenants such as Blue Bottle Coffee, Howdy’s Sonrisa Cafe, Barefoot Dreams, Malibu Sushi, Irv’s Burgers, Sparky’s Sports Bar and a Tesla showroom.

Los Angeles retail shifts gears

Located at 23401 Civic Center Way, The Park at Cross Creek is within Los Angeles’ Pacific Palisades-Malibu submarket. The retail center is near the Pacific Coast Highway.

The Los Angeles retail market began the year with a significant change in trends, experiencing a return to negative net absorption, higher vacancy rates and notable shifts in leasing activity. In the first quarter of this year, the metro recorded 1.8 million square feet of retail space under construction and approximately 49,000 square feet of new inventory, according to a recent Colliers report. The average advertised lease rate rose to $2.85 per square foot and leasing activity saw a 23 percent decline.

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East End Studios has secured a $130 million financing package for the development of an approximately 250,000-square-foot studio campus in Los Angeles’ Arts District, Commercial Observer reported. Dubbed East End Studios – Mission Campus, the $230 million project is already underway and scheduled for completion by the end of 2025.

Centennial Bank originated a senior loan, while Monroe Capital provided a mezzanine note. The remaining funding will be provided by East End’s capital partner. A CBRE team led by Senior Vice President Greg Grant advised the borrower and arranged the non-recourse financing.

READ ALSO: Why CRE Investors Are Zooming In on Studios

The project is the adaptive reuse of a two-story concrete and steel cold storage warehouse totaling some 140,000 square feet of floor area. East End acquired the property in 2021 for $43 million from Hager Pacific Properties, according to CommercialEdge information.

Designed to comply with CALGreen standards, Mission Campus will consist of five sound stages totaling 100,000 square feet with 42-foot clear heights, loading docks, parking and outdoor spaces. Additionally, the campus will feature 150,000 square feet of office space, post-production workspaces, commissary and mill areas, as well as talent suites.

The development is rising on 5 acres at 2233-2251 Jesse St. in the Boyle Heights area, 2 miles from downtown Los Angeles. The site is 1 mile away from East End’s ADLA Campus, an $800 million studio project slated for completion in 2026.

Production studios still poised for future growth

The commercial real estate sector is experiencing an increased interest for film and sound production studios, driven largely by an unprecedented demand for content. Although the industry faces potential obstacles like anticipated declines in production output due to strikes and budget constraints, the need for studio facilities remains robust.

Last year, East End Studios secured $193 million in financing for the construction of Sunnyside Campus, a 275,000-square-foot media and content production facility in New York City. That project will occupy an entire city block between Queens Boulevard and the Long Island Expressway and is scheduled to come online in the first quarter of next year.

More recently, Togus Urban Renewal LLC obtained a Film-Lease Partner Facility designation from The New Jersey Economic Development Authority for a 1.5 million-square-foot campus in Bayonne, N.J. The $1 billion project will feature 23 smart sound stages and 350,000 square feet of production support space, office spaces, mills, lighting and grip facilities.

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J.H. Snyder has completed a multi-million dollar renovation of the SAG-AFTRA Plaza, a 530,000-square-foot Class A office building in Los Angeles’ Miracle Mile submarket. The property came online in 1948 and was also upgraded in 2006.

In 2018, the developer took out a $105 million permanent loan from John Hancock, CommercialEdge data shows. That note matures in May 2028.

Renovations at the 11-story building at 5757 Wilshire Blvd. included the construction of a new outdoor tenant lounge with seating, tables and lounges, a new lobby and the addition of two new restaurants.

The developer also added 15,000 square feet of office spec suites that have already been leased, with an additional 20,000-30,000 square feet currently under construction and scheduled to be delivered by the first quarter of 2025. J.H. Snyder also completed the development of One Museum Square, an on-campus, 285-unit residential tower within the Central Hollywood submarket.

READ ALSO: Higher for Longer: Accepting Reality in CRE

The owner tapped JLL to conduct the leasing efforts. Since the beginning of the year, the brokerage firm secured roughly 40,000 square feet in commitments to multiple tenants. Managing Director Micheal Geller, Vice President Greg Astor and Senior Vice President Ben Silver are part of the team handling leasing efforts at the property.

Today, the 7-acre property features about 28,000 square feet of retail space, floorplates averaging 25,000 square feet and some 2040 parking spaces. Other tenants within the building include Museum Dental Center, Fusion and Primetime Sports, CommercialEdge data shows.

A building rich in history

Originally completed in 1943 and previously known as the Prudential Square and Museum Square, the building first housed Prudential Insurance Co.’s western division.  At the time, it was the tallest and largest privately owned building in the city.

Five decades later, SAG moved its national headquarters at 5757 Wilshire Blvd., shortly followed by AFTRA. In January 2014, the property was renamed to SAG-AFTRA Plaza as part of the leasing agreement between the union and J.H. Snyder, which also extended their staying to 2026.

The post J.H. Snyder Completes Renovation of LA Office Building appeared first on Commercial Property Executive.

Goodman Group has begun construction of Building One of Goodman Commerce Center Long Beach, a 505,043-square-foot industrial building located in Long Beach, Calif.

The project, scheduled for delivery in the fourth quarter, is being designed to target tenants in the aerospace, manufacturing, e-commerce and warehousing industries.

Development of Goodman Commerce Center Long Beach dates to 2019, when the firm purchased a site around Long Beach Airport which included a 93-acre Boeing manufacturing plant. Relativity Space moved its headquarters to the redeveloped facility in January 2020 and currently occupies the entire building. According to the Long Beach Business Journal, Goodman’s plans for the campus include a 77,552-square-foot facility as well as Building One. 

To the stars

Both Relativity Space’s base of operations and Goodman Commerce Center Long Beach are part of the Globemaster Corridor Specific Plan, a planned 437-acre industrial project.

Building One, to be built on 24 acres at 2401 E. Wardlow Road, will include 61 dock doors and two grade-level doors as well as a 240-foot-deep truck court and 40-foot clear heights. Additionally, the facility will offer tenants the option to build out flex office space. Newmark is the leasing agent for Building One.

Goodman is targeting LEED certification for the facility and plans to recycle 98 percent of the materials from the demolished Boeing facility. The property will also accommodate solar power infrastructure and electric vehicle charging stations.

READ ALSO: EV Battery Quest Super-Charges Demand for Sites, Facilities

Building One’s location offers access to nearby Interstate 405 half a mile to the southwest. Connection to the 605 freeway is about five miles from the site, the 710 freeway is three miles away and downtown Los Angeles is 16 miles to the north. Vandenberg Space Force Base is located to the north in Santa Barbara County. 

The area has been nicknamed “Space Beach,” due to the local presence of many aerospace and defense companies as well as the proximity of Vandenberg Space Force Base. SpaceX leases 6.5 acres at the city’s Port, where it operates rocket recovery operations after launches at Vandenberg.

SoCal reigns supreme

Despite a vacancy rate higher than the national average, the Los Angeles metro boasts one of the nation’s highest sales volumes. According to CommercialEdge’s latest National Industrial Report, more than $545 million worth of transactions have closed year-to-date, trailing only California’s Bay Area.

Last month, Rexford Industrial Realty purchased a 48-property portfolio of assets in Los Angeles and Orange Counties for $1 billion. Previously owned by Blackstone, the properties total more than 3 million square feet.

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Industrious has signed a 19,000-square-foot lease with Watt Cos. at the North Tower of Watt Plaza, a 476,120-square-foot office building in Century City, Calif. The flexible workplace provider entered into a 10-year lease agreement for a full floor at the office complex, which is expected to open in the fourth quarter of this year, after a complete renovation.

Watt Plaza comprises two buildings—The North Building and The South Building—totaling 900,000 square feet. The 23-story towers underwent a major lobby and common area renovation in 2020, which included the addition of a lounge, a flexible conference center, catering wet bar for events, retail space and a courtyard.

Watt Cos. purchased the office buildings back in 1999 in a $47 million portfolio transaction from Nuveen Real Estate, according to CommercialEdge data. The portfolio included 440,120 square feet of office space and 36,000 square feet of retail space at Watt Plaza – North Tower and 440,120 square feet of office space at Watt Plaza – South Tower. In 2015, the pair of buildings became subject to a $220 million loan originated by Prudential Financial, the same data shows.

READ ALSO: Where Branding, Franchising Meet in Coworking

Watt Plaza achieved LEED Platinum certification for the second time in 2017, exceeding its previous Platinum performance by five points due to ongoing improvements and sustainability commitments. Located at 1875-1925 Century Park E., the Class A office buildings are near Route 2, which allows easy access across the Los Angeles metropolitan area.

Industrious’ growing portfolio

With a global network spanning over 200 locations in more than 65 cities, Industrious already leases approximately 40,000 square feet across two additional floors at Watt Plaza at 1925 Century Park E. The flexible office provider recently opened a new location in West Los Angeles, inking a lease with landlord Douglas Emmett for 20,752 square feet at Westwood Center.

As of January, the Los Angeles office market recorded 4.3 million square feet of shared space, ranking second in terms of largest flex office footprint in the U.S., according to a recent CommercialEdge market update.

Industrious has recently expanded its coworking footprint in other metros. The firm partnered with PGIM Real Estate and HPI Real Estate and Investment Services to open Industrious at 3rd & Congress, a 20,573-square-foot coworking space in Austin, Texas. The flex workspace marks Industrious’ fourth location in the city.

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Tristar Realty Group has secured a $50 million refinancing loan for Ventana Medical Plaza, a 112,000-square-foot Class A medical office building in Tarzana, Calif. First Citizens Bank’s Healthcare Finance business originated the note.

The developer purchased the 2.5-acre site—which at the time included a 20,000-square-foot retail building dating back from the 1950s—in 2008. Ventana came online in 2017, the same year Tristar refinanced the corresponding construction debt with a $51 million loan from Capital One.

READ ALSO: Medical Office to Perform Well in 2024: Report

Rising four stories, the medical office building features 30,964-square-foot floorplates, as well as 4,200 square feet of retail space. The property also comprises a six-story detached parking garage providing 5 spaces per 1,000 square feet.

Providence Health System and Cedars Sinai Medical Center co-anchor Ventana Medical Plaza. The facility also includes facilities for MRI and PET/CT scans, as well as an 8,000-square-foot linear accelerator for radiation-based cancer treatment and a 12,500-square-foot surgery center.

Located at 18133 Ventura Blvd., Ventana Medical Plaza is less than 1 mile south of U.S. Route 101 and roughly 6 miles west of Interstate 405, as well as some 21 miles northwest of downtown Los Angeles. The property is also close to Providence Cedars-Sinai Tarzana Medical Center, which recently underwent a $624 million expansion project.

First Citizens Bank’s health-care deals

First Citizens Bank’s Healthcare Finance business has had a steady stream of activity in the past 12 months. Last September, it provided Onicx Group with $29 million for the refinancing of two Florida medical office buildings.

Also in September, First Citizens’ division of Silicon Valley Bank originated a $14.5 million loan used by Faros Properties to refinance a 73,060-square-foot medical facility in Stamford, Conn.

A month prior, a joint venture led by Rethink Healthcare Real Estate secured a $50.3 million loan for a 169,000-square-foot medical office building in Silver Spring, Md. First Citizens’ Health Care division provided the financing.

The post Tristar Realty Secures $50M for Los Angeles MOB appeared first on Commercial Property Executive.

Flexible office provider Industrious has opened a new location at Westwood Center in Westwood, Calif. The company inked a leasing agreement with landlord Douglas Emmett for 20,752 square feet of coworking space in West Los Angeles.

The location will host 234 desks at the 333,830-square-foot property. Built in 1962, the tower rises 22 stories, featuring 30,202-square-foot floorplates and 14,500 square feet of retail space. It comprises amenities such as valet services, 24-hour security and on-site storage. Other tenants at the property include Savills, Gemini Partners and various law firms, according to CommercialEdge data.

The owner acquired the building in 2016 for $268.9 million, as part of a larger portfolio transaction amounting to nearly $1.4 billion, the same source shows. In 2021, Wells Fargo originated a $625 million loan for a collection of Douglas Emmett properties, including Westwood Center.

Located at 1100 Glendon Ave., within Westwood Village, the building is near Interstate 405, roughly 15 miles from downtown Los Angeles and less than 4 miles from The Getty. It is also some 5 miles from Santa Monica Airport and adjacent to the University of California.

Industrious’ expansion plans

The flex office provider also announced another coworking location in Santa Monica slated to open in winter 2024. This location will span 23,331 square feet comprising 242 desks. Also owned by Douglas Emmett, the building is located at 808 Wilshire Blvd., some 4 miles from Westwood Center.

The company has found that the best markets and submarkets for its locations are mixed-use neighborhoods that provide retail and dining options within walking distance, Industrious CEO & Co-Founder Jamie Hodari told Commercial Property Executive in a recent interview. This approach may lead to the coworking provider expanding in non-traditional office submarkets, Hodari added.

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Primestor Development has completed the $90 million purchase of the Esplanade Shopping Center, a nine-building, 357,000-square-foot grocery-anchored shopping center in Oxnard, Calif.

According to CommercialEdge information, DRA Advisors was the previous owner. The company purchased the shopping center back in 2018 for $95 million.

The transaction marks DRA Advisors’ third retail disposition in under a month, having recently sold off two properties around Chicago. In March, the company let go of the 115,753-square-foot Oak Forest Commons  and the 649,668-square-foot Orland Park Place. According to The Real Deal, the latter sale is part the firm’s effort to divest from a $2.3 billion portfolio that it has owned since 2016, following a merger with Inland Real Estate Corp.

READ ALSO: Are Cap Rates Closing In On Peak Levels?

Primestor’s latest pickup marks the locally based firm’s 15th addition to its portfolio of retail centers around Los Angeles. Currently, the firm is developing another three retail properties in the City of Angels, alongside two mixed-use projects and one multifamily community.

CommercialEdge data shows that the Esplanade was built in 2001. Investec Real Estate Cos. currently heads up leasing at the shopping center. Crosby Slaught, the firm’s director of leasing & acquisitions, is the primary point of contact.

Anchor tenants at Esplanade include a Walmart Neighborhood Market, Home Depot, Dick’s Sporting Goods, TJ Maxx and Nordstrom Rack Staples. Other tenants include In-N-Out Burger, Cost Plus World Market, Tillys and Boot Barn. Located at 195 W. Esplanade Drive, the shopping center lies within 8 miles of a population of roughly 316,000, with the nearby cities of Ventura and Camarillo accessible via U.S. Highway 101 and State Route 126.

Grocery-anchored retail’s big moment

Grocery-anchored retail properties remain a top prospect for investors, outpacing non-grocery-anchored assets for occupancy, while trading at a much lower cap rate. A year-end 2023 report from Altus Group found that these properties have an occupancy rate of 92 percent, in comparison to their grocery-less relatives’ 90 percent.

READ ALSO: What 99 Cents Only’s Demise Means for CRE

In the same vein, a JLL Retail Outlook from the fourth quarter of last year found that the average cap rate for power centers was nearly 150 points higher than the level paid for grocery-anchored properties, more than three times their historical premium. The report states that this is likely due to investors seeing less risk for grocery-anchored assets compared to the big-box tenant viability of power centers in the context of recent store closures.

The post SoCal Shopping Center Commands $90M appeared first on Commercial Property Executive.

Lincoln Property purchased the six-building campus back in 2016 from The Muller Co. in a $135.3 million portfolio transaction, according to CommercialEdge data. Metropolitan Life Insurance Co. provided a $77 million loan for the acquisition, the same source shows.

Completed between 1989 and 2005, the buildings received cosmetic renovations in 2001 and 2018. The campus comprises three Class A, multi-tenant office buildings, a single-tenant medical office asset and a multi-tenant strip retail complex with a fitness center and several dining options.

Wateridge’s campus incorporates 208,999 square feet of office space at Wateridge —5105, 5100 & 5110 West Goldleaf Circle, 200,890 square feet of office space at Wateridge —5140 & 5150 West Goldleaf Circle, 104,162 square feet of office space at Wateridge —5120 West Goldleaf Circle and 37,921 square feet of retail space at 5035 West Gold Leaf Circle.

JLL’s Managing Directors Todd Sugimoto and Mark Wintner along with Director Chad Morgan led the Capital Markets team, working on behalf of the borrower. At the time of the deal, Wateridge was 80 percent leased to credit-tenants including the County of Los Angeles, Kaiser Health Foundation and Providence Health.

Los Angeles tops the nation for office sales

Located near the intersection of La Cienega Blvd. and West Slauson Ave., the campus is between the Baldwin Hills and Culver City submarkets. Wateridge is close to Interstate 405, providing easy access across the Los Angeles metropolitan area.

Last year through October, the market saw the largest office transaction volume in the nation, according to a recent CommercialEdge report. Around 7.5 million square feet of office space traded in Los Angeles for a total of nearly $1.9 billion.

The post Lincoln Property Lines Up $65M Refi for Los Angeles Campus appeared first on Commercial Property Executive.

Rexford Industrial Realty has expanded its industrial inventory with the purchase of a combined portfolio totaling 3 million square feet for $1 billion or $332 per square foot.

Blackstone Real Estate sold the 48 properties in separate transactions, which included Blackstone Property Partners as well as Blackstone Real Estate Partners and Blackstone Real Estate Income Trust.

The combined portfolio is 98 percent leased, with 99 percent of the property square footage situated within core and infill submarkets in Los Angeles and Orange counties.

READ ALSO: Top 5 Emerging Industrial Markets in 2024

Rexford Industrial funded these investments using proceeds from their recent exchangeable senior note offerings and cash on hand. In aggregate, the investments will produce a weighted average initial unlevered cash yield of 4.7 percent and an anticipated stabilized unlevered cash yield of 5.6 percent.

Rexford’s investment pipeline currently encompasses around $300 million in investments under contract or accepted offer. Their total investments year-to-date, completed or still in the pipeline, amount to $1.4 billion, with a weighted average initial unlevered cash yield of 5.0 percent and an anticipated stabilized unlevered cash yield of 5.7 percent.

Rexford’s booming industrial inventory

The REIT’s inventory currently consists of 422 industrial properties totaling 49.1 million rentable square feet occupied. The company focuses on investing in, managing and redeveloping industrial properties throughout infill Southern California.

In October, the firm acquired a nearly 1 million-square-foot industrial property in Greater Los Angeles for $120 million. The Irwindale, Calif., facility was fully leased.

A few months earlier, Rexford purchased another Los Angeles building for $210 million. San Diego County Employees Retirement Association sold the 595,304-square-foot asset.

