Rising Realty Partners buys the Garland Center for $210M
The iceberg-like Garland Center in City West experienced brief notoriety in 2006, when power outages at its subterranean data center knocked MySpace offline. Now, the behemoth complex has been purchased by one of Downtown L.A.’s most prominent landlords, The Real Deal has learned.
A partnership led by Nelson Rising’s eponymous firm bought the 733,000-square-foot building at 1200 West 7th Street in a complicated deal involving two ground leases and a building sale.
Rising Realty Partners declined to comment on the sale price, but sources with knowledge of the deal pinned it at $210 million, or $286 a square foot.
Rising purchased the property with partners H.I.G. Realty Partners and Silverpeak Real Estate Partners. It consists of a nine-story office building and a three-story subterranean data center with a detached 1,498 space parking structure.
The partnership purchased both the structures and the two ground leases they sit on in one complex transaction, said Christopher Rising, president of Rising Realty. The sellers were a Wells Fargo entity and other investors.
Eastdil Secured represented the sellers, while Rising and its partners represented themselves. JLL leases the space.
Rising said that the real estate firm’s wireless internet subsidiary, called 5×5 Telecom, will be used at the property.
“It’s right in the strikezone of what we do well, which is a complicated deal that took a lot of patience and has (elements) other firms don’t have the ability to work with, like data,” Rising said. “Since we own a telecom company, data is a natural fit. We have excelled when deals are complicated and this is a perfect example.”
The center was attractive to the firm and its partners because of its large office floor plates and abundant parking, Rising said.
The partnership plans on leasing up the vacant space in the data center, which is only about 40 percent leased. The office portion of the property is fully leased by tenants that include the Los Angeles Housing Department and the Department of Parks and Recreation.
“There’s four floors of data center space that were (previously) hard to lease up because the ground lease was dwindling in years, and (tenants couldn’t) sign a long-term lease,” Rising said. “Now, we can do 10, 15, or 20-year leases.”
The partners plan on adding retail to underutilized space at the site along 7th Street, which sits two blocks from the train station in an area that lacks plentiful shopping options.
Originally constructed in 1983 as an operations center for First Interstate Bank, the Garland Center sits just west of the 110 Freeway in City West.
“We are big believers in the Greater Downtown Los Angeles market, including City West, where this property is located,” Nelson Rising, chairman and chief executive officer of Rising, said in a statement. “This market has seen significant new housing, office, and retail development over the past few years.”
Rising has a diversified portfolio, from older long-term-hold buildings to new developments. The firm completed a full-on $25 million creative office revamp of the historic PacMutual Campus in DTLA, complete with pop music playing in the elevators. It leased the property to 90 percent and then sold last year for $200 million.