The latest office building sale in downtown Los Angeles is a bright spot in one of the country’s hardest-hit commercial real estate markets in the post-pandemic years.
L.A. Metro bought the 106,004-square-foot office building at 500 South Santa Fe Avenue in the Arts District for $45 million, CoStar reported. The county’s transit agency acquired the property in an off-market deal from development firm SteelWave. At about $450 per square foot, the sale dwarfs the downtown office average of $240 per square foot and the $342 per square foot average in Greater Los Angeles.
Cushman & Wakefield’s Michael Condon Jr., Pete Collins, Steve Marcussen, Brittany Winn, Erica Finke and Reif Gratsch represented SteelWave in the deal. L.A. Metro was represented by Cresa’s Lawson Martin and Clayton Hovivian.
San Francisco-based SteelWave purchased the property in 2021 as part of a two-building, 157,247-square-foot portfolio called The Switchyard from CEG Construction for $80 million. Both buildings were vacant at the time of the sale. The post-pandemic dip in tech tenants seeking space kept SteelWave from finding tenants, leading it to sell off the buildings in separate deals. SteelWave offloaded the neighboring 51,243-square-foot building at 540 South Santa Fe Avenue to DTLA Law Group in August for $20 million, or $396 per square foot.
L.A. Metro, a division of the County of Los Angeles, already owns a three-story, 86,000-square-foot building down the street at 590 South Santa Fe Avenue that it developed in 2019. That property has offices, a warehouse for spare parts, 11 maintenance bays for Metro vehicles, a tire shop, a machine shop and a vehicle-washing station. The County of Los Angeles owns 146 properties totaling 12 million square feet across the region.
The sale is the newest sign of continued recovery of office sales in Los Angeles overall. Transaction volume in the third quarter was up 56 percent over the same period last year, according to CoStar data. With such a significant improvement from a year ago, the market “might have finally bottomed out” and appears to be “back on the upswing,” said Catherine Yeh, CoStar’s director of market analytics for Los Angeles.— Chris Malone Méndez