The post Blackstone Closes $1B in Industrial Portfolio Sales appeared first on Commercial Property Executive.

Worthe Real Estate Group and Stockbridge have secured a $475 million, fixed-rate CMBS loan to finance Second Century, Warner Bros.’ 800,000-square-foot headquarters in Burbank, Calif.

Wells Fargo and Morgan Stanley led the transaction—the first single-asset, single-borrower CMBS office loan to close since early 2022, according to a company statement. Eastdil Secured served as exclusive advisor.

In 2019, the project became subject to a $594.2 million construction loan from Blackstone Group, according to CommercialEdge data. Previous financing also included a $117.8 million loan originated by Starwood Capital in 2018.

READ ALSO: Standout Deals Energize LA Office Market

Named for Warner Bros. Studios’ 100-year anniversary, Second Century came online following a land swap agreement exceeding $1 billion, Urbanize LA reported. The deal involved Worthe, Stockbridge and the former parent company of Warner Bros., AT&T.

As a result, the developers gained ownership of four additional properties, including the 30-acre Warner Bros. Ranch. Plans call for a $500 million redevelopment that will add new offices and soundstages, totaling some 925,000 square feet. Warner Bros. will fully occupy the space upon its 2025 delivery.

A three-year development

The developer broke ground on the two-building campus in February 2020, with construction completed last May. Partners on the development included architecture firms Gehry Partners and NBBJ, along with contractor Krismar Construction.

The seven- and nine-story buildings measure 355,000 and 445,000 square feet, respectively, and are LEED certified. Amenities include outdoor terraces and a three-level underground parking.

Second Century is at 100-200 S. California St., in the southernmost section of The Burbank Studios and adjacent to the Warner Bros. main lot. Downtown Los Angeles is 11 miles away.

The post Worthe, Stockbridge Land $475M for Warner Bros HQ appeared first on Commercial Property Executive.

This Hollywood star is getting a makeover even before its debut. It’s a $1 billion, 22-story creative office tower set for a 2-acre lot at 6061 W. Sunset Blvd. in Los Angeles.

Dubbed The Star, the spiral-shaped office building is the second version proposed for the site by Los Angeles-based development firm The Star LLC within three years.

The developer unveiled a new design for the tower from global architectural firm Foster + Partners, led by world acclaimed architect Norman Foster, whose credits include iconic buildings like Apple Park in Cupertino, Calif., the Gherkin skyscraper in London and the JP Morgan Chase headquarters tower in New York City. Foster + Partners also designed the master plan for One Beverly Hills, a $2 billion mixed-use development currently under construction in Beverly Hills next to the Beverly Hilton. The Star’s design team also includes the firm’s Senior Partner Patrick Campbell and Nigel Dancey, head of studio, for Foster + Partners.

READ ALSO: Why CRE Investors Are Zooming In on Studios

The Star LLC, led by CEO Maggie Miracle, scrapped a 2021 design by MAD Architects that called for a 420-foot-high dome-shaped tower with a cable railway on the side of the building to take visitors to a rooftop garden and restaurant. The project’s price tag at the time was $500 million.

Workplace of the future

Aimed at providing office space for Hollywood’s top content creators, the tower will provide spacious floorplans, generous outdoor areas and floor-to-ceiling windows with unobstructed views of downtown Los Angeles, the Hollywood sign and the Pacific Ocean. Its most distinguishing feature will be spiraling gardens that will rise from the street level of the building to the rooftop restaurant.

Development is anticipated to start in 2026, with completion set for 2029. In addition to about 525,000 square feet of office space, The Star will feature a theater, gallery, rooftop restaurant and outdoor event space. On the street level, plans call for an expansive LED video screen, arched paseo of restaurants and community gathering spaces.

Studios expanding

The proposal for The Star creative office tower comes at a time when studio operators are increasingly seeking out modern, high-quality studio spaces for productions. Los Angeles is among several cities across the country including New York City where there have been significant investments made to redevelop existing studios and build large-scale new developments.

The Star is located across from the old Warner Brothers Studios, now operating as Sunset Bronson Studios, and a 14-story office tower leased by Netflix, according to The Hollywood Reporter. The entertainment trade publication also notes Echelon Television Center, a $600 million redevelopment of the nearby former Television Center, is nearby.

The post $1B Hollywood Star to Rise on Sunset Boulevard appeared first on Commercial Property Executive.

Pacific Equity Properties has secured a $135 million first lien financing for Cross Creek Ranch, a 112,000-square-foot retail and office campus in Malibu, Calif. Torchlight Investors provided the five-year note that retires a $130 million construction loan from 2021. JLL secured the funds for the borrower.

Pacific Equity broke ground on the mixed-use project in 2021, after receiving the local authorities’ final approval the previous year. It was, at the time, the largest development to be approved since the city’s incorporation 30 years ago.

READ ALSO: Here Comes the Neighborhood: Mixed-Use Projects’ Bid to Fit In

Completed last year, Cross Creek Ranch comprises 71,605 square feet of retail and 50,719 square feet of creative office space across 10 one- and two-story buildings. The property also features a subterranean parking garage, outdoor seating and landscaped courts. Newmark is the leasing broker for the property’s retail component, while CBRE is spearheading office leasing, CommercialEdge data shows.

Located at 23465 Civic Center Way, in the core of Malibu’s shopping district, the 13-acre complex is close to Pacific Coast Highway and adjacent to the Santa Monica College Malibu Campus. The property is roughly 30 miles west of downtown Los Angeles and some 12 miles from the Santa Monica Pier.

Mixed-use development on the rise

Partner & Co-Head of Private Acquisitions Jon Stein led the Torchlight Investors team that provided the financing. JLL Senior Director John Marshall and Associate Spencer Seibring, along with Analysts Allie Black and Tim Donald, headed the Capital Markets Debt Advisory team that represented the borrower in the transaction.

As retail fundamentals were shaken by the pandemic, many of the Class B and C malls are being converted into mixed-use properties. A JLL analysis of 153 mall redevelopments in the U.S. shows that 46 percent represent this type of projects, incorporating at least three uses, the largest share of these being in California.

The post Pacific Equity Obtains $135M for Malibu Mixed-Use appeared first on Commercial Property Executive.

Last year, 83 properties totaling 11.1 million square feet of office space changed hands for a combined $1.7 billion in Los Angeles. Manhattan led the list of gateway cities with highest investment volume in 2023 ($2.4 billion in deals), followed by Washington, D.C. ($1.9 billion), Boston ($1.8 billion), while the City of Angels ranked fifth. In terms of total office square footage sold, the metro was outpaced only by Chicago, with 16.5 million square feet.

In 2023, office assets changed hands at an average $266.30 per square foot in the metro. Among gateway markets, Manhattan had the highest prices, averaging $833.90 per square foot, followed by Boston ($346.80 per square foot), while Los Angeles outpaced Seattle ($259.60 per square foot) and Washington, D.C. ($209.10 per square foot).

High-quality assets command high prices

The largest office deal of 2023 remains Waterbridge Capital’s $104 million acquisition of Union Bank Plaza in downtown Los Angeles. The 675,945-square-foot Class A office building was sold by KBS as the last asset in its fund, KBS Real Estate Investment Trust II.

Another significant deal was J.P. Morgan Asset Management’s purchase of Pen Factory’s West Building, in the Santa Monica submarket. The 132,200-square-foot, single-story property changed hands for $98.5 million.

In December 2023, First Citizens Bank paid $86.7 million for Pier Point Pacific, a 66,812-square-foot Class A office asset in the same Los Angeles submarket. Realty Bancorp Equities sold the three-story building at $1,131 per square foot, marking one of the priciest deals in the county in the last 3 years, according to The Real Deal.

In January 2024, CommercialEdge recorded only one significant office sale in the Los Angeles metro, but at a remarkably high price. The deal closed at $70.5 million, or $1,405.8 per square foot. Dublin-based Flutter Entertainment acquired 9000 Wilshire Blvd., a 50,148-square-foot office building in Beverly Hills, from Skanska.

Largest downtown LA lease signed in late 2023

In December, CIM Group inked last year’s largest downtown Los Angeles office lease. The landlord signed a 119,217-square-foot, long-term deal with Sheppard Mullin, a law firm which will relocate its headquarters to City National 2CAL, a 1.4 million-square-foot office tower.

During the same month, Avison Young became the exclusive leasing agent of Brookfield Properties’ Figueroa at Wilshire, a 1.1 million-square-foot office tower in Los Angeles’ Financial District. The company has been the owner of the Class A+ high-rise for nearly two decades.

In late January 2024, Snap Inc. signed a 467,000-square-foot long-term extension across eight office buildings at Santa Monica Business Park. The parent company of Snapchat signed the 10-year commitment with landlord BXP.

Los Angeles office development lags

As of January, the metro’s under-construction pipeline totaled 2.7 million square feet of office space spread across 15 properties. The amount represented 0.8 percent of the existing stock, below the national average of 1.6 percent. Among gateway markets, Los Angeles’ relative-to-total-stock pipeline was smaller than those of Boston—that led with 5.2 percent—San Francisco (3.7 percent) and Manhattan (1.4 percent), but larger than Chicago’s (0.5 percent).

Significant office projects currently underway include Century City Center, a 731,250-square-foot Class A office development of 37 stories. JMB Realty’s tower is rising at 1950 S. Avenue of The Stars and is expected to be delivered in early 2026.

Another noteworthy development is the 370,000-square-foot Harbor-UCLA Medical Center in Torrance, Calif. The Class A property broke ground last August and will be used as an outpatient facility, while also including hospital, research and support components. The 72-acre development at 1000 W. Carson St. is scheduled to come online in September 2026.

Deliveries in 2023

Throughout 2023, 17 properties totaling 1.9 million square feet came online in the Los Angeles metro, representing 0.6 percent of total stock. Construction starts amounted to 1.7 million square feet spread across eight properties.

One of last year’s significant deliveries involved the 800,000-square-foot Second Century project that came online in May. The two-building office property was developed by a joint venture between Worthe Real Estate Group and Stockbridge Real Estate Fund, which backed the project with a $594.1 million construction loan. The campus serves as Warner Bros.’ new headquarters.

In January 2024, two office projects totaling 137,397 square feet came online in Los Angeles. One of them was Sandstone Properties’ Palisades Village Center, a 89,755-square-foot medical office building at 881 Alma Real Drive in Pacific Palisades, Calif. The second one, at 850 Brea Canyon Road in Walnut, Calif., was a 47,642-square-foot, three-story building.

L.A.’s flex office market

As of January, the Los Angeles office market included 4.3 million square feet of shared space, ranking second after Manhattan (9.2 million square feet) in terms of largest flex office footprint in the country. Other gateway cities with a sizable coworking market included Washington, D.C., with 3.3 million square feet, and Chicago, with 3 million square feet.

Year-to-date through January, Cubework was the flex office provider with the largest footprint in L.A., its locations totaling 1,630,562 square feet. The company was followed by WeWork, with 885,058 square feet, Regus, with 731,029 square feet, Spaces, with 594,193 square feet and ReadySpaces, with 524,715 square feet.

Last April, Premier Workspaces opened a new coworking office totaling 14,500 square feet in Los Angeles’ Century City district. The company signed a 10-year lease with The Irvine Co. at 2121 Avenue of The Stars, a 970,000-square-foot office tower.

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Kilroy Realty has signed an approximately 12,000-square-foot long-term lease at its Sunset Media Center, a Class A office building in Los Angeles’ Hollywood submarket.

Com2uS is the tenant, which will relocate its North American corporate headquarters from El Segundo, Calif. JLL represented the landlord, while Cushman & Wakefield’s Executive Managing Director Greg Lovett negotiated on behalf of the tenant.

The Korean video and mobile game developer will bring approximately 150 employees to its new space. The relocation is a strategic and trendsetting move for Com2uS, that has used the El Segundo location for the past decade, said Lovett in prepared remarks. He also noted that most video game companies in the Greater Los Angeles area are not located in Hollywood and now, aside from Com2uS, there exists only one other large game developer in the submarket.

READ ALSO: Los Angeles Office Deal Volume Highest in the Country

The landlord picked up the 22-story building in 2012 from CBRE Investment Management in a $79 million deal, the same source shows. Other tenants at the 323,922-square-foot property include Assembledge+, OpenTable, OneMain Financial, Comerica Bank and APM Music, CommercialEdge shows.

Located at 6255 W. Sunset Blvd., Sunset Media Center features 19,000-square-foot floorplates, six passenger elevators, 22,436 square feet of grade-level retail space and 604 vehicle parking spots on levels three to five, according to CommercialEdge.

Originally completed in 1972, the property was last renovated in 2015 and now includes an on-site management team, security systems and multiple common-area amenities such as a restaurant, outdoor patios, an indoor lounge, an outdoor plaza with sitting areas, an upgraded lobby, a library, lockers and shower rooms. Additionally, Sunset Media Center achieved Energy Star, LEED Gold, WELL Health-Safety Rated and Fitwel certifications.

JLL’s team of Vice President Dana Vargas and Managing Directors Peter Hajimihalis and Hayley Blockley are leading all leasing efforts at the property. Sunset Media Center is close to multiple bus stations, while being 3 miles from West Hollywood, 6 miles from downtown Los Angeles and within 15 miles of Los Angeles International Airport.

Notable Los Angeles office deals

A recent significant deal in the metro is Snap Inc.’s 10-year extension for more than 467,000 square feet at Santa Monica Business Park, a 21-building creative office campus owned by BXP. The parent company of Snapchat has offices across eight buildings within the 1.2 million-square-foot complex.

In late 2023, Shepard Mullin signed a 119,217-square-foot, long-term commitment at City National 2CAL, a 1.4 million-square-foot building owned by CIM Group. The deal represented the largest downtown Los Angeles office lease of last year.

The post Kilroy Lands HQ Relocation at Hollywood Office Building appeared first on Commercial Property Executive.

The developer expects to complete the project by 2027. It will comprise three buildings totaling 228,000 square feet. Planned features include 34 dock-high and 17 grade-level loading doors and 332 parking spaces. The owner expects to achieve LEED certification.

Terreno Realty purchased the property back in 2017 for $37.6 million, according to CommercialEdge data. Its existing buildings were developed in three phases, in 1965, 1983 and 2003. The 11-acre asset features sky lights, climate control, fire sprinklers, cross docks and around 160 parking spaces.

Terreno recently executed a short-term lease for the existing building with an e-commerce firm, which will end at the beginning of 2026. The development is near the intersection of Interstate 105 and Interstate 110, allowing for easy access across the Los Angeles metropolitan area.

Current economic headwinds led to both investment and development activity dropping nationwide. According to a recent CommercialEdge report, Los Angeles ranked second for industrial transactions on a year-to-date basis through November—a total of $3.9 billion in sales was recorded. The metro’s development pipeline was much diminished, with only 4.4 million square feet of new industrial space underway in November.

At the end of last year, Terreno Realty completed a 191,000-square-foot industrial facility in Hialeah, Fla. The property is fully leased to an international logistics company.

The post Terreno Realty Begins $64M Redevelopment in Los Angeles appeared first on Commercial Property Executive.

Snap Inc., the parent company of Snapchat, has extended its stay in Santa Monica. The social media owner signed a 10-year lease extension for more than 467,000 square feet across eight office buildings at the Santa Monica Business Park, a 21-building, 1.2 million-square-foot creative office campus owned by BXP.

Snap’s current headquarters is located a quarter mile to the south at the city-owned 2772 Donald Douglas Loop. The company occupies more than 720,000 square feet around the city.

Decisions around Silicon Beach

According to CommercialEdge information, Snap has occupied the spaces at BXP’s park since 2017, first leasing 217,000 square feet at 2850 Ocean Park Blvd., a three-story, Class A office building built in 1980. Four years later, it became the park’s largest office tenant when it expanded by 145,000 square feet at 3100 Ocean Park Blvd., a nearby three-story property. Commercial Observer found that the space at 3100 Ocean Park had been previously occupied by video game holding company Activision Blizzard.

The other leases in Snap’s renewal included smaller spaces at 3340, 3250, 3200 and 3040 Ocean Park Blvd., as well as 2900 and 2950 31^st St.

In December, Yahoo Finance reported that the firm was considering reducing its office footprint by some 160,000 square feet. That information emerged more than a year after the company decided to lay off more than 20 percent of its workforce, roughly 1,300 employees.

BXP’s big moves

Snap Inc.’s, lease at the Santa Monica Business Park predates BXP’s ownership. The firm, in a joint venture with the Canada Pension Plan Investment Board, picked up the 47-acre asset in 2018 for $628 million. BXP had entered the Santa Monica market two years earlier with the $511.1 million purchase of Colorado Center, a six-building, 1.1-million-square-foot property.

According to CommercialEdge information, many of the buildings in the park were built between 1978 and 1980, and many underwent cosmetic renovations in 2010. The Park sits inside one of the city’s largest tech hubs, hosting more than 500 companies that include Reality Labs (formerly Oculus VR), Riot Games, Hulu, Tinder, Roku and ZipRecruiter.

The greater Los Angeles office market has struggled in the aftermath of the pandemic, pressured by the remote work trend and the migration of tech tenants to northeastern and southern markets. A fourth quarter 2023 market update from Cushman & Wakefield found that the city’s leasing volume had declined by 31.7 percent year-over-year, while the L.A. West submarket has seen more than 900,000 square feet of negative net absorption. Still, the city has roughly 2.2 million square feet of office space in its pipeline.

The city has fared better on the dealmaking front, generating the nation’s largest transaction volume. Earlier this month, The Regents of the University of California recently completed the $700 million purchase of One Westside and Westside Two, two office properties that UCLA plans to convert into research facilities. In late December, Shorenstein sold the Aon Center, a 1.1 million square-foot tower, to Carolwood LP.

The post BXP Snaps Up Big Lease Extension in Santa Monica appeared first on Commercial Property Executive.

Tenants at the property are set to include Ross Dress for Less, McDonald’s, Chipotle Mexican Grill, Raising Canes, Planet Fitness and Burlington. The retail center will also feature Hobby Lobby and Five Below stores, a nail salon, a specialty grocer and dental care services, plan documents show. Upon completion, the project is expected to include a parking ratio of 4 spaces per 1,000 square feet.

Situated at the southwest corner of Ontario Ranch Road and Hamner Avenue, The Ranch at Model Colony is on an approximately 17-acre lot. Future customers can access the site easily through the 15 Freeway and Ontario Ranch Road.

The nearby Ontario Ranch community, the largest master-planned community in Southern California, spans more than 8,000 acres with residential space, commercial space, retail, entertainment and dining options. The 3.1 million-square-foot Goodman Commerce Center is also in close proximity to the site, including more than 2 million square feet of Amazon distribution space.

