Adidas AG has signed the largest office lease in a year in Downtown Los Angeles, providing a boost for a Brookfield redevelopment project in the Fashion District.
The German shoe and sportswear giant has leased 107,000 square feet at the California Market Center, a 13-story wholesale hub at 110 E 9th St., according to the Wall Street Journal.
The Fashion District deal marked a major Los Angeles expansion in marketing, sales and design by the world’s second largest sportswear company. It also heralded the biggest downtown office lease in more than a year.
Adidas will expand and relocate its offices in L.A. to the top floors of two of the interconnected, three-wing California Market Center complex.
The company was drawn to the California Market Center because it was close to new hotels, apartments, bars, restaurants and cultural attractions, said John Barganski, a Brookfield senior vice president.
The 57-year-old center is also within walking distance to the Crypto.com Arena once known as the Staples Center and home to the Los Angeles Kings, Lakers, Clippers and Sparks sports teams.
“In our marketing material we identified the number of steps it was from our place to Staples,” Barganski said.
Brookfield, based in Toronto, Canada, bought a controlling interest in the 2.5 million-square-foot fashion complex in 2017 in a deal valued at $440 million. It then sank $250 million to relocate the fashion firms into one of three buildings and design the rest of the space for other office tenants.
The Adidas deal, in any case, suggests Downtown Los Angeles may be starting to draw major office tenants despite the coronavirus pandemic.
Downtown, like most U.S. markets, has been hit hard by the contagion with office vacancies among the highest in the nation. Vacancies were 19.6 percent in the third quarter of 2021, compared to 15.7 percent a year earlier, according to the Downtown Center Business Improvement District.
By mid-year, L.A. office leasing had shot up slightly to 3 million square feet, with a handful of high-profile deals including three at Boston Properties-owned offices.
At the same time, L.A. as a whole had an office vacancy rate of 19.2 percent, among the highest in the nation, compared to 13 percent at the close of 2019.
[WSJ] — Dana Bartholomew