Discount deals dominate LA’s top office sales in 2023

During a year when many institutional investors pulled back from the office market, two familiar names were involved in this year’s priciest office sale in Los Angeles. 

JPMorgan took the cake this year, buying the Pen Factory in Santa Monica from the California State Teachers Retirement System for $178 million. 

The deal, however, was a far cry from the top office sale of 2022 — Blackstone Real Estate Income Trust’s purchase of a stake in One Culver for $510 million. 

Four properties each traded for more than $100 million this year, according to TRD data, compiled from brokerages Newmark and CBRE, compared to last year’s six. 

Many offices this year have traded at deep discounts to previous sale prices, though some investors have managed to cash out at a profit. High interest rates, tenant hesitance to sign new leases and the city’s new Measure ULA transfer tax hindered deals in 2023 compared to previous years.

Here are the top 10 office sales across Los Angeles County for the year.

Pen Factory in Santa Monica | JPMorgan | $178 million

JPMorgan purchased the Pen Factory at 2701 Olympic Boulevard in August for $811 per square foot, the priciest deal on a square-foot-basis for a solely office property. Eastdil Secured represented the seller. 

JPMorgan was also one of the rare players to score an office loan in 2023. The firm obtained a debt package from investment manager PCCP in connection with its buy. 

CalSTRS sold the 220,000-square-foot property, which is fully leased to video game publisher Activision Blizzard and health care company GoodRx. Both companies are headquartered in the building. 

Since the deal closed after the City of Santa Monica’s own new transfer taxes went into effect, the pension fund was subject to $9.3 million in city taxes, plus $182,000 in county transfer taxes. 

The Mix at Harman in Northridge | Pendulum Property Partners | $171 million

Pendulum Property Partners, an investment firm based in Orange County, bought the 761,000-square-foot The Mix at Harman campus at 8500 Balboa Boulevard for about $224 per square foot.

The sellers, Shubin Nadal Realty Investors and DRA Advisors traded the office campus in Northridge for $171 million — a roughly 30 percent discount from its 2022 listing price of $250 million, but up from the $130 million the duo spent on the property in 2014. Newmark brokered the deal on behalf of the sellers.

The sale closed before Measure ULA, the city’s new transfer taxes that add 5.5 percent on sales over $10 million, went into effect on April 1, meaning the sellers saved about $9.4 million. 

Facebook’s parent company Meta leased about 80,000 square feet at the office campus in 2017. The office campus is named after Samsung’s Harman International, the parent company of speaker manufacturers JBL and Harman Kardon, which is also a tenant at the property.

AON Center in DTLA | Carolwood Partners | $146 million

Carolwood Partners, run by Adam Rubin and Andrew Shanfeld, bought the 1.1 million-square-foot AON Center in Downtown Los Angeles for $146 million, a roughly 45 percent discount from what the tower last traded for. The deal came out to $132 per square foot.

Shorenstein Properties, the seller, bought the tower for $268.5 million in 2014 and was forced to sell to resolve debt on the property, according to sources familiar with the matter. 

The deal, which has been in negotiations since May, closed in December. Rubin’s other firm, L&R Group of Companies had originally bid about $160 million on the tower, located at 707 Wilshire Boulevard. 

Union Bank Plaza in DTLA | Joel Schreiber | $110 million

In one of the most high-profile office sales this year, Joel Schreiber closed on his purchase of Union Bank Plaza in Downtown Los Angeles the day before the city of L.A.’s transfer taxes came into effect.

Schreiber’s Waterbridge Capital paid $110 million, or about $158 per square foot, for the 701,000-square-foot property, after successfully negotiating the purchase price down over the course of nine months. Newmark brokered the deal on behalf of the seller, a KBS REIT, while Cushman & Wakefield worked on behalf of Waterbridge. 

KBS had marketed the tower at 445 South Figueroa Street for sale since 2017, once eyeing $250 million for the property. 

Waterbridge bought the property using financing from Steve Gozini’s BH Properties, a real estate investment firm based in West L.A., and Don Hankey’s Hankey Capital. 

7th Street Studios in the Arts District | Nuveen Asset Management | $85 million

Nuveen bought 7th Street Studios, a film production studio in the Arts District, for $85 million in March, signaling a continued investor interest in studio properties. The deal came out to roughly $900 a foot, higher than JPMorgan’s purchase of the Pen Factory on a square-foot basis. Newmark represented the seller.

Related Fund Management and studio operator DGMT sold the property — and made a hefty return doing so. 

The duo purchased it for $35 million — $368 a square foot — in October 2020, from Davalan Sales, a produce wholesaler. The firms then redeveloped the building into studios. 

1601 Vine Street in Hollywood | Oscar Properties | $72.5 million

In June, J.H. Snyder sold a 51 percent stake in the 115,000-square-foot office building at 1601 Vine Street, in a deal valuing the building at $72.5 million. Oscar Properties bought the stake in a roughly $630-a-foot deal. Newmark brokered it on behalf of both parties.

The deal came around the same time Kim Kardashian’s clothing and lingerie line Skims leased the entire office portion of the building, which was previously occupied by WeWork. The lease also helped Snyder avoid defaulting on a loan tied to the property. 

400 and 450 Brand Boulevard in Glendale | Ben Li | $60 million

Kennedy Wilson sold the 441,000-square-foot office complex in Glendale for a nearly 60 percent haircut, serving as a benchmark for how far office values have fallen in the last few years. The deal marked one of the largest discounts across Los Angeles County. 

Newmark brokered the deal on behalf of Kennedy Wilson. The price works out to about $136 per square foot.

The publicly traded REIT bought the 441,000-square-foot complex for $144 million in 2017 — about $327 a foot, records show. 

A limited liability company managed by Ben Li, an accountant based in El Monte, bought the property. No loan was recorded in connection with the purchase, making it likely the buyer paid cash.

18470 Avenue Stanford in Valencia | Vallarta Supermarkets | $49 million

Marking the largest owner-occupier transaction, Vallarta Supermarkets bought a three-building office campus in Santa Clarita for $48.9 million in January. The deal came out to $250 per square foot. Equity Union Real Estate brokered the deal on behalf of the supermarket chain, while CBRE represented the seller. 

True North Management sold the 195,000-square-foot property. 

• 1020 Chandler Boulevard in North Hollywood | SAG-AFTRA | $47 million

Months before SAG-AFTRA went on strike, the union purchased a 249,000-square-foot office building in North Hollywood for $47.1 million, or roughly $189 a foot. 

Jamison Properties sold the office building, just before the City of Los Angeles’ transfer taxes came into effect, for about double the $24 million it paid for the building in 2016. 

801 South Grand Avenue in DTLA | Elat Properties | $46 million

Elat Properties’ purchase of 801 South Grand Avenue in Downtown L.A. was another deal to close days before Measure ULA came into effect in April. 

CIM Group sold the building for $46 million, or roughly $98 per square foot, one of the lowest office deals on a price-per-square-foot basis in 2023. CIM had bought the property for $52.5 million, records show.