CommercialEdge data shows that the development is exposed to a traffic count of some 149,000 cars per day. Downtown Ontario is 11 miles from The Ranch at Model Colony, while downtown Los Angeles is within approximately 45 miles.

Maverick Commercial Mortgage Inc.’s President Ben Kadish arranged the loan, which carries a term of 24 months. It was originated through 3650’s Bridge and Event-Driven lending platform.

CBRE is leasing The Ranch at Model Colony.

3650’s lending activity

3650 REIT has also provided a $91 million loan to sponsor Chesnut Properties for Gillespie Field iPark, a 380,000-square-foot industrial facility in El Cajon, Calf. The loan similarly carries a term of 24 months and was originated through the same lending platform.

Late last year, 3650 REIT originated a $71.5 million loan for the acquisition of a 10-building retail power center in California. The 10-year loan was originated from the REIT’s Stable Cash Flow lending platform and was arranged by Palmer Capital Inc.

The post 200 KSF Retail Project Obtains Loan in SoCal appeared first on Commercial Property Executive.

One Westside is roughly 2 miles south from UCLA’s main campus. Image courtesy of CommercialEdge

The Regents of the University of California has acquired One Westside and Westside Two, two office assets totaling some 687,000 square feet in Los Angeles, for $700 million. The seller was a partnership between Hudson Pacific Properties and Macerich, which held 75 percent and 25 percent interest in the venture, respectively. UCLA intends to convert the two buildings into a medical and engineering research park.

The former owners completed a redevelopment project on the property in 2022—which was originally built in 1985 as a shopping center—converting it to office space, according to CommercialEdge data. Wells Fargo Bank provided a $414.6 million construction loan for this endeavor in 2019.

READ ALSO: Office Trends in 2024—How Much Will the Sector Change?

Also in 2019, Google signed a 14-year lease for the entirety of One Westside, taking 584,000 square feet. The tech giant had agreed to pay $36.6 million in annualized base rent, according to SEC filings. However, the company never moved into the space and will be released from the agreement once the sale is finalized, Bisnow reports. Going forward, the LEED Gold-certified property will serve as UCLA’s research center, housing the California Institute for Immunology and Immunotherapy and the Center for Quantum Science and Engineering.

Located at 10800 W. Pico Blvd., the campus is roughly 12 miles west of downtown Los Angeles, some 10 miles from the Los Angeles International Airport and 6 miles from the Santa Monica Pier.

The former Westside Pavilion shopping mall is not the only UCLA acquisition in downtown Los Angeles. In mid-2023, the university paid $40 million to purchase the 351,189-square-foot Trust Building from Lionstone Investments.

High debt volume

Hudson Pacific Chairman & CEO Victor Coleman stated in prepared remarks that the sale proceeds will allow the company to address outstanding debt and have no maturities until the end of 2025. According to a recent CommercialEdge market bulletin, office debt volume in Los Angeles totaled $60 billion as of October, of which more than 17 percent is due by the end of 2024, and nearly 36 percent is maturing in 2026.

The price per square foot for the UCLA deal amounted to nearly $1,020, marking one of the priciest sales in the past few years, far surpassing the $267 average recorded in the metro as of November,  CommercialEdge shows. In the first 11 months of 2023, investment volume in Los Angeles totaled $1.96 billion, the metro being among the most attractive markets for investors nationwide.

The post UCLA Pays $700M for Pair of Los Angeles Office Assets appeared first on Commercial Property Executive.

The building at 1640 Sepulveda Blvd. underwent renovations worth more than $11 million within the last decade. Image courtesy of Harbor Associates

Harbor Associates LLC and F&F Capital Group purchased 1640 Sepulveda Blvd., a 164,683-square-foot office building in Los Angeles, for $44.7 million. Goldman Sachs Asset Management was the property’s seller, according to CommercialEdge data.

Newmark brokered the transaction, with Co-Head of U.S. Capital Markets Kevin Shannon and Vice Chairman Rob Hannan working on behalf of the seller.

The building was 80 percent leased upon closing. Tenants include Shout Factory, Fusion, ThinkFactory Media and Summit Equity Investments.

The Class A property sold for 52 percent less than its price five years ago. Goldman Sachs acquired the asset back in 2018 from Ocean West Capital Partners for $92.5 million, the same source shows.

Completed in 1987, the five-story building underwent renovations worth more than $11 million within the last decade, which included the improvement of tenant spaces, a redesign of the lobby and common areas, new elevator landings, a 70-seat ground-floor screening room and the creation of North and West facing balconies. Formerly known as Westwood Terrace, the low-rise building features four passenger elevators, controlled access and approximately 600 parking spaces.

1640 Sepulveda Blvd. marks the joint venture’s second acquisition within the last two months. In November, Harbor Associates and F&F Capital bought a 102,000-square-foot industrial portfolio in the San Diego area for $21 million.

A well-located asset

Located in West Los Angeles, 1640 Sepulveda Blvd. is at the gateway of Century City and Beverly Hills. The property is near the intersection of Interstate 405 and Interstate 10, which provide easy access across the Los Angeles metropolitan area. West Los Angeles Medical Center, University of California and an abundance of retail centers and dining options are within the property’s proximity.

Harbor’s Principal Paul Miszkowicz said in prepared remarks that more than 80,000 square feet of leases have been signed in the past three years, due to the creative office building’s location in one of Los Angeles’ strongest office submarkets.

The post Harbor Associates JV Pays $45M for LA Office Building appeared first on Commercial Property Executive.

The 62-story Aon Center traded for 45 percent less in 2014. Image courtesy of CommercialEdge data

In the largest post-pandemic office sale in downtown Los Angeles, a partnership between Carolwood LP and real estate investors Daniel Abrams and Adam Tischer has acquired Aon Center, a 1.1 million-square-foot office building, for $147.8 million.

The seller was Shorenstein, according to CommercialEdge data. Colliers assembled and advised the ownership group, while Newmark represented the seller.

The deal also marks the only high-rise over 1 million square feet to trade since 2020. The third-largest office tower in the metro changed hands for 45 percent less than its previous $268.5 million sale price in 2014, the same source shows. In 2018, Shorenstein took out a $159.9 million loan from Wells Fargo Bank for the 62-story high-rise.

Dating back to 1974, the LEED Platinum-certified building underwent a $15 million capex plan over the past 10 years that included upgrading the elevators and creating a new fitness center. The asset features floorplates averaging 19,782 square feet, 24 passenger elevators, some 830 parking spaces, collaborative spaces, conference rooms, a three-story lobby and EV charging stations. Other tenants at the 1-acre property include Meyers Nave, Morrison & Foerster and State Bank of India.

Located at 707 Wilshire Blvd., the transit-oriented building is close to a host of dining and retail options, including shopping malls The Bloc and Saint Vincent Court, while Los Angeles International Airport is some 19 miles southwest. Aon Center is also less than a mile from City National 2CAL, where CIM Group signed the largest downtown L.A. office lease of the year last week.

The Colliers team that represented and assembled the ownership group included Vice Chair Sean Fulp and Senior Vice President Adam Tischer. Newmark’s Co-Head of U.S. Capital Markets Kevin Shannon represented Shorenstein, according to Fortune.

Largest transaction volume in the country

According to a CommercialEdge office report, the Los Angeles market registered the highest transaction volume across the U.S., amounting to $1.96 billion year-to-date through November. The metro was followed by Washington, D.C., and Manhattan, both almost reaching $1.9 billion.

Other significant deals in Los Angeles include Waterbridge Capital’s acquisition of Union Bank Plaza, a 675,945-square-foot tower. A fund managed by KBS sold the asset for $104 million. Earlier this month, Skanska sold 9000 Wilshire, a newly completed office property, to a Europe-based company for $71 million.

The post Shorenstein Sells LA Tower for $148M appeared first on Commercial Property Executive.

9000 Wilshire Blvd. in Beverly Hills, Calif., marks the Skanska’s first project in the Los Angeles region. Image courtesy of Skanska

Skanska has sold an office building in Beverly Hills, Calif., for approximately $71 million. A Europe-based company acquired the asset, 9000 Wilshire.

Standing four stories tall, the office building is 50,148 square feet, according to CommercialEdge data. It includes a rooftop terrace and four subgrade parking levels.

Skanska initially broke ground on 9000 Wilshire in 2020. It was the company’s first project in the Los Angeles area.

Completed in 2023, the office building is set to become the first new LEED Platinum office asset in Beverly Hills. It has attained a WiredScore Platinum certification and a two-star Fitwell certification. The same data shows that tenants of 9000 Wilshire include Farmers Insurance and Lazy Daisy Café.

READ ALSO: How Lifestyle Offices Are Redefining Work-Life Balance

Downtown Los Angeles is approximately 11 miles from the office asset with dining, retail and entertainment options. Tenants have access to a number of retailers in Beverly Hills including a Whole Foods Market, The Cheesecake Factory, Il Pastaio and Saks Fifth Avenue. The notable street, Rodeo Drive, is less than a mile away.

Skanska’s busy year

Throughout the year, Skanska has been highly active throughout many markets nationwide. Earlier in the summer, the company signed a deal to develop an approximately 398,000-square-foot research center in Boston. The mixed-use project is worth $311 million and is anticipated to complete in September 2026.

Skanska also topped out an office tower in Bellevue, Wash., this year. The Class A office space totals 541,00 square feet and is slated to complete in March of 2024. It stands 25 stories tall and will include a standalone 1,000-square-foot mass timber retail pavilion.

The post Skanska Sells Beverly Hills Office Asset for $71M appeared first on Commercial Property Executive.

Figueroa at Wilshire is the ninth-tallest building in Los Angeles. Image courtesy of CommercialEdge

Brookfield Properties has selected Avison Young as leasing agent for Figueroa at Wilshire, a 1.1 million-square-foot Class A+ office tower in Los Angeles’ Financial District. Principal John Eichler and Senior Vice President Tyler Stark will oversee leasing at the 52-story trophy high-rise.

Designed by Albert C. Martin & Associates, Figueroa at Wilshire—formerly known as Sanwa Bank Plaza—came online in 1990. Brookfield Properties has been its owner for nearly two decades, having purchased it from Hines Interests in 2005 for $357 million, according to CommercialEdge information.

Prior to picking Avison Young, the firm provided in-house leasing services at the property. Currently, the tower’s tenant roster comprises both local and international banking, engineering, investment, law and commercial real estate service companies.

READ ALSO: Getting in the Heads of Office Tenants

Avison Young’s new assignment will encompass the entirety of the LEED Gold-certified tower’s office and retail spaces. Featuring 21,102-square-foot floorplates, Figueroa at Wilshire is the ninth-tallest building in Los Angeles. Tenants have access to conference areas, a fitness center, a café, dry cleaners, a bike room, outdoor seating, a private lounge and on-site electric vehicle charging stations.

Situated at 601 S. Figueroa St. in Los Angeles’ central business district, the property’s neighbors include the Wilshire Grand Center, the tallest building in the Western U.S., as well as the City National Plaza complex.

Los Angeles office space: a tale of highs and lows

At the tail end of a difficult year for the office sector, Los Angeles’ market has seen both successes and setbacks. According to a recent CommercialEdge market update, the metro has the nation’s largest sales volume year-to-date through October, totaling $1.86 billion. On the flipside, leasing activity and occupancy have declined, with a recent JLL report showing a downward-trending year-to-date net absorption of 4.7 million square feet and a vacancy rate of 26.1 percent.

The city’s downtown saw its largest lease of the year this week, with Sheppard Mullin inking nearly 120,000 square feet at City National 2CAL, a 1.4 million-square-foot tower.

The post Avison Young Tapped to Lease LA Trophy Tower appeared first on Commercial Property Executive.

The 52-story tower is part of California Plaza, a $2 billion mixed-use complex. Image courtesy of CommercialEdge

In the largest downtown Los Angeles office lease of the year, Sheppard Mullin has signed a 119,217-square-foot, long-term commitment at CIM Group‘s City National 2CAL, a 1.4 million-square-foot office building. The law firm will relocate its headquarters at the property starting mid-2025 and will occupy floors 39 through 42 and some 7,000 square feet on the plaza level. JLL represented the owner, while CBRE worked on behalf of the tenant.

The landlord acquired the 52-story office tower formerly known as Two California Plaza in a seven-property portfolio transaction in February 2014, according to CommercialEdge data. The seller was U.S. Bank, which obtained ownership after MPG Office Trust defaulted on its $470 million loan on the asset in 2012.

City National 2CAL is part of a mixed-use complex dubbed California Plaza. The $2 billion property also includes another office tower, 82,000 square feet of retail space, a 400-key luxury hotel, The Yard, the Colburn School of Performing Arts, a 700-unit condo building and the Los Angeles Museum of Contemporary Art.

READ ALSO: Top 5 Markets for Office Transactions

The office tower underwent cosmetic renovations in 2015. Image courtesy of CommercialEdge

The office high-rise features floorplates averaging 27,000 square feet, 23 passenger elevators, more than 1,370 parking spaces and some 44,000 square feet of first- and second-floor retail space. Other tenants include LT Global Investment, HDR and Mitsui & Co.

Located at 350 S. Grand Ave. in the Bunker Hill District, the transit-oriented building is close to several dining and retail options, including Japanese Village Plaza and Saint Vincent Court shopping centers. Los Angeles International Airport is 19 miles southwest.

Bringing the office tower up-to-date

The 1992-completed property went through cosmetic renovations in 2015, CommercialEdge data shows. CIM implemented a capex program that included the upgrading of the entrances and plaza levels in order to improve the lobby area and create greater walkway connectivity. The addition of new restaurants, retailers and service businesses followed.

READ ALSO: The Must-Have Office Amenities

In August, the property secured LEED Platinum certification for another five years. The building also received Fitwel and Platinum WiredScore certifications.

Los Angeles’ office market remains steady

According to recent CommercialEdge research, the Los Angeles metro saw a 2.0 percent decline in listing rates year-over-year as of October, falling to $41.84 per square foot. The vacancy rate also rose 130 basis points during the same period, reaching 16.0 percent, but remained 180 basis point below the national average.

In terms of sales, the City of Angels registered the highest transaction volume in the nation, totaling $1.87 billion year-to-date through October. The metro was trailed by Dallas-Fort Worth and Manhattan, with $1.78 and $1.71 billion, respectively.

Notable leasing deals in the metro include Lincoln Property’s 53,000-square-foot lease at BA/SE, a creative office campus in Los Angeles’ Hollywood submarket. Verve Talent & Literary Agency relocated its global headquarters to this LEED Gold-certified building earlier this fall.

The post CIM Group Signs Downtown LA’s Largest Office Lease of 2023 appeared first on Commercial Property Executive.

The other office building within the Conejo Corporate Campus was retained by the seller. Image courtesy of CommercialEdge

Strategic Office Partners, an investment platform founded by TPG Real Estate and Gramercy Property Trust, has sold 2400 Conejo Spectrum, a 98,841-square-foot office building in Thousand Oaks, Calif. County of Ventura purchased the asset for $14.9 million. A Newmark team represented the seller.

The property is part of Conejo Corporate Campus, a two-building, 196,034-square-foot office park. In 2019, the seller acquired the complex for $41.4 million, CommercialEdge data shows. Harbor Associates and Blue Vista Capital were the previous owners.

Dating back to 2001, the Class B suburban office building will house the county’s Fire Department administrative headquarters. The two-story asset features 16-foot ceiling heights and a parking ratio of four spaces per 1,000 square feet.

Located at 2400 Conejo Spectrum St., the property is some 2 miles from a host of dining and retail options, including Ventu Park Shopping Center. Los Angeles International Airport is 48 miles away, while downtown Los Angeles is some 47 miles southeast.

The Newmark team included Co-Head of U.S. Capital Markets Kevin Shannon and Vice Chairmen Ken White, Rob Hannan, Laura Stumm and Michael Moll.

LA sees largest office deal volume in the country

According to a recent Los Angeles market update based on CommercialEdge data, the metro saw some 7.5 million square feet of office space changing hands year-to-date through October, amounting to $1.86 billion. In the first 10 months of the year, L.A. registered the highest transaction volume in the nation, trailed by gateway cities, such as Manhattan ($1.71 billion), Boston ($1.48 billion) and Washington, D.C. ($1.42 billion).

One of the largest office transaction in the market was Waterbridge Capital’s acquisition of Union Bank Plaza, a 675,945-square-foot building that changed hands for $104 million.

The post Strategic Office Partners Sells LA-Area Asset appeared first on Commercial Property Executive.

Worthe Real Estate completed the Second Century Project for Warner Bros., in Burbank. Rendering by Sora, courtesy of Gehry Partners

As we enter the last quarter of the year, Los Angeles’ office construction pipeline is still on a downward trajectory—in line with national trends. Despite a slowdown in new development, office investment in the metro picked up since the first quarter, Los Angeles leading the nation in terms of sales, according to recent CommercialEdge data.

As of October, the City of Angels had nearly 2.2 million square feet of office space under construction across 23 properties, representing 1.1 percent of the existing inventory—below the national average of 1.7 percent. The metro’s relative to total stock under-construction pipeline outpaced that of Washington, D.C. (1.0 percent) and Chicago (0.5 percent). Across other gateway markets, Boston led the ranking with 5.3 percent, followed by Miami (4.6 percent), San Francisco (4.1 percent) and Manhattan (1.7 percent).

Deliveries and construction starts

In terms of office space under construction, Los Angeles’ pipeline outperformed that of Chicago (1.4 million square feet), but was lower than in Miami (2.8 million), Washington, D.C. (4.0 million), Manhattan (5.0 million square feet), San Francisco (6.0 million) and Boston (13.7 million).

In the years’ first 10 months, some 1.6 million square feet across 13 properties came online, representing 0.5 percent of stock. One of the largest deliveries was the 800,000-square-foot, two-building Second Century Project, completed in May. Worthe Real Estate Group and Stockbridge Real Estate Fund developed it as Warner Bros.’ new headquarters, in Burbank, Calif.

Year-to-date through October, developers commenced construction on eight properties totaling 1.8 million square feet. A significant office project that broke ground in August is the 730,000-square-foot Century City Center. JMB Realty’s plans call for a 37-story Class A building, scheduled for delivery in early 2026. Creative Artists Agency will anchor the property, occupying 400,000 square feet, while Clearlake Capital preleased 151,104 square feet in July.

