Downtown Los Angeles has taken the biggest hit to US office markets since the pandemic as remote work becomes more popular
photo AP
The Aon Center, the third-tallest tower in Los Angeles, sold for $147.8 million – about 45% less than its last purchase price in 2014 – as office values continue to slide due to high availability and high financing costs .
The sale is the biggest office sale deal this year in downtown Los Angeles, which has taken the biggest hit to the US office market since the pandemic, as telecommuting becomes more popular and escalating interest rates drive values down. , leveraging the owners' equity.
“With a new low base and a well-capitalized owner, Aon Center will be competitively positioned to attract and retain tenants who desire a well-formed skyline tower in the heart of downtown Los Angeles,” said Sean Fulp, the Colliers broker representing the buyers.
The buyers are a group consisting of Carolwood LP, a Los Angeles-based investment firm, Daniel Abrams and Adam Tischer, who also brokered with Fulp on the sale. The seller, San Francisco-based Shorenstein, was represented by Kevin Shannon of Newmark Group Inc.
Nearly 30 percent of downtown Los Angeles office space was available for lease or sublease in the third quarter, brokerage Savills said. Many renters and investors resent the neighborhood's difficult commute and high homeless population. Rents in the city center were 40% lower than in more desirable areas such as Century City, where the vacancy rate was 16%, according to Savills.
Office prices across in the country have fallen 35% since their peak in the first quarter of 2022, when the Federal Reserve began raising interest rates to fight inflation, according to real estate analyst Green Street.
The 62-story Aon Center, at 707 Wilshire Blvd., was built in 1973 and purchased in 2014 by Shorenstein for about $268.5 million, according to real estate records.
The sale price is about $134 per square foot. The most recent major downtown Los Angeles office property to be sold was the Union Bank building. That deal closed in March for $104 million, or about $150 per square foot.
With information from Bloomberg
