Pasadena Office Tower Value Plummets

There was lots of distress throughout Los Angeles this week.

Let’s start with the Pasadena Office Tower. The nine-story tower at 150 South Los Robles Avenue was reappraised at $23 million, a 59 percent decrease from its appraisal a decade ago. Not only that, the new appraisal is worth much less than the $40 million commercial mortgage-backed securities loan tied to the property. The loan went to special servicing a couple months ago at the borrower’s request, which suggests the borrower is looking to refinance.

Entities connected to Albert Taban and Michael Pashaie purchased the office property in 2002 for $22 million. The owners indicated they were unable to pay off the loan before its maturity in June because of the tenant flight to higher quality space, part of a trend throughout Los Angeles.

The Pasadena Office Tower occupancy plummeted to 69 percent in 2024 from 93 percent in 2015, and things could get worse. The five largest leases, totaling 39 percent of the space, are set to expire by the end of 2027. That includes one for the City of Pasadena.

Downtown tower in foreclosure

One California Plaza is in foreclosure after the Rising Realty Partners-owned Downtown Los Angeles office tower landed in special servicing for imminent monetary default.

The property’s appraised value was slashed 74 percent to around $121 million from $459 million in just eight years due to fleeing tenants. The current value is $179 million less than the $300 million CMBS loans tied to the office tower.

Christopher Rising’s Rising Realty purchased the 42-story office tower at 300 South Grand Avenue in Bunker Hill for $465 million in 2017, The Real Deal previously reported.

Occupancy at the 1.1-million-square-foot One California Plaza is about 63 percent down from 88 percent in 2017. The property saw net operating income fall to $9 million in 2024 from $17 million the year before. The debt service ratio is suspected to be below one, which means the property is not pulling in enough income to cover debts.

Jamison defaults then looks for buyer

After defaulting on a $35 million CMBS loan for one of its Downtown Los Angeles office buildings, Jamison Properties is looking for a buyer.

The company purchased the 21-story office property at 811 Wilshire Boulevard in 2003 for $26.5 million. But occupancy at the 337,000-square-foot building built in 1960 plunged to 35 percent at the end of last year and more leases are set to expire soon.

Office vacancies across Downtown are making it difficult for companies like Jamison to pay off debts. The Downtown vacancy rate rose to about 33.6 percent in the first quarter compared to about 28.8 percent a year ago, CBRE data shows. Jamison still has a debt of more than $200 million that backs seven other properties spanning more than 2.4 million square feet

Introducing the new downtown

Speaking of Downtown, Century City is giving it a run for its money when it comes to offices.

Century City offices have the lowest vacancy rate in all of West Los Angeles and command the highest rent, at 12.8 percent and $6.93 per square foot, according to CBRE. Downtown offices, on the other hand, have a 33.6 percent vacancy rate and ask $3.69 per square foot.

Armanino, Savills and Paul Weiss discussed their decisions to open offices in Century City with The Real Deal in a July magazine feature on the “new downtowns.” Each company noted that Century City has become a business hub with offices that are filled with desirable amenities and have the draw of being near retail. “There’s a vibe when you’re walking around that Downtown doesn’t really have right now,” Savills Los Angeles President Josh Gorin said about Century City; the company was in the process of moving from Downtown to Century City during an interview with TRD.

The perception of safety matters, too.

Downtown Los Angeles’ homeless population has swelled and that can be a problem for businesses who want their workers back. “Business people were tired of leaving their beautiful high-rise building, walking outside and being inundated with homelessness,” Gary Weiss, principal at LA Realty Partner, said.

Trump cancels offices

Los Angeles County leads the nation in federal office spaces lost to canceled leases, part of the Trump administration’s cost cutting agenda once helmed by billionaire Elon Musk (back when he and the president were friends).

More than 70,000 square feet in L.A. County leased by the General Services Administration, which manages workspaces for government agencies, has been canceled this year alone. Outside of Washington, D.C., California has the most cancellations of any state, and Los Angeles accounts for 21 percent of the more than 335,000 square feet canceled.

Offices that were home to the Federal Highway Administration, U.S. Food and Drug Administration and Natural Resources Conservation Service in areas such as Wilmington, Rowland Heights, Monterey Park, Brentwood, Downtown L.A. and Mid-City are in limbo. And this isn’t only happening only in Los Angeles County either. Orange County lost 26,000 square feet of office space.

MF1’s Fitz on Fairfax problem

Fitz on Fairfax could be another miss for MF1.

MF1 doled out floating-rate loans to multifamily syndicators before interest rates rose. An analysis by The Real Deal found that across MF1’s roughly $11 billion amortizing loan book, almost half of the deals were either watchlisted or delinquent, once rates increased a couple years ago.

Well, a $38 million loan backing the Fitz on Fairfax in West Hollywood came due Wednesday, and because the borrower holds an adjustable rate mortgage, once interest rates rose, so did payments.

The borrower is tied to Palisades Capital Partners and was discussing options for upcoming maturity with lender MF1 last month. The borrower made interest-only payments but was late twice in June and April.

The 67,000-square-foot property at 1250 Fairfax Avenue comprises 53 apartments. The property was appraised at $53 million three years ago when the loan on the apartment building owned by an affiliate of Palisades Capital Partners was refinanced to reach stabilized occupancy levels.

Occupancy dipped to 85 percent at the end of March and net operating income dropped to $921,000 in 2024 from $1.5 million in 2023. The Fitz appears to be offering concessions, and the property is not bringing in enough income to pay off its debts.