The Real Deal Los Angeles

Los Angeles is the second most active office sales market in the US: report

LA's 42 office transactions in the first half of 2016 were worth nearly $5.3 billion combined

July 27, 2016 12:00PM
By Cathaleen Chen and Eda Kouch

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The Garland Center at

The Garland Center at1200 West 7th Street and 5900 Wilshire Boulevard (credit: CoStar)

The Los Angeles’ office market saw a remarkable number of deals in the first half of 2016, second only to New York City in both quantity and total sales amount.

Between January and June, there were 42 transactions for commercial properties of at least $25 million, according to a REAlert report. These deals were worth nearly $5.3 billion combined, and reflected a 200 percent year-over-year increase.

In the same period of last year, there were only 31 transactions worth at least $25 million and totaled only $2.4 billion. Below, The Real Deal reviews some of the biggest deals this year.

By far, the biggest deal in 2016 so far was Douglas Emmett Inc.’s acquisition of a 1.7 million-square-foot office portfolio for $1.3 billion in a joint venture with Qatar’s sovereign wealth fund, Qatar Investment Authority, which closed in March. The portfolio contains four properties at 10960, 10940 and 10880 Wilshire Boulevard, and 1100 Glendon Avenue.

The Real Deal broke the news of the second place acquisition, snatched up by Boston Properties. The East Coast firm acquired its first L.A. property: a 50 percent stake in the six-building Colorado Center office portfolio. It cost the New York landlord a whopping $500 million, or about $900 a square foot. The seller of the 1.1 million-square-foot campus was also Blackstone, which will retain a stake in the other half. Although the overall complex is 75 percent occupied, one building was fully vacant at the time of the sale.

Next on the list is CBRE Global Investors’ sale of its Downtown headquarters for $330 million in March. The buyer was a partnership between the Pittsburgh-based PNC Financial Services Group and the German real estate fund manager GLL Real Estate, as TRD first reported. Located at 400 South Hope Street, the property is 701,535-square-foot Class A office building with 26 stories. Talk about a big return: CBREI previously purchased it for $238 million from Tishman Speyer just four years ago, according to CoStar.

Blackstone made a third major appearance on the scene this year with its sale of the Wells Fargo Center for $311 million to Hudson Pacific Properties, which TRD first reported. The buyer, based in West L.A., acquired the 500,475-square-foot Class A tower for $621 a square foot — nearly twice the rate of what Blackstone paid for the structure in 2006.

More recently, TRD broke the news that Nelson Rising’s Rising Realty Partners bought the Garland Center in City West for $210 million from a Wells Fargo entity and other investors that composed the selling party. The 733,000-square-foot property at 1200 West 7th Street includes not only a nine-story office portion but also a a three-story subterranean data center. Rising made the acquisition in a joint venture with H.I.G. Realty Partners and Silverpeak Real Estate Partners.

Last but certainly not least, Lincoln Property Company’s second-time purchase of 915 Wilshire Boulevard concludes this list at $130 million — more than $80 million pricier than what the firm paid for it in 2003, as TRD first reported. Since then, the Dallas-based firm renovated the property and sold it to New York’s Brickman Associates for $117 million in 2007. Though Lincoln has reclaimed ownership, the company has been the manager of the nearly 400,000-square-foot property for the past 10 years.