Updated, October 14th, 2016, 3 p.m.: How much will a buyer pay for a historic Downtown office building with architectural majesty, but no parking? The Sorgente Group of America is gunning to find out.
It put the intricately-detailed Fine Arts Building, constructed in 1926 and renovated this year, on the market in September, following months of off-market murmurs.
Sources with knowledge of the offering said the U.S. subsidiary of the Rome-based Sorgente Group is expecting to get roughly $45 million, or $388 a square foot, for the 115,900-square foot building at 811 West 7th Street. That price, sources said, is a ballpark figure, as the property does not have an official listing price. The landmark sits between Flower and Figueroa streets at one of Downtown’s busiest intersections, a block away from the 7th Street Metro station.
Kevin Shannon and his team at Newmark Grubb Knight Frank have the listing, but declined to comment. Sorgente Group could not be reached.
The building is 88 percent occupied. Co-working company WeWork occupies 45,000 square feet of space with a 15-year lease that expires in 2029. It pays a starting rate of $34 a square foot, or roughly $1.5 million a year, according to CoStar.
Other tenants in the building include SWA Group, LTK Consulting and Pfeiffer Partners Architects. Asking rent for the 13,900 square feet of vacant space is $43.50 a square foot a year.
Sorgente bought the building in 2010 for $28.5 million, or $246 a square foot, and spent $10 million on capital improvements to restore it. The property was designed by architects Albert Raymond Walker and Percy Augustus Eisen, who were also responsible for the James Oviatt Building, the Title Insurance Building and the Beverly Wilshire hotel.
Burt W. Johnson sculpture in the Fine Arts Building (R. Brodin, Getty Images)
What it lacks in parking — tenants who aren’t public transit-oriented park in nearby lots — it makes up for in dramatic architecture. The building has sculptures of naked figures that lounge on its third floor exterior, a Romanesque entrance with heavy bronze doors and a cathedral-esque lobby with bronze statues of children playing in an actual fountain.
The building is unique — in its architecture, in its lack of parking and in its occupancy by WeWork, a company that is valued at more than $16 billion but is not seen by lenders as a “credit tenant.” Accordingly, its ballpark asking price of $388 a square foot does not compare to recent comps in Greater Downtown, where the average sale price is $300 a square foot, according to CoStar.
The unofficial ask is much lower, for example, than the record-breaking $540 a square foot a family investment group paid for the similarly sized Chase Plaza building in Bunker Hill this month. It is also cheaper than the $430 a square foot Ivanhoe Cambridge and Callahan Capital Properties paid Rising Realty after it renovated the historic PacMutual Building. It is pricier, however, than many small, older building trades in the Fashion District, where Onni recently paid just shy of $230 a square foot for the Western Pacific Building, which was constructed in 1928.
Headed by Veronica Mainetti, Sorgente Group of America’s bread and butter is historic properties. It owns the Art Deco-style Clock Tower building in Santa Monica and Flatiron building in New York.
When The Real Deal interviewed Mainetti earlier this year, she had no plans to sell its Los Angeles properties.
“We’re marathon runners when it comes to office buildings,” she said. “We want to be in it for the long haul.”
Correction: A previous version of this story stated WeWork’s lease was for 38,000 square feet. It is for 45,000 square feet. The vacant space available in the building is 13,900, not 21,000. The story has also been updated to clarify that the price The Real Deal’s sources provided was not an official asking price.