Los Angeles: Leading the nation for office sales

Year-to-date through October, 7.5 million square feet of office space changed hands in Los Angeles, for a total of $1.86 billion. The California metro had the largest transaction volume in the nation. So far, a total of 368,417 square feet changed hands for $49.9 million during the fourth quarter of the year. Compared to other gateway markets, the metro’s transaction volume surpassed Manhattan ($1.71 billion), Boston ($1.48 billion), Washington, D.C. ($1.42 billion) and Miami ($944 million).

The $104 million sale of Union Bank Plaza in March remained the largest transaction. Image courtesy of KBS

The largest office deal since the start of the year remains Waterbridge Capital’s $104 million acquisition of Union Bank Plaza, a Class A office building in downtown Los Angeles. The 675,945-square-foot high-rise was the last asset remaining in KBS Real Estate Investment Trust II’s portfolio.

Another notable transaction was JP Morgan Asset Management’s $98.5 million acquisition of Pen Factory – West Building, a 132,200-square-foot low-rise in the metro’s Santa Monica submarket. Clarion Partners sold the property in August.

In March, Pendulum Property Partners paid $93.8 million for Mix at Harman Campus, a 160,366-square-foot Class A building in Northridge, Calif. The low-rise office asset was sold by DRA Advisors.

Office assets in Los Angeles changed hands at an average of $282.0 per square foot year-to-date through October. Prices in the metro were higher than the national average of $192.3, but lower than San Francisco’s $340.6 per square foot and Boston’s $312.6 per square foot. Among other gateway markets, Los Angeles outperformed Washington, D.C. ($215.5 per square foot) and Chicago ($107.3 per square foot).

Notable office leases in Los Angeles

In August, Verve Talent & Literary Agency signed a 53,000-square-foot lease at Lincoln Property Co.’s BA/SE, a creative office campus in the metro’s Hollywood submarket, with the tenant relocating its global headquarters. The deal marks one of the biggest office commitments in Los Angeles this year.

DivcoWest inked a 21,377-square-foot leasing agreement with Syracuse University at a nine-story, Class A office building in North Hollywood, Calif.

The Gas Co. Tower. Image courtesy of CommercialEdge

In April, Colliers became the exclusive leasing agent in charge of Gas Co. Tower in downtown Los Angeles. A court-appointed receiver of Trident Pacific Real Estate Group retained the brokerage company after the owner, Brookfield Properties, defaulted on a $465 million loan package associated with the property.

At the beginning of the fourth quarter, Los Angeles had some 4.6 million square feet of shared space, more than in Washington, D.C. (3.3 million square feet), Chicago (3.2 million square feet), Boston (2.9 million), San Francisco (2.1 million square feet) and Miami (1.6 million). Across gateway metros, only Manhattan had more coworking space, at 9.7 million square feet.

Los Angeles also had one of the largest shares of coworking space as percentage of total leasable office space, reaching 2.2 percent in October—surpassing Chicago (2.0 percent), Boston (1.8 percent), Washington, D.C. (1.6 percent) and the national average of 1.7 percent.

Year-to-date through October, flex office provider Cubework had the largest footprint in the metro, its locations totaling 1,630,562 square feet. The company was followed by WeWork, with 962,832 square feet, while Spaces was third, with 594,193 square feet.

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NewMark Merrill will now manage a combined 630,000 square feet of retail. Image courtesy of NewMark Merrill Cos.

NewMark Merrill Cos. has purchased The Collection at Janss Marketplace—a 172,008-square-foot retail center in Thousand Oaks, Calif.—from Seritage Retail Group. CBRE’s Phil Voorhees and Jimmy Slusher brokered the transaction on behalf of the seller. Gortikov Financial’s Bryan Gortikov secured an acquisition loan from Prime Finance.

Completed in two phases, in 1980 and 2014, the property was initially a multi-story Sears department store. At the time of the sale, The Collection at Janss Marketplace was 60 percent leased to retailers such as Dave & Buster’s, DSW and Nordstrom Rack.

READ ALSO: Retail Leasing’s Space Race

A regional shopping destination

Located on the Northwest corner of Moorpark Road and Hillcrest Drive, the retail center is right off Route 101. The shopping center serves roughly 75,175 people within a 3-mile radius, with the average household income of $131,674. The daily traffic count is approximately 58,000 vehicles.

The property is adjacent to the Janss Marketplace shopping center, a 458,000-square-foot neighborhood shopping center which NewMark Merrill managed and leased for more than 20 years. The company will now be responsible for the oversight of the combined 630,000-square-foot regional center. The two shopping centers share parking and access points, as well as a newly remodeled Regal Cinema’s and Gold’s Gym.

Maxxam Enterprises purchased Janss Marketplace in 2003 for $51 million, according to CommercialEdge data. The property comprises 10 buildings spread on a 24-acre site. The tenant roster includes local, regional and national retailers such as Regal Theaters, Old Navy, Aldi, Five Below, Sky Zone, and Buca di Beppo.

NewMark Merrill Cos. President & CEO Sandy Sigal hopes that the proposed development of a 216-key hotel at Janss, the retail destination will attract more visitors in the future.

The post NewMark Merrill Buys 172 KSF Retail Center in LA appeared first on Commercial Property Executive.

EPIC, one of the buildings in Hudson Pacific Properties’ Hollywood Media Portfolio. Image courtesy of Hudson Pacific Properties

In two separate transactions, Hudson Pacific Properties Inc. has divested a land parcel in Silicon Valley and certain tranches of a loan secured by its Hollywood Media Portfolio, for gross proceeds of $189.3 million before prorations and closing costs.

The two sales were:

• Cloud 10, a 5.3-acre land parcel at 1601 Technology Drive in San Jose, for $43.5 million before prorations and closing costs.
• 100 percent of two tranches and 49 percent of a third tranche of debt associated with its Hollywood Media Portfolio, generating gross proceeds of $145.8 million, while retaining a 51 percent ownership of the third tranche with a notional value of $30.2 million.

The company used net proceeds to repay amounts outstanding on its unsecured revolving credit facility.

A Hudson Pacific spokesperson confirmed to Commercial Property Executive that the identity of the buyer(s) is not being released at this time.

READ ALSO: In a Low-Deal Year, These Transactions Stand Out

In June 2020, funds affiliated with Blackstone Property Partners acquired a 49 percent interest in Hudson Pacific’s Hollywood Media Portfolio, which consists of three studios and five on-lot or adjacent Class A office properties, totaling 2.2 million square feet.

The studios are Sunset Bronson, Sunset Gower and Sunset Las Palmas Studios, at 5800 Sunset Blvd. and 1438 N. Gower St., Hollywood, and 1040 N. Las Palmas Ave., Los Angeles, respectively. The office assets include 6040 Sunset, ICON, CUE, EPIC and The Harlow in the Los Angeles market.

The following summer, the partners announced plans to develop the Los Angeles area’s first large-scale, purpose-built studio in more than 20 years. Sunset Glenoaks Studios was estimated to cost $170 million to $190 million and was planned to feature 240,000 square feet on more than 10 acres in Sun Valley, Calif.

High tech but soft rents

The Silicon Valley office space market is seeing availability and vacancy rising, to 21 percent and 14.6 percent, respectively, according to a third-quarter report from Kidder Mathews. The brokerage commented that many tenants approaching lease expirations are proactively reviewing their space needs in anticipation of mounting economic challenges.

Against a backdrop of negative net absorption, the average asking lease rate has declined to $4.48 per square foot.

This past August, Hudson Pacific closed the sales of two office properties in the Santa Monica submarket of Los Angeles, for a total of $72.5 million. The seller used the proceeds to repay amounts outstanding on its unsecured revolving credit facility.

The post Hudson Pacific Raises $189M From Land, Studio Debt Sales appeared first on Commercial Property Executive.

The portfolio comprises four adjacent buildings. Image courtesy of Harbor Associates

Harbor Associates, in a joint venture with Evergen Equity, has purchased a 126,015-square-foot, four-building industrial portfolio in Gardena, Calif., for $55 million. An individual private investor sold the properties.

CBRE Senior Vice President Eric Cox, along with Vice Chairmen Barbara Perrier and Darla Longo, represented the seller.

The transaction marks Harbor Associates’ third industrial investment of this year, bringing the company’s Southern California footprint to 640,000 square feet.

The adjacent buildings are at 690-760 W. 190th St., with sizes ranging from 17,000 to 45,000 square feet. The new owner is considering converting the 8-acre property for other uses, such as Class A industrial outdoor storage for trailers and trucking.

The portfolio’s location allows for quick access to major Southern California thoroughfares, such as interstates 405 and 110. It is 13 miles from Los Angeles International Airport, 14 miles from Port of Long Beach and within 16 miles of downtown Los Angeles. According to Harbor Associates, the 34 million-square-foot Gardena/Harbor submarket has a vacancy rate of under 1 percent.

Los Angeles’ sales volume outpaced most markets

Year-to-date through October, Los Angeles recorded nearly $3.6 billion in industrial sales, exceeded only by the adjacent Inland Empire market—which had $3.7 billion—a recent CommercialEdge report shows. Demand contributed to the average price per square foot in the supply-constrained market to rise to $314 in October, which was more than double the national rate of $136.

Recent large Los Angeles deals included Dedeaux Properties’ $190 million purchase of an 882,000-square-foot distribution center in Commerce, Calif. Ares Management sold the asset in what was one of the largest industrial transactions in the county this year.

In July, Rexford Industrial paid $210 million for a 595,304-square-foot industrial asset in Santa Fe Springs, Calif. The property previously changed hands in 2015 for $62.3 million.

The post Harbor Associates JV Buys LA Industrial Portfolio for $55M appeared first on Commercial Property Executive.

Gateway Corporate Center’s tenant roster includes several Fortune 500 companies. Image courtesy of CBRE

Travelers Insurance has signed a 66-month, 41,646-square-foot lease with Buchanan Street Partners at Gateway Corporate Center, an 81,221-square-foot office building in Diamond Bar, Calif. JLL assisted the tenant, while CBRE negotiated on behalf of the landlord.

Travelers will occupy more than half of the office space at 21680 Gateway Drive, bringing the building’s occupancy to 100 percent. The insurance company is currently at 21688 Gateway Drive, the neighboring property that was once the second, twin component of the former Gateway campus.

A San Gabriel Valley office building

Buchanan Street had purchased Gateway Corporate Center in 2016 from Cornerstone Holdings for $44 million, according to CommercialEdge data; back then, the property was a two-building, 162,339-square-foot office campus. Later on, the firm split the complex in two and sold one of the buildings to an owner-user.

Completed in 2000 and renovated in 2020, Gateway Corporate Center is now a three-story building connected to its twin through a landscaped courtyard. Its tenant roster includes Global Imports, Cushman & Wakefield, Impro, Sampe and NuBridge Commercial Lending, among others.

Gateway Corporate Center is part of a 155-acre master-planned business park within the East San Gabriel Valley submarket. The property is near the intersection of Orange and Pomona freeways, which provide direct access to downtown Los Angeles.

CBRE Senior Vice President Philip Woodford and Vice President Steven Saunders brokered the transaction on behalf of the landlord, while JLL Executive Managing Director Kevin Mechelke worked on behalf of the new tenant.

The Los Angeles office market saw leasing activity improvement in October, according to a recent CommercialEdge report. The metro’s vacancy rate clocked in at 16 percent, down 50 basis points over the month and 1.8 percent below the national average. However, the value was still up 130 basis points on a year-over-year basis.

The post Buchanan Street Partners Signs 42 KSF Tenant at LA-Area Office Building appeared first on Commercial Property Executive.

DJM Capital Partners and Gaw Capital USA have officially reopened Ovation Hollywood, a 475,000-square-foot lifestyle center in Los Angeles’ Hollywood, following a $100 million renovation process that started three years ago.

Located in the heart of the neighborhood at 6801 Hollywood Blvd., in an Opportunity Zone, Ovation Hollywood comprises 135,000 square feet of retail space, two floors of nearly 100,000 square feet of creative office space, 85,000 square feet of dining, 65,000 square feet of entertainment space and 40,000 square feet of event space.

The property’s tenant roster includes a diverse mix of retailers such as Footlocker, Sephora, Walgreens, Forever 21, Café de Leche, Hard Rock Café, Tacos Neza, Lucky Strike, Dave & Buster’s and TCL Chinese 6 Theatres, among others.

A shopping center with a history

Formerly known as Hollywood and Highland, the shopping center was developed by TrizecHahn Corp. with funds from the Community Redevelopment Agency. The property came online in 2001, on the former location of the 1902 Hollywood Hotel, which was demolished in 1956 and replaced by the First Federal Building of the First Federal Savings & Loan Association of Hollywood. 

DJM and Gaw purchased the decades-old shopping center back in 2019 from CIM Group for $325 million, according to CommercialEdge data, in the largest single asset retail transaction outside of Manhattan of that year. Natixis provided the buyers with a $211.3 million CMBS loan from Wells Fargo Bank and a $52.5 million note from Natixis Bank. 

READ ALSO: CPE Asks: When Will It Be a Good Time to Invest in Retail?

After the acquisition, the new owners announced plans for a major renovation which was set to include the rebranding of the property, upgrade of several retail levels and the courtyard, the addition of office space on the upper floors and removal of the controversial Babylonian-themed archway and oversized elephant statues. The renovation process began in 2020 and much of the property remained open throughout the revamp.

Gensler reimagined and updated the design of the outdated architecture, transforming the five-level mall into a vibrant destination for retail, dining and entertainment which reflects modern-day Hollywood. The newly renovated center achieved a 110 percent increase in foot traffic this year and registered 500,000 more visitors in comparison to 2022.

The post Hollywood Lifestyle Center Gets New Life After $100M Renovation appeared first on Commercial Property Executive.

West Valley Logistics Center will be completed in late 2024. Image by Douglas Franz Architects, courtesy of Stream Realty Partners

CapRock Partners has hired Stream Realty Partners as exclusive leasing agent for its West Valley Logistics Center, a 269,780-square-foot Class A industrial development in Pomona, Calif. The property is currently under construction and is expected to come online in 2024’s third quarter. Douglas Franz Architects is the designer, while the general contractor in charge is Fulcrum Construction.

CapRock purchased the development site in December 2020, through its $250 million Industrial Value-Add Fund III. One year later, the company also landed a $50 million construction loan, originated by JPMorgan Chase.

READ ALSO: Expanding Into Industrial: Diversifying for Long-Term Success

Stream Realty Partners Executive Vice Presidents Wes Hunnicutt and Matt Moore, together with Associate Mike Torres, will be in charge of marketing West Valley Logistics Center for lease.

West Valley Logistics Center is taking shape at 4200 W. Valley Blvd. It is a speculative project designed to gain LEED certification, planned to include 40-foot clear heights, 28 dock-high doors, a two-story office component totaling 10,000 square feet, secure dual access with drive around capabilities, 130 vehicle parking spots and 45 trailer parking spots.

The 12.5-acre industrial development is close to the Interstate 10 and State Route 57 interchange, 17 miles from Ontario International Airport, 28 miles from downtown Los Angeles, 44 miles from Port of Los Angeles and within 47 miles of Port of Long Beach. West Valley Logistics Center’s location also allows for quick access to major transportation routes in Southern California. Other nearby large industrial users include FedEx, Ryder Logistics, NFI Industries and Williams Sonoma.

Bullish on California’s industrial market

CapRock Partners has multiple industrial projects in various stages of development in California. In August, the developer commenced construction on CapRock Central Point III, a four-building 2.7 million-square-foot industrial campus in Visalia, Calif. The project’s first building is scheduled for delivery in late 2024.

In June, the company announced its plans for a 500,000-square-foot warehouse that will be developed within the master-planned World Logistics Center in Moreno Valley, Calif. It also brought online Palomino Ranch Business Park’s Phase I and Saddle Ranch South, two industrial projects in Norco, Calif, which encompass 1.1 million square feet of space.

The post Stream Realty to Lease Los Angeles Industrial Project appeared first on Commercial Property Executive.

The building is fully leased to health-care provider DaVita. Image courtesy of Gantry

Gantry has secured $15.3 million in permanent refinancing for a 51,000-square-foot medical flex office building in El Segundo, Calif. According to Los Angeles County records, the five-year CMBS loan was provided by DBR Investments Co. Limited, an affiliate of Deutsche Bank. The fixed-rate mortgage features interest-only terms for the life of the loan.

Gantry Principal Mark Ritchie, Senior Director Amit Tyagi and Associate Alicia Sabanero with the firm’s Los Angeles office secured the financing on behalf of the owner, G&N Management. The building is fully leased to health-care provider DaVita, serving as its regional headquarters and national training facility.

READ ALSO: MOB Sector Remains Stable, Attractive

G&N Management acquired the property back in 2004 for $13.2 million from CT Realty, CommercialEdge data shows. The facility was previously subject to a $12.3 million CMBS loan in 2014, originated by Cantor Commercial Real Estate, with Wilmington Trust acting as lender.

Completed in 1963, the Class B building underwent renovations in 1990. The single-story property has controlled access and offers 178 car parking spaces at a ratio of 3.5 spaces per 1,000 square feet. The facility has an energy system that generates 75 percent of energy used on site.

The property is at 601 Hawaii St., near Interstate 405 and Los Angeles International Airport, being some 18 miles from downtown Los Angeles. Other medical centers in the surrounding area include Torrance Memorial – El Segundo, St. Paul Medical Center of the S. Bay, Center for Heart and Health and El Segundo Medical Center, among others.

Refinancing health-care assets

In recent months, several companies received financing for their health-care properties across the U.S. Some of these included Huntington Medical Center’s $19.5 million loan on Long Island, N.Y. The Procter Co. is the owner of the 66,316-square-foot medical office building.

Additionally, Onicx Group secured $29 million refinancing loan from First Citizens Bank for two medical office buildings totaling 132,000 square feet in Florida. That same lender also provided $14.5 million in refinancing for Faros Properties’ Holly Pond Plaza, a 73,060-square-foot medical office building in Stamford, Conn.

The post Gantry Secures $15M Loan for LA-Area MOB appeared first on Commercial Property Executive.

Plaza Tower was 84 percent leased at the time of sale. Image courtesy of Newmark

Logos Missions Inc. has purchased Plaza Tower, an office building spanning 191,939 square feet in Cerritos, Calif. The previous owner, The Koll Co., had acquired the property in 2015 for $30.5 million, according to CommercialEdge data. Newmark represented the seller in the current transaction.

Completed in 1986 and renovated in 2015, the nine-story building features 28,000-square-foot floorplates. The asset was 84 percent leased at the time of sale; tenants include The Oncology Institute of Hope & Innovation, Thermal Engineering, Premier Workspaces and Fremont University.

