GGP ditches its own office building for creative space at One Bunker Hill

REIT inks 9,500-sf at Art Deco building Rising Realty Partners is restoring

Dec.December 16, 2016 02:00 PM
General Growth Properties CEO Sandeep Mathrani and the CalEdison at 601 West 5th Street

One Bunker Hill, which was recently rebranded as “the CalEdison” in the midst of creative restoration, has an unlikely new tenant: General Growth Properties, the retail REIT based in Chicago, headed by Sandeep Mathrani.

GGP inked a 10-year lease for 9,500 square feet on the seventh floor of the iconic Art Deco building at 601 West Fifth Street in Downtown Los Angeles, The Real Deal has learned. The lease rate is not known. If calculated using the average rent at similar buildings in the submarket, it would be valued at north of $4 million.

Aram Pogosian of Engine Real Estate represented GGP while Carle Pierose of Industry Partners was the listing agent for the landlord, Rising Realty Partners.

Rising acquired the 13-story building for $92 million in October 2015, according to CoStar, alongside Lionstone Investments and Hermes Investment Management of London.

GGP owns the Galleria Office Tower at 100 West Broadway, where its West Coast headquarters occupies about 8,000 square feet, Pogosian told TRD. It has decided to move out of the space, favoring the under-construction creative office space in the CalEdison, because it wants a more creative environment that “speaks to the culture” of its retail clients like Apple, Pogosian said.

GGP’s other L.A. County property is the Galleria and the Northridge Fashion Center at 9301 Tampa Avenue. Mathrani is the highest paid REIT executive in 2015, according to the Wall Street Journal.

Its relocation to CalEdison points to the emergence of creative offices for traditional firms. Rather than being solely for “creative” tenants, it is now becoming the standard direction of commercial space in L.A.

“I haven’t heard of a new office being labeled as just an office these days,” Pogotian said. “Everything is ‘creative.’ You’re seeing industries that aren’t traditionally in these types of spaces move into the market.”

Hackman Capital Partners, Majestic Asset Management, and Lincoln Property Company are among the multitude of developers now pursuing creative office developments. Within the past two months, Hackman has purchased three Westside properties — including a parcel at 9300 Culver Boulevard, a nearby warehouse for $25 million, and an El Segundo industrial complex for $81.5 million — all slated for creative offices.

Amenities at the rehabbed CalEdison will include outdoor patios, WiFi throughout the property, and a lobby work area. GGP will move into its new space in February or March, Pogosian said.

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