Sidley Austin to Vacate Brookfield’s Gas Company Tower

Sidley Austin is vacating the Gas Company Tower — the 45-story building once owned by Brookfield and now in receivership — and shrinking its Downtown Los Angeles office footprint, The Real Deal has learned.

The Chicago-based law firm will relocate to 57,000 square feet at CIM Group’s Two California Plaza at 350 South Grand Avenue, according to a Savills report and documents filed with L.A. County. That represents a 58 percent shrinkage compared to its current footprint.

CIM did not respond to a request for comment, while Sidley Austin declined to comment.

Sidley Austin currently occupies about 136,000 square feet in the Gas Company Tower at 555 West 5th Street, according to filings from a Brookfield entity with the Securities & Exchange Commission. Its lease expires next year, an annual report from the entity that controls Brookfield’s Downtown L.A. holdings shows.

The firm took up 2.2 percent of Brookfield’s entire Downtown L.A. office portfolio and paid about $3.9 million in annual rent.

In February, Brookfield defaulted on a $350 million loan tied to the tower. Two months later, the building was placed under the control of a court-appointed receiver, tasked with leasing the property and with the power to sell it.

Vacancy across office space in Downtown L.A. has ballooned to about 30 percent since the start of the pandemic, given the persistence of remote work. And some experts predict that Downtown L.A.’s office properties will lose up to 55 percent of their value.

In a receivership, no debt payments have to be made, meaning any funds previously allocated to that can be spent on the building. However, brokers have warned that some tenants may not be comfortable signing a lease with a receiver.

“How comfortable are tenants making a long-term commitment with landlord instability?” JLL’s Jaclyn Ward said this month. “Given the landlord now will surely not be the landlord at the end of their lease. We don’t know.”

However, the Gas Company Tower may get a 300,000-square-foot boost in the near future. A source familiar with the property said L.A. County is in talks to lease about 13 floors at the building, adding that the deal isn’t finalized.