Located at 18000 Studebaker Road, the 4.2-acre property is off Interstate 605, directly adjacent to Plaza 183 and near the Los Cerritos shopping mall. Downtown Los Angeles is roughly 18 miles northwest, while Long Beach Airport is some 6 miles away.

Los Angeles leading the U.S. in office sales

Newmark Co-Head of U.S. Capital Markets Kevin Shannon and Senior Managing Director Brandon White, along with Vice Chairmen Paul Jones and Ken White, represented The Koll Co. Jones stated in prepared remarks that the buyer was offered immediate occupancy of the existing vacancy.

Los Angeles led the U.S. in office transactions year-to-date through September, registering a total volume of $1.98 billion, at an average $308 per square foot, according to a recent CommercialEdge report. The metro’s vacancy rate clocked in at 16.5 percent, up 150 basis points year-over-year, but still remained below the national rate of 17.8 percent.

The post The Koll Co. Sells LA-Area Office Building appeared first on Commercial Property Executive.

Home Depot and Goodman Distribution are long-term tenants at the fully occupied property. Image courtesy of Cress Capital

Cress Capital, together with Brasa Capital Management, has purchased a three-building industrial property totaling 122,904 square feet in Baldwin Park, Calif., within Los Angeles’ submarket of San Gabriel Valley. Shea Properties sold the asset for $15 million, according to CommercialEdge.

Colliers negotiated on behalf of the seller, while JLL assisted the buyer in securing acquisition financing—a $7.5 million loan originated by River City Bank, the same source shows.

Located at 315, 345 and 365 Cloverleaf Drive, the one-story buildings include ESFR sprinkler systems, 22-foot clear heights, sky lights, loading doors, dock levelers and bumpers, trailer parking spaces and 191 vehicle parking spots, according to the same data provider. Additionally, all buildings also feature a two-level office component.

A total of 14 tenants are present at the property, fully occupying the asset. The roster includes Goodman Distribution and Home Depot, which have long-term lease agreements in place.

The 7-acre asset is close to interstates 605 and 10, allowing easy access to the Greater Los Angeles area. It is also 16 miles from downtown Los Angeles, within 31 miles from Port of Los Angeles and 38 miles from John Wayne Airport.

Colliers Vice Chairman Michael Kendall, Senior Vice President Gian Bruno and Vice President Kenny Patricia worked on behalf of Shea Properties, while JLL Senior Managing Director Jeff Sause worked on behalf of the buyer.

One of the priciest industrial markets

Los Angeles remains one of the hottest industrial markets nationwide, according to a recent CommercialEdge report. Year-to-date through September, the metro recorded $3.1 billion in sales volume, outpaced only by Inland Empire’s $3.6 billion. The average price per square foot for these sales was $319, which was more than double the national average of $135.

Recent large deals in the metro included Dedeaux Properties’ $190 million sale-leaseback of an 882,000-square-foot distribution center in Commerce, Calif., and Rexford Industrial Realty Inc.’s $210 million purchase of a fully leased warehouse in Los Angeles County.

The post Shea Properties Sells Los Angeles Industrial Property appeared first on Commercial Property Executive.

Rexford Industrial acquired 15801 West 1st Street, Irwindale, Calif., in the Los Angeles San Gabriel Valley submarket. Image courtesy of CommercialEdge

Rexford Industrial Realty Inc. has both acquired for $120 million a nearly 1 million-square-foot industrial facility in Greater Los Angeles and loaned the seller an additional $125 million collateralized by an adjacent 150-acre industrial development site.

Pabst Brewing sold the property, according to CommercialEdge data. Rexford did not respond to Commercial Property Executive’s request for additional information.

The existing building is a 993,142-square-foot structure on a 75-acre site at 15801 W. First St., Irwindale, adjacent to the I-210 freeway, in the San Gabriel Valley submarket.

It’s fully leased to what Rexford describes as “a deeply entrenched tenant with an eight-year lease term subject to long-term extension options.”

READ ALSO: What’s Ahead for Industrial?

Rexford noted that this was an off-market transaction and provides “an initial 5.6 percent unlevered cash yield,” along with the possibility of redeveloping the site following lease expiration.

On the other side of this transaction, the REIT issued to the seller a $125 million five-year, fixed-rate loan with an effective interest rate of 8.0 percent. The loan also features a right of first offer for Rexford to acquire the industrial development site in the future.

Rexford funded the twin deals using proceeds from forward equity settlements and cash on hand.

In a prepared statement, Rexford co-CEOs Howard Schwimmer and Michael Frankel noted that the REIT “has a near-term pipeline comprising approximately $100 million of new investments under contract or accepted offer.”

La-La Land doldrums

The metro Los Angeles industrial space market is seeing negative net absorption, with buildings in a wide range of sizes returning to the market, according to a third-quarter report from Kidder Mathews. Further, newly completed Class A buildings are getting little love, as 3PL users, the primary tenant base, remain on the sidelines.

As a result, vacancy has increased to 3.2 percent, and the average asking rent has slid to $1.83. On the positive side, new deliveries are down, and Kidder Mathews expects an increase in cargo at the ports of Long Beach and Los Angeles going into 2024.

Earlier this month, IDS Real Estate Group obtained an $84 million four-year, floating-rate loan as post-close acquisition financing for IDS’s July purchase of the three-building Azusa Industrial Center in Azusa, Calif. The 432,500-square-foot asset is fully leased to four tenants.

The post Rexford Industrial Seals $245M Deals in LA appeared first on Commercial Property Executive.

Montclair Place underwent a multi-phase revitalization plan. Image courtesy of CommercialEdge

Main Event Entertainment has leased 51,802 square feet at CIM Group‘s Montclair Place, a 1.2 million-square-foot regional retail center in Montclair, Calif. The new tenant will open its first Southern California location in 2025.

Main Event provides entertainment services, with such activities as bowling lanes, laser tag, escape rooms, banquet rooms and more. Its new space will be on the ground floor, below AMC DINE-IN Montclair Place 12. Together they occupy an approximately 134,000-square-foot building added by the CIM Group as part of its multi-phase revitalization plan.

The tenant roster includes Nordstrom, Macy’s, Sears, JCPenney and Barnes & Noble. Montclair Place also features regional and national retailers such as Bath & Body Works, Claire’s, Guess, Foot Locker, Forever 21, Starbucks, H&M, Pandora and MAC Cosmetics.

Located at 5060 E. Montclair Plaza Lane, the mall is right off Interstate 10, which provides direct access to downtown Los Angeles. Ontario International Airport, Ranging Waters Los Angeles and California Botanic Garden are within a 7-mile radius.

In March, CIM secured two leases totaling approximately 40,000 square feet at its 443,148-square-foot Northwoods Shopping Center in San Antonio. Barshop & Olesbrokered the deals on behalf of the landlord.

The Montclair Place revitalization

CIM Group purchased 70 acres out of the entire 100-acre Montclair Place in 2014 for $170 million, with the remaining pads owned by independent retailers and institutions. Later, the developer started an improvement plan which included modifications and significant facade improvements, the creation of the food hall, an interior modernization with new flooring and lighting and the addition of communal gathering spaces.

The site was subdivided to allow parts of the mall to continue operation while redevelopment proceeded. The plan followed an urban design strategy that transformed the area from a suburban, auto-oriented retail environment into a pedestrian-oriented and mixed-use downtown district.

The post CIM Group Signs Tenant at Los Angeles-Area Mall appeared first on Commercial Property Executive.

The property serves as 99 Cents Only Stores’ headquarters. Image courtesy of CommercialEdge

Dart Entities, a 3PL provider connected to Dedeaux Properties, has acquired an 882,000-square-foot distribution center in Commerce, Calif., for $190 million. The seller was Ares Management, the owner of 99 Cents Only Stores, CommercialEdge data shows. Following the sale-leaseback, the retailer chain will continue to use the Class B property as headquarters.

The deal marks one of the largest industrial transactions in Los Angeles County this year so far. Lee & Associates President Jack Cline, with the assistance of Eastdil Secured, arranged the sale.

READ ALSO: What’s Ahead for Industrial? SIOR Conference Report

The one-story industrial building, located at 4000 Union Pacific Ave. and 4040 Noakes Ave., features 126 dock-high doors, sky lights, a 110-foot truck court and 600 vehicle parking spots, the same source shows. The approximately 24-acre property is adjacent to the Hobart Intermodal Railyard and close to interstates 5 and 710. The location is 5 miles from downtown Los Angeles, 23 miles from the Port of Los Angeles and within 24 miles of Los Angeles International Airport.

The asset is part of an industrial campus where Dedeaux Properties manages more than 2 million square feet of logistics space. President & Managing Member Brett Dedeaux said, in a prepared statement, that the property has been on the company’s radar for some time and it might be redeveloped into a distribution center that will include two adjacent buildings totaling more than 400,000 square feet.

Los Angeles, a pricey market

Los Angeles’ industrial sales volume totaled $2.4 billion year-to-date as of August, with assets changing hands for $346 per square foot, the highest price in the U.S. according to a recent CommercialEdge report. In terms of total sales, the metro was second to the Inland Empire ($3.3 billion) and outperformed the Bay Area ($1.98 billion).

In one of the priciest deals, Rexford Industrial Realty Inc. paid $210 million for a 595,304-square-foot industrial property in Los Angeles County. The asset had previously changed hands in 2015 for $62.3 million.

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Azusa Industrial Center comprises three fully leased buildings. Image courtesy of JLL

IDS Real Estate Group has obtained $84 million for Azusa Industrial Center, a three-building campus in Azusa, Calif. PGIM Real Estate provided the four-year, floating-rate loan through its debt fund that focuses on transitional bridge lending.

Working on behalf of the borrower, JLL arranged the post-close acquisition financing; IDS had purchased the property in July for $126 million.

Completed between 1986 and 1987, Azusa Industrial Center comprises 432,500 square feet across its three buildings that feature clear heights ranging from 24 to 30 feet. The industrial campus has a total of 73 dock doors, seven grade-level doors and truck courts ranging from 130 to 160 feet. The property is currently 100 percent leased by four tenants.

READ ALSO: Industrial Sector Navigates Growth Challenges

The industrial park occupies a 23.6-acre site at 975-985 W. Eighth St., 823-829 W. Eighth St. and 875-935 W. Eighth St. The location gives its tenants easy access to Southern California’s many freeways, including interstates 210 and 605. The property is also within 40 miles of Los Angeles International Airport and the Port of Long Beach.

Senior Director Matt Stewart, Associate Ace Sudah and Analyst Daniel Skerrett led the JLL team which secured the financing for IDS. The PGIM team was coordinated by Vice President Jace Bertges.

Industrial properties across California

Los Angeles-based IDS Real Estate owns approximately $3.6 billion in assets across California and the Pacific Northwest. The firm’s property management portfolio totals 40 million square feet.

During the past 12 months, IDS has obtained several post-close acquisition loans. More recently, the firm landed $69.1 million from MetLife Investment Management, which was also arranged by JLL. The financing involved a 33-building industrial portfolio in Walnut, Calif.

IDS also obtained $124 million for a 1.2 million-square-foot cold storage facility in Riverside, Calif. Northwestern Mutual provided the 10-year, fixed-rate loan.

The post IDS Lands $84M for LA Industrial Property appeared first on Commercial Property Executive.

2411 Santa Fe Ave. sold for $45.7 million. Image courtesy of CommercialEdge

Terreno Realty Corp. has completed its $45.7 million purchase of a two-building, 112,000-square-foot infill industrial property located in Redondo Beach, Calif.

The seller was Link Logistics, a subsidiary of Blackstone, according to CommercialEdge data.

The assets, located at 2411 Santa Fe Ave., were built in 1968 and consist of a 67,000-square-foot transshipment facility, alongside a 45,000-square-foot industrial flex building. Link Logistics picked up the assets in 2016 for $20.7 million, the same source indicates.

The former building, fully occupied by DSD Trucking, holds 14- to 18-foot clear heights, 23 dock-high loading doors and one for grade level uses. Aerospace giant Northrop Grumman is the latter facility’s sole tenant. The properties, built up over 6.7 acres, are flanked by 200 car parking spaces.

READ ALSO: Top Markets for Industrial Deliveries in H1 2023

An Orange County-based Colliers team consisting of Vice Chair Michael Kendall, Senior Vice President Gian Bruno, Vice President Kenny Patricia, Senior Executive Vice President Jeffrey Smart and Senior Associate Elizabeth Capati oversees leasing at the complex.

The property is within one of the South Bay’s largest industrial districts, roughly a quarter mile to the west of the Interstate 405, and within 4 miles of Los Angeles International Airport. Space Park, a 5 million square foot microelectronics manufacturing plant operated by Northrop Grumman is located across Redondo Beach Avenue. Los Angeles Air Force Base, home to one of the company’s largest clients, sits 2 miles to the northwest. Downtown Los Angeles, accessible through an interchange to Interstate 105, lies 13 miles to the northeast, and the Ports of Los Angeles and Long Beach are roughly equidistant to the southeast.

According to Terreno Realty’s website, the latest acquisition brings the publicly traded REIT’s portfolio around Los Angeles to 55 buildings spanning over 2.8 million square feet.

At the heart of an industrial powerhouse

With $2.3 billion in year-to-date sales as of August and a $346 price per square foot, Los Angeles retains one of the nation’s most valuable industrial markets, according to a recent CommercialEdge report. Its total transaction volume and average rent over this period are second only to the Inland Empire, according to the report.

Some recent industrial deals around the City of Angels include the $54 million sale by a joint venture between Staley Point Capital and Bain Capital Real Estate of two properties totaling 116,000 square feet, at a price per square foot slightly below the state’s average. Earlier this summer, Rexford Industrial Realty spent $210 million on a 595,304-square-foot property in the city’s Mid-Counties submarket.

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Wayne Ratkovich, Founder & CEO of The Ratkovich Co., created a legacy of preserving and redeveloping some of L.A.’s most iconic landmarks. Photo courtesy of The Ratkovich Co.

Wayne Ratkovich, the real estate developer and civic leader, who helped save and preserve many Los Angeles historic landmarks in a career spanning five decades, died on Sept. 24. He was 82.

During his prolific tenure as CEO of the company he founded 46 years ago—The Ratkovich Co.—he worked to reimagine and restore iconic Los Angeles buildings that were often overlooked and deemed unworthy of redevelopment, turning them into profitable assets.

“Wayne Ratkovich was a true visionary in urban development, city building and place making, and exemplified everything that a real estate developer should be,” said Clare De Briere, Americas Chair and member of the Urban Land Institute’s global board of directors, in a statement. “His passing is a deep loss to the development community worldwide, to the City of Los Angeles and to all of us who had the privilege to know him.”

Ratkovich’s legacy continues in his company’s most recent project, West Harbor, a 42-acre revitalization of the Los Angeles waterfront. In a joint venture with Jerico Development, Ratkovich Co. is constructing a $150 million entertainment, dining and shopping district next to the Port of Los Angeles in the city’s San Pedro neighborhood. Scheduled for completion in 2025, it is set to include year-long events in a 6,200-seat outdoor amphitheater, along with open-air restaurants, retail and waterside recreational activities.

West Harbor will be the latest in a long line of projects that have helped renew Los Angeles’ skyline and iconic buildings. Ratkovich discovered a sense for how such properties can be reimagined in 1977, when he purchased the James Oviatt Building in the city’s CBD. The Archdiocese of Los Angeles sold it for around $5 per square foot, assuming it would be demolished.

Instead, Ratkovich decided to renovate the property and maintain its original Art Deco design, which included glass and other details created by renowned French designer Rene Lalique. The city designated the building as a historic cultural landmark and Ratkovich responded by turning the property into an asset that attracted many renowned tenants in the years that followed.

Ratkovich said later that this move changed his career. “The experience with the Oviatt changed forever my role as a developer. I no longer had interest in factories and warehouses. I realized that my little company could make a positive difference in the city, and it was something I wanted to continue to do,” he said in 2020.

Preserving Los Angeles’ built history

The Oviatt renovation kicked off a series of projects of increasing scope and size. Ratkovich repositioned many historic landmarks across the Los Angeles area, preserving their character while transforming them into successful contemporary properties.

The 1928 Oviatt Building features Art Deco fixtures and Lalique glass. It is a recipient of a preservation award by L.A. Conservancy. Photo courtesy of CommercialEdge

These include the historic Pellissier Building and adjacent Wiltern Theater, in the Miracle Mile neighborhood. Ratkovich worked with such organizations as the Los Angeles Conservancy to save the Wiltern Theater from demolition and acquired it in 1981. Following a four-year renovation, the theater reopened and is still serving as one of the city’s top entertainment venues.

“The greatest thing Wayne did is shine a bright light on historic buildings in Downtown and beyond,” said Linda Dishman, president & CEO of the Los Angeles Conservancy, in a statement. “He was a pioneer in transforming underutilized buildings into places people wanted to go, including the Oviatt, Fine Arts and the Wiltern.”

The Ratkovich Co. would continue to work and reimagine many other landmarks across the region, including The Fine Arts Building, Chapman Market and 5900 Wilshire—a 30-story office tower across from the Los Angeles County Museum of Art—as well as a 40-acre mixed-use development, The Alhambra, in San Gabriel Valley.

Lifelong dedication

The buildings redeveloped and reimagined by The Ratkovich Co. were honored with multiple awards by the Los Angeles Conservancy.

In 2020, Wayne Ratkovich passed on his day-to-day leadership duties to Brian Saenger, who continues to lead the company as president & CEO.

Ratkovich is also being remembered for his mentorship and contributions to the Southern California community. “Wayne was truly dedicated to improving the built environment for the benefit of all and devoted his time to foster and mentor the next generation of leaders in real estate, said ULI’s De Briere. “I was a recipient of his mentorship and friendship for over thirty years. I am grateful to Wayne for my deep understanding of the responsibility that we as developers have to our communities.”

Wayne Ratkovich with members of Homeboy Industries, including CEO Tom Vozzo. Ratkovich was a member of the board of directors and executive committee of Homeboy Industries and was active in helping bring affordable housing to a site near Homeboy’s headquarters. Photo courtesy of The Ratkovich Co.

Throughout his career, Ratkovich was involved in the development more than 16 million square feet of office, retail, industrial and residential properties. Ratkovich attended UCLA, where he was a defensive end on the football team, lining up in practice against another California real estate titan, Nelson Rising.

In 2011, ULI named Ratkovich a life trustee, which is an achievement that only 15 other members received in the organization’s 80-year history. Ratkovich was a former member of ULI’s global board of directors, as well as a trustee emeritus of the National Trust for Historic Preservation.

