Put the County of Los Angeles on the list of bottom-feeders in the Downtown office market.
The county has struck a deal to pay $215 million for the Gas Company Tower at 5th Street and Grand Avenue, at the foot of Bunker Hill, the Los Angeles Times reports. The price works out to about $154 per square foot, down from a pre-pandemic assessed value of $630 million, or $527 per square foot.
JLL is marketing the building, at 555 East 5th Street, while vacancy rates hover around 30 percent in the Downtown office market. Brookfield Properties let the building fall into default with $465 million in loans outstanding; it’s currently managed by a court-appointed receiver.
The Times reported that county staff “quietly but aggressively negotiated the deal,” but offered no substantiating details.
The sale falls in line with other deals, such as the 52-story office building at 777 South Figueroa Street — on par with the Gas Company Tower as a Class A Downtown property — which recently sold for $120 million, which came to $120 per square foot.
Terms of the deal for the Gas Company Tower might also suggest that the county is bottom-feeding to meet its own needs for office space, or serving as a de facto stalking horse for the marketing of the property, or stepping up as a buyer of last resort.
The county told the Times that it has submitted a “letter of interest” in the deal. But speculation about its motives could get an airing before the Board of Supervisors votes on a final approval of the deal. Each of the five members of the body represents a geographic district of the county of 10 million people.
If the county plans to occupy the building, it could move workers from existing, 1960s-era buildings in the Civic Center district of Downtown to the Gas Company Tower. County Supervisor Janice Hahn — daughter of Kenneth Hahn, for whom the county’s main administrative building is named — said she is opposed to moving significant numbers of employees away from the Civic Center, which is several blocks northeast of the Gas Company Tower.