Owner-users behind several major recent transactions
Marcelo J. Canel, I sell Properties in Los Angeles
Coldwell Banker Commercial Multi-Family Real Estate-Investment sales. & Leasing DRE Lic. 01131904 NMLS 882636
November 21, 2024 | 11:53 AM
Los Angeles office sales activity has already doubled since the first half of 2024. That activity remains down from levels seen before early 2020, but the uptick could portend improved sales activity and dollar volume in 2025.
As of Nov. 18, around $2.5 billion in office properties have sold since July 1, nearly twice the $1.3 billion seen in the first two quarters of 2024.
Owners and users were behind some of those largest recent sales. With the current environment giving buyers more leverage, owner-user purchasers see opportunities to buy quality properties at attractive pricing. During the past 12 months, this buyer quarter has accounted for around half of the sector's activity.
领英推荐
One major Los Angeles owner-user sale closed in September, when Fashion Nova, a fast-fashion retailer, acquired 407 N. Maple Drive, an almost 175,000-square foot property, from Tishman Speyer for about $118.3 million, or $675 per square foot. Fashion Nova will use the building for its global headquarters, relocating from its current headquarters in Vernon, California.
The largest sale so far this quarter involved San Francisco-based Drawbridge Realty acquiring the Arboretum Gateway office building at 2220 Colorado Ave. for $185 million, or around $820 per square foot. The 225,773-square-foot building was 100% leased to Universal Music Group, an investment-grade tenant, through 2036, a key reason for the elevated pricing.
CoStar predicts that Los Angeles office property values could bottom out in 2025. However, with the sector's headwinds expected to persist for at least several years, uncertainty remains on the trajectory for overall pricing. Value declines will likely vary widely based on property attributes, substantiated by the range of losses seen with recent sales. The forecast expects vacancy to rise further during the next several years, which should continue to limit landlords' ability to raise rents and improve property cash flows, limiting the upside for asset values.