Ratkovich made diverse contributions as a civic leader. He served on the board of directors and executive committee of Homeboy Industries, which aims to assist at-risk youth and former gang members.

Ratkovich was a past president of the Jonathan Club, where he instituted a series of programs aimed at addressing Los Angeles’ homeless crisis. He was a founding board member of the Downtown Women’s Center and the founding board chair of Wende Museum in Culver City.

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Retail is largely flourishing in areas that benefited from inward migration during the pandemic, such as the Sun Belt, Peter Braus, managing principal & cofounder of Lee & Associates NYC told Commercial Property Executive.

Peter Braus, managing principal & cofounder, Lee & Associates NYC. Image courtesy of Lee & Associates NYC

“Florida, for example, is experiencing double-digit year-to-year growth,” Braus explained. “However, many of these geographies also are overbuilt, and consequently, the older retail projects, and specifically the Class B and C malls, are suffering, even in good markets.”

Retail demand can also look entirely different from one submarket to another. New York City retail, for example, is appears healthy. But in some areas, like Midtown East, occupancy rates are underperforming. This trend is also evident in downtown Los Angeles, San Francisco and Atlanta.

“Some suburban and less densely populated areas, as well as those struggling with economic instability, may experience varying levels of demand,” said Lawrence Taylor, founder & chairman of Christina. “One example that presents a good case is San Francisco, a market struggling with high office vacancy rates, tech industry shifts and high costs of living, which have all contributed to an overall decrease in retail demand.”

What retailers want

When it comes to national retail trends, there are certain spaces that consistently perform. In Class A malls, for example, the boutique-size spaces continue to attract attention, Braus said. For big-box fashion retail, there is a trend toward downsizing in order to meet the consumer in a street retail environment, leading to stores such as JC Penney, Sears and K-Mart giving up massive locations and other big-box retailers adapting to smaller storefronts.

“H&M opened their first experiential pop-up in Williamsburg, N.Y., in 2022 and Macy’s just announced the rollout of a smaller store model that will carry a more curated selection,” said Danny Volk, founder of Vantage Real Estate Advisors. “However, experiential retail is taking the opposite approach, locking down very large spaces in locations such as stale shopping malls and warehouses for concepts like pickleball, paddleball, arcades, escape rooms, etc.”

Lawrence Taylor, founder & CEO, Christina. Image courtesy of Christina

In Los Angeles, for example, the retail experience has become more dynamic and creative, leading retailers to blend the consumer experience across different mediums, including online, direct-to- consumer delivery, and traditional brick-and-mortar facilities, Taylor noted.

“As a result, we’ve noticed that retailers are trending toward smaller physical storefronts, which allows them to offer a combination of both online and in-person experiences,” he explained. “In addition, midsize restaurant spaces offering unique dining experiences also remain popular, especially on pedestrian-oriented streets.”

Mixed-use developments are continuing to gain traction, catering to the consumer’s desire for convenience, Taylor noted.

In addition to space requirements, retailers have other considerations when debating where to sign a lease. As with any CRE asset, companies weigh rent prices, building conditions, co-tenancies and neighborhood demographics. In urban locations, foot traffic makes a difference, too. And, of course, location is king.

“Above all, the terms of the agreement need to be such that the landlord can feel good and make their obligations, and the tenant can make money,” observed Volk. “When a deal is only penciling for one side, that’s when we see premature turnover.”

Factors like ease of access, proximity to target consumers, competitive lease terms and parking all impact the decision, as well, Taylor said. “Moreover, retailers are increasingly interested in spaces that allow them to integrate technology and create immersive, engaging shopping experiences,” he continued.

Resiliency ahead

While other property types may be bracing for impact or are already experiencing a downturn in demand, retail is largely expected to maintain a strong footing. Braus believes that, while high interest rates and economic volatility will drag on upcoming retail expansion, the fundamentals look good moving into next year.

“Inflation was expected to take a major bite out of consumer spending, but it hasn’t seemed to occur,” Braus said. “If the Fed manages to achieve a ‘soft landing,’ then we would anticipate retailing to remain strong going into 2024.”

Likewise, in Los Angeles, retail will continue to recover and thrive, supported by a diverse and resilient consumer base, Brause predicted. “Despite the rapid rise in interest rates, which has affected all facets of the real estate industry and the economy, demand for street retail in the best locations continues to accelerate,” he noted.

READ ALSO: What Retail Investors Want Now: A View From Transwestern

For Volk, retail’s robustness in the near term will depend on pricing. Landlords that value great tenants will continue to offer incentives to lure those tenants in.

“Examples of strong deal points include additional free rent periods and great tenant improvement allowances packages,” he explained. “There will always be speculation on the staying power of this retail comeback, but the feasibility of it will truly depend on the ability of landlords to create an environment for retail to survive.”

Trends to watch

While traditional retail seems to be enjoying a comeback, experiential retail continues to sweep the nation. In some cases, big-box spaces are trying to reinvent themselves as experiential.

“I think the most interesting thing to watch is how these large spaces will be repurposed into new uses,” said Braus. “This represents millions of square feet and will present great opportunity. However, high interest rates will present a challenge to redevelopment of these properties.”

These adaptive reuse developments are taking hold across the nation. Spaces that are dated or underutilized are being converted into pickleball courts, ping pong areas, golfing spaces, etc.

“Over the past few years, we’ve noticed an increase in experiential retail tenants, such as fitness studios, coworking spaces and wellness centers,” Taylor observed. “We’ve also seen an uptick in demand for quick-service, grab-and-go food operators and high-end salons. Additionally, there’s a growing demand for grocery stores and pharmacies, reflecting consumers’ focus on health and convenience.”

The emergence of health-related spaces is also something to watch.

“In a post-COVID world, there is a rise in consumer interest in not only health but also cosmetic treatments, and these tenants are willing to pay competitive rents to meet their consumers in the most convenient place possible to capture that drive,” said Volk.

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The $104 million sale of Union Bank Plaza in March remained the largest transaction through July. Image courtesy of KBS

The office market’s weak performance is still ongoing, as owners and developers are experimenting with solutions for the sector’s future. Through the first seven months of the year, Los Angeles’ office market experienced a similar trend, according to recent data from CommercialEdge.

Office development activity cooled off, as did investments and listing rates. A few new projects came online year-to-date through July, with the largest falling in the creative office segment.

As of July, Los Angeles had 1.1 million square feet of rentable office space under construction. The metro’s development pipeline represented 0.4 percent of its total stock, down 50 basis points since March and 120 basis points below the national rate.

Compared to other gateway markets, Los Angeles stood at the bottom of the list in terms of office development. San Francisco led the ranking, with 3.8 percent of stock underway, followed by Miami (2.9 percent), Manhattan (1.6 percent) and Chicago (0.8 percent).

No new construction starts since April

Four properties broke ground year-to-date through July, comprising a total of 472,827 square feet, marking a 20.6 percent decrease year-over-year. Furthermore, no new construction starts were recorded since April.

Excluding owner-occupied assets, the largest development to commence construction was The Bradmore Group’s 42XX project in Marina Del Ray. The developer financed the 151,000-square-foot project last year with a $117 million construction loan, which encompassed senior debt from Bank OZK and mezzanine debt from Acore Capital.

Other developments that broke ground included Swift Real Estate Partners’ 146,000-square-foot office addition to the Reframe Studios redevelopment in Glendale, Continental Development Corp.’s 136,438-square-foot building for Raytheon in El Segundo, as well as Redcar Properties’ Euclid 1650, measuring 39,389 square feet and taking shape in Santa Monica.

Completions were also on a downward trend—a total of 1.4 million square feet of office space came online in the market during the first seven months of the year, down 38.7 percent year-over-year.

Worthe Real Estate completed the Second Century Project for Warner Bros., in Burbank. Rendering by Sora, courtesy of Gehry Partners

The largest of these was the 800,000-square-foot, two-building Second Century Project, developed by Worthe Real Estate for Warner Bros. in Burbank.

In terms of rentable office space, two completions stood out—Samitaur Constructs’ 180,548-square-foot (W)rapper Tower in Culver City, along with The Luzzatto Co.’s 107,199-square-foot The Depot, in South Los Angeles. Both properties are marketed as creative office propeties.

Leasing grinds to a halt

Although vacancy in Los Angeles’ office market remained elevated—at 14.1 percent in July—the metro’s rate was 300 basis points below the national average. L.A. fared better than most of its gateway counterparts. San Francisco’s rate stood at 21.7 percent, followed by Chicago (19.4 percent), Manhattan (17.4 percent) and Miami (12.8 percent).

Office leases were scarce, with tenants either downsizing space or relocating to more favorable locations.

In April, publisher and global media company Condé Nast relocated to a 25,000-square-foot space in the 1.4 million-square-foot ROW DTLA, within the Arts District submarket. JLL brokered the transaction on behalf of both parties.

DivcoWest acquired 5250 Lankershim Blvd. for $92 million in 2021. Image courtesy of CommercialEdge

In May, Syracuse University signed a lease for 21,377 square feet at 5250 Lankershim Blvd. in North Hollywood. DivcoWest is the owner of the 179,246-square-foot office building, having acquired it in 2021 for $92 million.

Investments slowed in the third quarter

Roughly 5.6 million square feet of office space traded in Los Angeles year-to-date through July, for a total of $1.2 billion. Investment volume dropped to less than half of the $2.7 billion recorded during the same period last year—when more than 6 million square feet traded.

Of the total amount, 4.3 million square feet changed hands in the first quarter alone, for $827 million. Investments cooled gradually after the first three months, with the top five largest sales all occurring in March. Despite the depressed transaction volume, Los Angeles still ranked third on a national level, on par with Boston ($1.2 billion) and behind Manhattan ($1.5 billion).

Year-to-date through July, Los Angeles office assets traded at an average of $231 per square foot, which was 17.9 percent above the national figure.

Among the few transactions recorded after the first quarter was the $24.7 million sale of the DYAD South Bay Campus. Borstein Enterprises purchased the 116,220-square-foot campus from Westport Capital Partners LLC.

In June, UCLA acquired an iconic office building in downtown L.A. Lionstone Investments sold the 351,189-square-foot Trust Building for $40 million, or $113.9 per square foot.

The largest sale though the first seven months of the year remained Waterbridge Capital’s $104 million acquisition of Union Bank Plaza, also in downtown Los Angeles. KBS sold the asset through its KBS Real Estate Investment Trust II.

More coworking spaces open

Premier Workspaces’ new location at 2121 Avenue of the Stars encompasses 55 private offices. Image courtesy of CommercialEdge

As of July, 2.2 percent of Los Angeles’ entire office inventory was coworking space—roughly 4.7 million square feet. Compared to other gateway markets, the metro’s flex office inventory relative to total office space stood below that of Manhattan (2.9 percent) and Miami (3.3 percent), but above San Francisco (1.9 percent) and Chicago (1.9 percent).

In April, Premier Workspaces opened a new location within the Century City submarket, at 2121 Avenue of the Stars. The company signed a lease for 14,500 square feet at The Irvine Co.’s 970,000-square-foot property. The new location offers 55 private offices, ranging from 90 to 240 square feet.

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Westfield Valencia Town Center. Image courtesy of Unibail-Rodamco-Westfield

Unibail-Rodamco-Westfield has completed the $199 million sale of Westfield Valencia Town Center, a 1 million-square-foot shopping mall in Santa Clarita, Calif. Centennial Real Estate purchased the property for $4 million in excess of the property’s existing $195 million debt. URW had defaulted on the loan in January.

Following the change of hands, the property has been rebranded as Valencia Town Center. Carl Tash, Centennial’s CIO & senior executive vice president, said in prepared remarks the firm is taking into consideration the asset’s redevelopment into a live-work-play destination that will combine retail with offices, apartments and entertainment spaces.

The sale is the latest transaction in URW’s ongoing two-year deleveraging strategy that includes office and residential properties. So far, the undertaking has generated $1.8 billion in proceeds; dispositions included Westfield Mission Valley and Westfield North County Fair, two shopping centers totaling 2.7 million square feet.

A shopping mall with a long history

Valencia Town Center came online in 1992, developed by the former JMB Realty’s retail-focused arm, Urban Shopping Centers. Eight years later, the firm was bought by Rodamco North America, which merged with the Westfield Group in a $2.2 billion deal that closed in 2002. That move saw Westfield acquiring a quarter of the ownership stake of the asset, which would later expand to half in 2005, after a $69.2 million buy. The mall consequently adopted the Westfield brand, in line with other shopping centers owned by the company.

READ ALSO: CBRE Capital Forecast: Caution This Year, Some Recovery Next Year

In 2019, the owner announced a $100 million expansion with a Costco and additional cinema space to take shape at the site of a now-demolished Sears. That project was canceled two years later.

Presently, the 60-acre mall is home to some 140 retailers. Macy’s, alongside JCPenney, H&M, Forever 21, Regal Cinemas and Gold’s Gym, anchor the property. The Patios, a landscaped outdoor section that combines experiential stores with outdoor dining options is one of its most-trafficked offerings. The asset was 87 percent leased at the time of sale.

Located at 24201 Valencia Blvd., the shopping mall is adjacent to Valencia Town Center Drive, a mixed-use development that also includes a 57,000-square-foot medical facility, 551 luxury apartments and a 244-key Hyatt hotel. Downtown Los Angeles is 34 miles southeast.

The post Unibail-Rodamco-Westfield Sells LA-Area Mall for $199M appeared first on Commercial Property Executive.

The portfolio includes four buildings in Valencia, Calif., completed in 2000. Image courtesy of Colliers

Westcore Properties has acquired a 16-building industrial portfolio in California, spread across Livermore, Valencia and Chino. MEPT was the seller of the 3.5 million-square-foot Odyssey Portfolio, CommercialEdge data shows. Eastdil Secured assisted the seller, while Westcore represented itself in the transaction.

Fully leased at the time of the deal, The Odyssey comprises Class A, A- and B+ buildings. The portfolio includes nine buildings in Chino totaling 1.5 million square feet, occupied by nine tenants. Adding up to 742,558 square feet, the four properties in Valencia came online in 2000 and comprise five tenants. Completed in 2016, the three Class A Livermore buildings are leased to two tenants and offer a total of 1.3 million square feet.

READ ALSO: Real Estate Market Sentiment Improves

The portfolio’s tenant roster comprises distribution, warehousing and light manufacturing companies, operating on a national, regional or local level. Some of the major tenants include Pharmavite, Tesla, Draxlmaier Automotive, as well as blue-chip companies, such as Coca Cola and Schlage.

The properties are part of the Los Angeles, Inland Empire and Bay Area markets. As of July, all three metros led the U.S. industrial market for price per square foot and transaction volume, a recent CommercialEdge report shows. Inland Empire was at the forefront, with a $2.8 billion deal volume year-to-date through July, followed by Los Angeles ($1.8 billion) and the Bay Area ($1.4 billion).

Eastdil Senior Managing Director Steve Silk, Managing Director Jay Borzi, Director Adam Pastor and Christina Buhl with Industrial Equity Sale facilitated the deal for the seller.

Westcore’s industrial expansion

The Odyssey Portfolio brings Westcore’s assets under management in the U.S. to more than $4 billion and 25 million square feet. The real estate investment company focuses on industrial properties since its founding in 2000.

During the first half of the year, the company made several purchases in the Southwest, with a main focus on its Texas portfolio. Westcore entered the Fort Worth market in April with the acquisition of three buildings at North Quarter 35, totaling 485,000 square feet. The deal was followed by two additional purchases in Fort Worth, namely the acquisitions of the 301,120-square-foot Rockwall Distribution Center and the Railhead Business Station, a 519,905-square-foot, Class A industrial campus.

The post Westcore Adds 3.5 MSF to California Footprint appeared first on Commercial Property Executive.

604 Arizona Ave. previously traded for $21.5 million in 2011. Image courtesy of CommercialEdge

In separate transactions, Hudson Pacific Properties has sold two office properties in Los Angeles’ Santa Monica submarket for a combined $72.5 million. The West-coast focused office REIT used the net proceeds, which include a $22 million gain, to repay amounts outstanding on its unsecured revolving credit facility.

The assets include:

• 3401 Exposition Drive, a 66,376-square-foot office property that originally came online in 1961 as an industrial building and was converted to office use in 2013, according to CommercialEdge information. The asset previously traded in 2013 for $24.7 million, the same source shows. Currently, the property serves as the headquarters of Company 3, a post-production firm that provides color grading and film finishing services.
• 604 Arizona Ave., a 44,260-square-foot building that was developed in 1950 and underwent cosmetic renovations in 1995, 2005 and 2017. Hudson Pacific picked up the asset nearly two years prior to 3401 Exposition Drive, in a $21.5 million deal. In 2018, job search marketplace ZipRecruiter signed a full-building lease at the property, and is using it as its global headquarters through 2025, according to the Los Angeles Business Journal.

The properties are 2 miles of each other, surrounded by many local dining, retail and entertainment venues. Downtown Los Angeles is roughly 14 miles away.

Office REITs are reeling

Hudson Pacific’s divestments came at a time when office REITs face highly discounted trade valuations, unlike industrial and multifamily-focused investors. The majority of headwinds have been brought on by deflated transaction volumes, high vacancies and a difficult lending environment.

According to June 2023 research from S&P Global, office assets changed hands at a negative 57.7 percent net asset value. For its part, Hudson Pacific traded at the biggest discount rate for office REITs above $200 million in market capitalization in May, 76.7 percent below its NAV estimate, the same data reveals.

The post Hudson Pacific Sells 2 LA Office Properties for $73 Million appeared first on Commercial Property Executive.

The warehouse at 10907 Painter Ave., one of the assets that traded for $339 per square foot. Image courtesy of CommercialEdge

Staley Point Capital, in a joint venture with Bain Capital Real Estate, has sold two Southern California industrial properties totaling 160,000 square feet for $54 million, or $339 per square foot. The buyer was Walton Street Capital, according to CommercialEdge data.

Latham & Watkins provided legal counseling services for the seller. Eastdil Secured acted as financial advisor and The Klabin Co. provided local market expertise.

The same source reveals that the two industrial properties previously changed hands in separate transactions in 2021, for a combined $35.2 million.

One of the assets came online in 1977 at 333 Cliffwood Park St. in Brea, Calif., while the other is a 1993-built warehouse at 10907 Painter Ave. in Santa Fe Springs, Calif. The properties have 24- and 22-foot clear heights, sky lights, ESFR sprinkler systems, exhaust fans, office build-out components, truck courts and ample parking space.

The Brea property was fully occupied by Corporate eWaste Solutions at the time of sale. The recently renovated Santa Fe Springs facility has several tenants on its roster, one of them being Concord USA Corp., CommercialEdge data shows.

The two warehouses are less than 11 miles from one another. The Brea industrial asset is in Orange County, close to U.S. highways 57 and 90, within 9 miles of Anaheim, Calif; the Santa Fe Springs building is close to interstates 5 and 605 in Los Angeles County, some 22 miles from The Port of Long Beach.

SoCal recent industrial transactions

Despite the economic slowdown and investment decreases across all commercial property types, the appetite for industrial assets is still strong, a recent CommercialEdge report shows. Western markets led the nation in the first half of 2023, with investments totaling $6.52 billion as of June. Orange County saw $301 million in traded industrial assets, while Los Angeles scored one of the largest sales volumes in the region, with $1.20 billion.

Recent notable transactions in the area include Rexford Industrial’s $210 million purchase in Santa Fe Springs. The 595,304-square-foot, fully occupied industrial facility is less than 2 miles from the Painter Avenue warehouse.

In April, an 851,131-square-foot industrial portfolio comprising Orange County and Los Angeles County assets changed hands for $263 million. A joint venture of three companies picked up the properties.

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Westfield Century City underwent a $1 billion redevelopment that was completed in 2017, when this archived photo was taken. Image courtesy of Unibail-Rodamco-Westfield

Bank of America, JP Morgan and Morgan Stanley are set to originate a $925 million non-recourse, first lien mortgage for Unibail-Rodamco-Westfield on Aug. 17. The debt is collateralized by the retail owner’s 1 million-square-foot interest in Westfield Century City, a 1.4 million-square-foot mall on Los Angeles’ Westside.

The floating-rate loan will have an initial two-year term, with three one-year extension options and will require monthly interest-only payments based on a one-month term Secured Overnight Financing Rate, according to Kroll Bond Rating Agency. KBRA has assigned preliminary ratings to five classes of CENT 2023-CITY, a CMBS single-borrower securitization collateralized on the $925 million mortgage.

Word of the impending loan emerged on Tuesday in statements on rating actions by KBRA and Fitch Ratings.

Proceeds will be used to return some $909.5 million in equity to the borrower and to pay estimated closing costs of approximately $18.5 million, according to a report from Fitch. The rating agency also noted the property’s quality and prime location, as well as its reputation as one of the West Coast’s top malls.

Assigning Westfield Century City a property quality grade of ‘A’, Fitch noted that its three department store anchor tenants brought in nearly $200 million last year, the majority of it from Bloomingdale’s.

Westfield Century City, which opened in 1964 as Century Square Shopping Center, underwent a massive redevelopment program that was completed in 2017. That year, Paris-based Unibail-Rodamco acquired Australia’s Westfield Corp. in a nearly $16 billion transaction.

The post LA Mall Lands $925M Loan appeared first on Commercial Property Executive.

The two-building BA/SE creative office campus in Hollywood. Image courtesy of CommercialEdge

Verve Talent & Literary Agency signed a 53,000-square-foot lease with Lincoln Property Co. at BA/SE, a creative office campus in Los Angeles’ Hollywood submarket. The tenant will relocate its global headquarters to the LEED Gold Core & Shell-certified office building by the end of the next month.

The transaction marks one of the largest office leases of this year within the Los Angeles metro. Lincoln Property Co.’s Senior Vice President Kent Handleman and Vice President Douglas Brown represented the owner in-house, while CBRE’s Vice Chairman Jeff Pion worked on behalf of the new tenant.

Verve will become an anchor tenant at the Class A office campus. Part of its Global Corporate Solutions Group, Lincoln’s project management team will be in charge of tenant build-out at Verve’s new headquarters.

Completed in 2015, the campus comprises two separate structures: the 118,093-square-foot East Building and the 129,610-square-foot West Building. Lincoln Property acquired the campus in a $186 million portfolio transaction in 2020, according to CommercialEdge data. The same source shows that Invesco Real Estate provided the $140 million acquisition loan.

A newly upgraded office campus

BA/SE features floor-to-ceiling glass, passenger elevators, private screening rooms, high ceilings and concrete floors, on-site showers, electrical vehicle charging stations, bike parking, controlled access and approximately 729 parking spaces. The buildings received Energy Star and WELL Healthy Safety ratings.

Upon the purchase of the campus, the new owner executed an improvement plan which included the renovation of the exterior of the buildings, the addition of outdoor patios, gathering areas, dining options and seating areas, among other amenities.

The campus’ buildings are located at 6555 Barton St. and 959 Seward St., respectively, in the Hollywood Media District. BA/SE is across the street from the Sunset Las Palmas Studios and near Route 101, which provides easy access across the Los Angeles metropolitan area.

The post Lincoln Property Inks 53 KSF Lease at Hollywood Campus appeared first on Commercial Property Executive.

9400 Santa Fe Springs Road. Image courtesy of CommercialEdge

Rexford Industrial Realty Inc. has acquired a 595,304-square-foot industrial property in Los Angeles County for $210 million. CommercialEdge data shows that the former owner of the fully leased asset is the San Diego County Employees Retirement Association, an entity that purchased the warehouse in 2015 for $62.3 million.

Located at 9400 Santa Fe Springs Road on 22.4 acres in the Mid-Counties submarket, the facility is occupied by two tenants. Rexford described the area as “demonstrating an extreme scarcity of similar size and quality available product.”

READ ALSO: The Rise of Co-Warehousing—What’s the Appeal?

In a prepared statement, Rexford Co-CEOs Howard Schwimmer and Michael Frankel referenced the REIT’s $50 million pipeline of additional acquisitions under contract or accepted offer, as well as Rexford’s 9 million square feet of value-add repositioning and redevelopment projects.

Rexford’s focus is investing in, operating and redeveloping infill industrial properties throughout Southern California. Its portfolio currently comprises 368 properties totaling about 45.1 million rentable square feet. Most recently, Rexford leased an industrial facility in Orange County to an EV manufacturer.

Could be better

The metro Los Angeles economy will likely benefit from a recent agreement between the Pacific Maritime Association and the International Longshore and Warehouse Union, gradually winning back pan-Pacific cargo traffic from the East Coast, according to a second-quarter report from Kidder Mathews.

Leasing deals are sluggish, the report stated, with overall vacancy creeping up to 3.3 percent. On the other hand, asking rents are holding steady at an average of $1.89, and lease renewals indicate that tenants generally prefer the status quo.

In Santa Fe Springs, there’s a total availability of 1.6 percent on an inventory of 53.7 million square feet and a small amount of net negative absorption year-to-date.

Kidder Mathews is guarded about the near-term outlook, indicating that although the port numbers should improve later this year, absorption trends and the quantity of industrial inventory point toward a slower pace of lease transactions.

The post Rexford Spends $210M on LA Warehouse appeared first on Commercial Property Executive.

The Americana at Brand. Image courtesy of CommercialEdge

Caruso has obtained $450 million to refinance the retail component of The Americana at Brand, a 1 million-square-foot mixed-use property in Glendale, Calif., The Real Deal first reported.

Morgan Stanley and Goldman Sachs provided the funds that retire a $360 million loan originated by Metropolitan Life Insurance Co. in 2013, according to Los Angeles County public records. The CMBS loan has an interest rate of 7.1 percent.

Completed in 2008, The Americana at Brand encompasses 570,000 square feet of retail space, along with a residential component comprising 242 apartments and 100 condominiums. Anchored by Nordstrom, the property features a wide array of tenants including Apple, H&M, Barnes & Noble, Tesla and Samsung Experience Store, along with luxury brands such as Gucci, Louis Vuitton, Balenciaga and Bottega Veneta. Between 2015 and 2022, the asset has maintained an average annual occupancy rate of 98 percent, a DBRS Morningstar report shows.

Located at 889 Americana Way, The Americana at Brand is in a dense shopping area that also includes Glendale Galleria and Glendale Marketplace, among others. The property is close to Interstate 5 and some 10 miles north of downtown Los Angeles, as well as 8 miles from Pasadena.

The shifting retail market

The retail real estate market has been facing various challenges in recent years, as it was impacted by the aftermath of the pandemic. The sector is also seeing the effects of the volatile economic environment marked by increasing interest rates.

In a recent interview, Transwestern Managing Director of Retail Services & Urban Land Services Steve Williamson told Commercial Property Executive that lately there has been a noticeable return to brick-and-mortar, with experiential retail leading the way, a trend which is expected to continue especially in regional mixed-use venues.

The post Caruso Lands $450M for LA Mixed-Use appeared first on Commercial Property Executive.

1404-1408 Third St. Rendering courtesy of Sonnenblick-Eichner Co.

Sonnenblick-Eichner Co. has arranged $27.4 million in construction financing for Blatteis & Schnur’s upcoming speculative retail development within the Third Street Promenade shopping district in Santa Monica, Calif.

Civitas Capital Group provided the funds, Commercial Observer reported. The non-recourse loan was priced at 550 basis points over SOFR. The debt package will finance the replacement of a 77-year-old mixed-used building that was demolished last year.

Set to take shape at 1404-1408 Third St., the three-story, 25,000-square-foot retail building will feature approximately 50 feet of retail frontage and include a 2,500-square-foot roof deck. The development will rise adjacent to the Nordstrom-anchored, 475,000-square-foot Santa Monica Place mall and 1 mile from Santa Monica Pier.

Third Street Promenade comprises three blocks of pedestrian-only space, creating an open-air retail area that spans more than 200,000 square feet. A wide range of retail destinations, dining options and entertainment venues are present within the shopping district.

CBRE research indicates that there still is significant caution in the retail sector when it comes to development, as evidenced by the lowest-ever recorded level of deliveries, at 5.1 million square feet in the first quarter. Additionally, retail construction starts during the same period amounted to only 4.8 million square feet, reflecting the ongoing pattern of prudent development.

The post Sonnenblick-Eichner Lines Up $27M for Santa Monica Retail Project appeared first on Commercial Property Executive.

15601 S. Avalon Blvd. Image courtesy of NAI Capital Commercial

Rexford Industrial Realty Inc. has secured a full-building lease at its recently completed 86,879-square-foot, Class A industrial property in Gardena, Calif. NAI Capital Commercial acted on behalf of the new tenant, bakery company Puratos Corp., while JLL represented the landlord.

Located at 15601 S. Avalon Blvd., the distribution facility was recently completed and includes 32-foot clear heights, one grade level door, LED lightning, an ESFR sprinkler system, nine dock high positions, electrical vehicle charging stations and 97 parking spots.

READ ALSO: How Debt Costs Will Affect Industrial Demand This Year

Spreading across almost 4 acres in one of Southern California’s tightest industrial markets, Puratos Corp.’s new warehouse is close to interstates 110 and 105, roughly 13 miles from Los Angeles International Airport, 14 miles from Port of Los Angeles and downtown Los Angeles, and within 15 miles of Port of Long Beach.

NAI Capital Commercial Vice President Edward Michino negotiated on behalf of the tenant. Senior Vice President Brianna Demus, Executive Managing Director Zachary Sakowski and Associate Danny Irish were part of the JLL team that represented Rexford Industrial Realty Inc.

At the beginning of this year, JLL’s brokers assisted the tenant in another significant deal in the area: Provider of sets and storage for the film and TV industry Scenic Expressions signed a 299,234-square-foot lease in Santa Clarita, Calif.

The post Rexford Industrial Secures Full-Building LA Lease appeared first on Commercial Property Executive.

EY Plaza. Image courtesy of Colliers

Following a default by Brookfield on $275 million in CMBS financing for EY Plaza, a downtown Los Angeles office tower, the 41-story property has been placed in receivership.

Colliers said Thursday that it was awarded the exclusive leasing and property management assignment for the 968,184-square-foot tower at 725 S. Figueroa St. by Gregg Williams of Trident Pacific Real Estate, who was appointed receiver for the property.

Sean Fulp, Head of Office Capital Markets, U.S. Southwest, at Colliers, was named lead advisor and is tasked with ensuring EY Plaza’s value is preserved despite the turbulent market conditions. He is joined by Vice Chair Matthew Heyn and Executive Vice President Ian Gilbert, who will oversee the leasing efforts. Kevin Rude, regional managing director of West Coast, and Tina Minook, regional managing director of California Real Estate Management Services, will lead full-service property management.

READ ALSO: Office Owners Face Financing Dilemma

The news was not surprising as word spread in recent weeks that Brookfield DTLA Fund Office Trust Investor Inc. had not made payments on the 4-acre property’s CMBS package—a $220 million senior loan and $35 million mezzanine loan. Last week, Morgan Stanley and Wells Fargo, the lenders on the CMBS package, filed a lawsuit in Los Angeles County Superior Court asking that the property go to a special servicer, according to The Real Deal.

Brookfield DTLA had also stated in early April it might not be able to make payments on the EY Plaza building along with the 54-story Wells Fargo Center North Tower. Brookfield DTLA has been dealing with distressed assets in its downtown Los Angeles office portfolio since early this year. In February, the fund defaulted on $755 million in loans for the Gas Company Tower and the 777 Tower. To date, Brookfield has defaulted on $1.1 billion in loans for the portfolio.

The 52-story Gas Company Tower at 555 W. 5th St. was sent to receivership last month. Gregg Williams of Trident Pacific Real Estate was also appointed as receiver for that asset and tapped the Colliers team to lease and manage it.

READ ALSO: Today’s Most-Desired Office Amenities

Built in 1985, Brookfield acquired the LEED-certified Platinum building in June 2002 for approximately $150 million, according to CommercialEdge data. In September 2020, Wilmington Trust originated a $275 million loan for the property that matured in October 2022, CommercialEdge reported. The building has first-floor retail and a fitness center along with a 904-space multi-level parking structure. As of last week, EY Plaza had 114,905 square feet in available space, according to CommercialEdge.

DC dilemma

Brookfield, the Canadian-based alternative asset management firm, also recently defaulted on a mortgage for Class B office properties in the Washington, D.C., area. The properties were located mainly in the Maryland suburbs and were transferred to a special servicer working with Brookfield to execute a pre-negotiation agreement, according to several news reports. Rising interest rates that have more than doubled in the last year were cited as contributing to increased monthly payments for an approximately $161.4 million mortgage held by Brookfield that had initially backed the purchase in 2018 of a dozen smaller office buildings. At the time of the default, Brookfield still owned nine of the assets and had sold three of the assets in the mortgage.

A Brookfield spokesperson told Commercial Property Executive in April the DC-area assets represented a very small percentage of the firm’s office portfolio. The spokesperson noted most of the company’s office properties are Class A trophy buildings that see strong demand globally and benefit from the flight-to-quality trend.

Office distress

In February, asset manager PIMCO’s Columbia Property Trust defaulted on $1.7 billion of debt tied to an office portfolio that included properties in New York City and San Francisco.

The situation, exacerbated by higher interest rates and lower vacancy rates due to more companies adopting hybrid work schedules or moving to newer, higher-quality buildings, could worsen in the second half of this year and 2024. In February, Trepp reported a total of $40.47 billion in office loans is scheduled to mature by late 2024, consisting of 353 loans backed by 583 office properties.

The office delinquency rate rose to 2.77 percent in April, up from 2.61 percent in March and was up almost 1 percent over a three-month period, according to the Trepp CMBS Delinquency Rate. By comparison, in April 2022, the office delinquency rate was 1.71 percent.

The Trepp Special Servicing Rate for all property types rose 7 basis points between March and April to 5.62 percent. The largest increase in delinquency rates occurred in the office sector, which had a rate of 5.39 percent, up from 4.77 percent in March. Trepp stated the office sector was responsible for 53.4 percent of the new special servicing transfers in April. A total of $2.75 billion worth of CMBS loans were transferred to special serving in April, with office and lodging making up $2.51 billion of the total.

The post Brookfield LA Office Tower Goes to Receivership appeared first on Commercial Property Executive.

FourFortyFour South Flower. Image courtesy of CommercialEdge

Oaktree Capital Management has secured a loan extension at FourFortyFour South Flower, a 48-story, 914,000-square-foot office tower in downtown Los Angeles. The property is subject to a $258.8 million loan from AIG Insurance Co., now set to mature in 2026, according to CommercialEdge information.

The loan extension provides the opportunity to finance the implementation of new leases, spec suites and amenities within the building, according to the ownership, also enabling funding for future projects. Oaktree will invest in enhancing FourFortyFour, transforming it into a more sustainable building.

READ ALSO: Office Owners Face Financing Dilemma

Oaktree assumed ownership of the building after a UCC foreclosure in January. To handle the leasing process, the firm tapped a JLL team comprising Managing Directors Hayley Blockley, Josh Wrobel and Peter Hajimihalis. Additionally, CBRE was retained to oversee property management.

Since the acquisition, the owner secured leases for a total of 90,000 square feet. According to CommercialEdge, Esquire Depositions Solutions, PeopleSpace, Syska Hennessy Group, Project Management Advisors and Chelsea Management are among the tenants at the property.

An LA skyscraper achieving new sustainable heights

FourFortyFour South Flower is one of the early multi-tenant commercial office buildings in downtown L.A. to achieve Carbon Neutral status, said Blockley in a prepared statement. The building holds several certifications, including WELL-Building for Health and Safety, LEED Gold, Global Biorisk Advisory Council star rating, Energy Star Certification, a BOMA Earth Award, as well as UL’s Tier 2 and Tier 3 Healthy Building Verification for Indoor Environment.

Designed by AC Martin, the office tower came online in 1981 and underwent cosmetic renovations in 2011, CommercialEdge shows. The property features an open-air atrium and multiple levels of terraces. Additionally, three of the tenants have created indoor/outdoor balconies by carving out windows on the corner of Fifth and Flower.

Boosting workers’ return: amenity-rich properties in focus

Blockley also added that, amid the ongoing evolution of the downtown Los Angeles office market, leasing interest predominantly stems from companies specifically seeking amenity-rich properties meant to encourage the return to office of their workforce.

FourFortyFour South Flower encompasses a handful of on-site amenities including a fitness facility, a restaurant and a Starbucks, as well as a hair and nail salon, in addition to a shared conference and events center.

READ ALSO: A Closer Look at Tech Layoffs’ Impact on Office Leasing

The vacancy rate in Los Angeles stood at 14.4 percent by the end of April, according to a recent CommercialEdge report. When it comes to sales volume, Los Angeles emerged as the leader of the Western region, with deals totaling $629 million at an average price of $251 per square foot year-to-date through April.

The post Oaktree Secures Loan Extension for Downtown LA Tower appeared first on Commercial Property Executive.

Image by RoschetzkyIstockPhoto/iStockphoto.com

Los Angeles’ office market still struggled to overcome its post-pandemic woes, in line with most major U.S. metros. Hybridization of work and the ongoing interest rate hikes have provided a combination of challenges for office providers to surpass.

The office construction pipeline is shrinking in Los Angeles, following national trends, while deal volume is also significantly down from a year ago. In the first quarter, several large leases proved that demand is still positive, albeit skewed toward the metro’s massive creative office segment.

Read on for key insights into Los Angeles’ office market performance during the first quarter, based on CommercialEdge data.

Supply favors creative office segment

As of March, Los Angeles had 2.6 million square feet of office space under construction. This represented 0.9 percent of total stock, only half of the 1.8 percent national rate. Development of new office space has slowed down post-pandemic, as traditional office users nationwide have slowed or halted expansion plans. No construction starts were recorded during the first quarter.

Compared to other gateway markets, Los Angeles’ office pipeline stood among the bottom half. San Francisco’s office space underway represented a 5.1 percent expansion of its current stock, followed by Miami (3.3 percent), Manhattan (2.0 percent) and Chicago (1.2 percent). Among all major metros tracked by CommercialEdge, Austin had by far the largest expansion of its stock underway, at 7.0 percent (6.2 million square feet).

Second Century. Rendering by Sora, courtesy of Gehry Partners

The largest properties underway in the first quarter were a pair of office buildings comprising the Second Century Project in Burbank—measuring 355,000 and 445,000 square feet. Worthe Real Estate developed the property for Warner Brothers. The project was completed this month and is set to house 4,500 employees.

Another significant project is underway in North Hollywood—NBCUniversal is constructing a new campus, set to include 315,000 square feet of office space. The development broke ground in 2021 and is expected to come online later this year.

During the first quarter, three office properties came online in the market, totaling 214,849 square feet. Year-over-year, completions were down significantly from 2022’s first quarter, when nearly 2 million square feet of space was brought online.

The largest property completed in the first quarter was The Wrapper Tower in Culver City, developed by Samitaur Constructs. Eric Owen Moss Architects designed the 180,000-square-foot, 17-story tower, which is also being marketed as offering creative office space.

Office vacancy still a concern

Office vacancy in Los Angeles stood at 14.7 percent as of March, up 10 basis points month-over-month, and 200 basis points below the national average. Year-over-year, vacancy increased by 110 basis points.

5750 Wilshire Blvd. Image courtesy of Cushman & Wakefield

Several large office leases were completed in the first quarter, highlighting the strength of Los Angeles’ creative office segment. In February, Sony Pictures Entertainment agreed to a long-term lease at Onni Group’s 5750 Wilshire Blvd. The company will occupy 225,239 square feet across multiple floors of the Class A office building.

Another large lease was Ares Management’s 206,000-square-foot agreement in Century City. The company signed a 12-year lease at 1800 and 1900 Avenue of the Stars, which is currently undergoing a $100 million renovation. Ares expects to move in after the upgrades are completed, in 2024.

Los Angeles’ full-service equivalent listing rate stood at $42.4 as of March, 10.9 percent higher than the national average, and up 0.8 percent year-over-year.

Office investments slow down

Nationwide office sales for the first quarter diminished from the previous year’s performance. At $6.5 billion, sales volume was only a third of the amount recorded in 2022’s first quarter. Los Angeles followed this pattern as well, with $343 million in office sales during the first three months—down 65.6 percent year-over-year.

The average price per square foot for these sales stood at $196 as of March, down 49.4 percent from 2022, and on the same level with the national average.

Union Bank Plaza. Image courtesy of KBS

Waterbridge Capital closed on the largest sale of the quarter, the $104 million transaction of Union Bank Plaza in downtown Los Angeles. The Class A building was the last asset in the portfolio of KBS Real Estate Investment Trust II. The new owner financed the purchase with a $75 million loan, provided by BH Properties.

Coworking solutions expand

As of March, Los Angeles’ coworking segment accounted for 2.2 percent of its total office inventory.

When compared to other metros, Los Angeles sits in the top half for how much shared space it has to offer. Manhattan is one of the largest from this perspective, with 2.8 percent of office space as coworking space (13.5 million square feet allocated).

Los Angeles is on track to retain its spot as one of the top metros for coworking companies. Last year, WeWork launched a global return-to-work initiative, teaming up with 11 cities and organizations, including Los Angeles. The program aims to incentivize local businesses to develop hybrid solutions, while the company will provide data and key insights into the needs of workers.

The post Los Angeles Ended Q1 on a Slow Note appeared first on Commercial Property Executive.

DYAD South Bay. Image courtesy of Colliers

Borstein Enterprisers has acquired DYAD South Bay, a 116,220-square-foot office campus in Torrance, Calif. Westport Capital Partners LLC sold the portfolio for $24.7 million.

Colliers brokered the transaction, representing both the seller and the buyer. At the time of the sale, the campus was 92 percent occupied.

The portfolio encompasses two buildings, comprising 59,700 and 56,500 square feet. Completed in 1983, the two-story buildings feature two conference rooms, outdoor space, elevators, controlled access and surface parking with a ratio of four spaces per 1,000 square feet.

Westport completely renovated the DYAD South Bay campus in 2020. The improvements included upgrades to the lobbies, corridors, bathrooms, amenity rooms, lighting, facades, landscaping, ADA and outdoor lounge space.

The office buildings are located in an Opportunity Zone, at 19700 and 19750 South Vermont Ave. The campus is close to the intersection of Interstate 405 and Interstate 110, which provide easy access across the Los Angeles metropolitan area. Martin Luther King Jr. Hospital, Del Almo Plaza and Los Angeles International Airport are within a 11-mile radius.

The Colliers team was led by Senior Executive Vice Presidents Steve Solomon, Ryan Plummer and Mark Schuessler, Vice Chairman Sean Fulp, and Creative Office Specialist Kristen Bowman. The brokerage firm has recently been appointed as the exclusive office leasing agent for the Gas Co. Tower in downtown Los Angeles.

The post Borstein Enterprises Buys $25M Office Campus in Los Angeles appeared first on Commercial Property Executive.

Second Century. Rendering by Sora, courtesy of Gehry Partners

Worthe Real Estate Group and Stockbridge Real Estate Fund have completed the construction of Second Century, an 800,000-square-foot project in Burbank, Calif. The development will serve as Warner Bros.’ new headquarters, in anticipation of the firm’s upcoming centennial celebration.

Second Century encompasses two nine-story, LEED-certified office buildings. Gehry Partners spearheaded the architectural efforts, with Krismar Construction taking charge of construction operations. When the project broke ground in 2019, the developers secured a $594.2 million construction loan, provided by The Blackstone Group, CommercialEdge data shows.

READ ALSO: Los Angeles, Among the Top 10 Markets for Office Deliveries in 2022

Nestled in the Burbank Media District, at 100-200 S. California St., the towers are situated on the southernmost section of The Burbank Studios Lot, neighboring the main lot of Warner Bros. The construction of Second Century generated jobs that totaled more than 2 million hours of work.

Entertainment industry boosts office leasing

According to JLL data, leasing activity in the Los Angeles area during the first quarter was characterized by larger leases, signed primarily by firms in the entertainment and financial services sectors. The city’s office pipeline had 3 million square feet of space under construction as of the first quarter, the same source reveals.

The availability of sublease space reached a historical high of 9.3 million square feet during the quarter, JLL also reported. Interestingly, despite widespread layoffs, the metro’s technology sector, which is more focused on content creation, has not experienced a significant impact.

Sony Pictures Entertainment has recently signed a long-term lease for 225,239 square feet at Wilshire Courtyard, a Class A office campus in Los Angeles.

The post Worthe, Stockbridge Wrap Up 800 KSF Warner Bros. HQ appeared first on Commercial Property Executive.

Image by Cedric Letsch via unsplash.com

The Los Angeles City Council has granted Apple the necessary approvals to proceed with zone changes for the construction of its upcoming Culver Crossings campus, Urbanize reported. The hub is set to rise on a 4.5-acre site located at the southeastern intersection of Venice and National boulevards.

Spanning both Culver City, Calif., and Los Angeles, the property will feature offices, production areas and other related facilities, occupying an estimated 536,000 square feet. Additionally, the project includes plans for underground parking that can accommodate more than 1,200 vehicles.

READ ALSO: Tech Layoffs and Their Impact on Office Leasing

Based on an environmental study cited by Urbanize, the construction of the campus will be carried out in two phases. The initial phase will involve commencing work on the Culver City section of the complex, projected to debut around late 2024.

The construction of the building in Los Angeles should follow in the second half of 2023, with completion targeted in either 2025 or 2026. Previous reports, Urbanize says, suggest that Apple intends to initiate construction on the project this year, aligning with the findings of the study.

Gensler is the designer of the development, which will feature four- and five-story buildings that will showcase terrace decks on the upper levels.

Culver City media hub

Apart from office space, Apple envisioned approximately 58,000 square feet of open areas both inside and surrounding the campus. This includes a central courtyard and a park-like alcove that faces south toward Washington Boulevard. Along Venice, the primary street frontage, there will be a promenade, while a more understated green space is planned for the western side facing National Boulevard.

READ ALSO: Getting Into the Heads of Tech Tenants

The upcoming campus will effectively expand Apple’s presence in the Los Angeles area, nearly doubling its existing footprint of more than 500,000 square feet in and around Culver City. The tech company currently leases a 128,000-square-foot building situated in a neighboring property at the intersection of Washington and National.

Apple joins a growing list of prominent companies that have established their presence near Culver City Station. Warner Bros. Discovery has signed a full-building, 240,000-square-foot lease within the Ivy Station complex. Additionally, Amazon also secured more than 600,000 square feet at the Culver Studios complex and the adjacent Culver Steps development.

The post Apple’s LA Campus Moves Forward appeared first on Commercial Property Executive.

5250 Lankershim Blvd. Image courtesy of CommercialEdge

DivcoWest has inked a 21,377-square-foot, full-floor lease at 5250 Lankershim Blvd., a nine-story Class A office building in North Hollywood, Calif. JLL’s Senior Vice President Anneke Greco and Managing Director Patrick Church negotiated on behalf of the landlord, while CBRE’s First Vice President Marty Barkan represented the tenant, Syracuse University.

The new space will house the university’s career-oriented programs for students at The College of Visual and Performing Arts and The S.I. Newhouse School of Public Communications. The tenant is set to move to the property’s fourth floor in the fall of 2023.

READ ALSO: Top 10 Commercial Real Estate Trends for 2023

Built in 2009 and part of the NoHo Arts District, the 179,346-square-foot property includes 20,000-square-foot floor plates, 1,000 square feet of retail space and 625 covered parking spots, according to CommercialEdge. The current ownership purchased the asset in 2021 for $92 million, the same data provider shows.

Situated on a 2.2-acre lot, the office building is close to multiple bus and subway stations. The property is located 10 miles from Los Angeles County Museum of Art, 12 miles from downtown Los Angeles and within 24 miles of Los Angeles International Airport.

During the fourth quarter of 2022, the Greater Los Angeles market recorded 3.5 million square feet in leasing activity, representing a 26.8 percent drop compared to the same period of 2021, according to CBRE. With ongoing tech sector layoffs and companies favoring a hybrid work environment, office vacancy, which reached 19.2 percent at the end of 2022, will likely continue to increase, the report predicts.

The post DivcoWest Lands Tenant at LA-Area Office Building appeared first on Commercial Property Executive.

The Row on Harbor. Image courtesy of JLL Capital Markets

DMI Real Estate Group has sold The Row on Harbor, a 23,314-square-foot retail strip center in La Habra, Calif. The buyer acquired the property in a 1031 all-cash exchange.

Completed in 1972 and completely renovated in 2020, the retail center features 15 stores and approximately 120 parking spaces. The shopping center comprises a mix of highly rated restaurants and retail services.

Tenants at the property include AkaFuji, Bodhi Leaf Coffee Traders, EggBred, Feu Noodle Bar, Harbor Mexican Café, Furai Chicken, Cuzco Peruvian Restaurant, AKT Fitness, Sisu, Beauteous Nails, Code Ninjas and Club Pilates. The Row on Harbor was 100 percent leased at the time of sale.

The retail center is located at 1450-1478 S. Harbor Blvd., on the border of La Habra and Fullerton, in an affluent Orange County area. The property is situated near the Imperial Highway and Harbor Boulevard intersection, in an area where the daily traffic count reaches approximately 38,000 vehicles. The Row on Harbor serves households with an average income of $140,000 within a 1-mile radius.

JLL Capital Markets brokered the transaction, with Senior Director Daniel Tyner and Managing Directors Geoff Tranchina and Gleb Lvovich working on behalf of the seller. Another JLL Capital Markets team led by Senior Managing Directors Jose Cruz and Kevin O’Hearn, Director J.B. Bruno and Associate Mark Belenky represented AFL-CIO Building Investment Trust in the $71 million sale of a 395,000-square-foot grocery-anchored retail center in Riverhead, N.Y.

The post Orange County Retail Center Trades in 1031 Exchange appeared first on Commercial Property Executive.

Mission Rock. Rendering courtesy of Tishman Speyer and San Francisco Giants

Visa has listed for sublease its entire 190,000-square-foot San Francisco headquarters at One Market Plaza.

The company is set to relocate and expand its presence within the city’s Mission Rock neighborhood in Mission Bay, a 1.4 million-square-foot megaproject slated to open its first phase in mid-2024. Tishman Speyer and San Francisco Giants are behind the development.

Visa’s sublease agreement at One Market Plaza is among the largest in the city. The property comprises two towers with a combined area of nearly 1.6 million square feet and an occupancy rate of 96.6 percent, generating $151.7 million in annual office rent and $2.8 million in annual retail and restaurant rent, according to the filings of Paramount, the building’s owner.

READ ALSO: A Closer Look at Tech Layoffs’ Impact on Office Leasing

Despite not being driven by the same factors that have contributed to San Francisco’s office vacancy reaching a record high of 29.4 percent in March 2023, as reported by CBRE, the listing will further increase the already substantial amount of vacant space in the city’s central business district.

Visa’s sublease sends ripples through San Francisco’s office market

The impact of office vacancies in the city is expected to go beyond the financial burden on owners. According to city officials, vacant office buildings could have a considerable effect on the local budget, leading to an anticipated loss of nearly $200 million in property taxes each year by 2028.

Visa’s sublease offering will increase the available space in the building, causing a 16.4 percent rise in the vacancy rate, according to the same source. Apart from Visa, technology company Autodesk, has also put up approximately 73,000 square feet of space for sublease due to flexible work arrangements.

Visa’s upcoming new headquarters, slated to open early next year, will cover an area of 300,000 square feet, providing space for 1,500 employees compared to the current location at One Market Plaza, which houses only 650 employees, as revealed by the San Francisco Chronicle.

The company is also reportedly shutting down its Palo Alto offices and making its entire 64,000-square-foot building, located at 385 Sherman Ave., available for sublease, as stated in prior reports by The Registry.

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The Vineyards at Porter Ranch. Image courtesy of Northmarq

Northmarq has secured a $35 million refinancing for The Vineyards at Porter Ranch, a 203,172-square-foot grocery-anchored retail center in Porter Ranch, Calif. The 10-year, permanent-fixed loan has a 3-year amortization schedule.

Ory Schwartz, Northmarq’s senior vice president and managing director of the Los Angeles office, arranged the financing through a life insurance company.

Located at 20039-20209 Rinaldi St., just off the Ronald Reagan Freeway, the open-air mall is anchored by a Whole Foods Market location and has a diverse mix of tenants, including shops, restaurants, movie theaters, luxury apartments and a hotel. Some of the retailers at the property are ULTA Beauty, Mayweather Boxing + Fitness, Spectrum, Rare Fine Jewels, YOGASIX, AMC and Extra Urgent Care.

The dining options at the shopping mall are Chipotle, Habit Burger, Finney’s Crafthouse & Kitchen, Gus’s BBQ, Lure Fish House, LA Popular, Jersey Mike’s and Silverlake Ramen.

Green initiative in LA suburb

Completed in 2019, the property has achieved LEED Gold certification. The Vineyards at Porter Ranch features 120 electrical vehicle charging stations, clean air vehicle parking stalls and 110 bicycle storage lockers and racks.

Among the property’s sustainable features are reflective roofing materials designed to reduce building heat absorption and a storm water-capture system that recycles water for irrigation purposes. According to the property’s website, 16 percent of the site’s expected electrical consumption is offset by photovoltaic solar systems, while 85 percent of construction waste was diverted from landfills for reuse and a full 100 percent of the interior finishes have low levels of volatile organic compounds to reduce indoor air contamination.

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The Gas Co. Tower. Image courtesy of CommercialEdge

Brookfield Properties has appointed Colliers as exclusive office leasing agent of the Gas Co. Tower in downtown Los Angeles. Court-appointed receiver Gregg Williams of Trident Pacific Real Estate Group retained the brokerage firm. Executive Vice President Ian Gilbert and Vice Chair Matthew Heyn will spearhead the leasing efforts.

Vice Chair & Head of Colliers’ Office Capital Markets team Sean Fulp is advising the client. California Real Estate Management Services Regional Managing Director Tina Minook will be overseeing property management at The Gas Co. Tower.

READ ALSO: Office Owners Face Financing Dilemma

Brookfield was unable to repay a loan package of $465 million associated with the property, as well as $319 million in loans linked to the adjacent 777 South Figueroa St., as reported by multiple sources back in February.

Located at 555 W. Fifth St., the 52-story office building is located within the city’ Bunker Hill neighborhood, offering connectivity to Pershing Square METRO Station and METRO Bike Share. The Class A property is next to the historic core and in close proximity to restaurants, hotels, shopping centers, entertainment venues and cultural destinations.

The roughly 1.4 million-square-foot, Class A property completed in 1991 was designed by Skidmore, Owings & Merrill. The Gas Co. Tower features various amenities an outdoor plaza with seating, a dining and coffee kiosk, EV charging stations and executive car wash and detailing services.

Tech slowdown impedes office sector recovery

The office building serves as headquarters for the Southern California Gas Co. Additional tenants at the property include Deloitte, WeWork and NuVision Federal Credit Union.

Office recovery was constrained in the first quarter of 2023 due to a combination of factors such as the banking system’s instability and a slowdown in the tech sector, despite inflation starting to level off, according to a recently released JLL report.

In Los Angeles, the vacancy rate rose from 23.2 percent to 24.1 percent on a quarter-over-quarter basis, as tenants returned additional space to the market because of ongoing economic uncertainty and challenges in returning to the office.

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