Thank God It’s Almost April

What a month, eh? As if scripted, March ends today with some more bad news for commercial real estate. In Los Angeles, an office skyscraper just sold at a steep loss, reflecting the general maladies afflicting the office sector amid hybrid work. Also, Manhattan’s office vacancy rate recently ascended to a record high.

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— Tom Acitelli, Co-Deputy Editor

Union Bank Plaza in Downtown LA Sells at a Big Loss

Joel Schreiber won this round. Facing the larger troubles engulfing the office market, KBS sold the Union Bank Plaza tower in Downtown Los Angeles for a big discount to the Schreiber-run Waterbridge Capital after several rounds of descending bids, Commercial Observer has learned. The 40-story, 701,888-square-foot office building sold for between $105 million and $110 million, according to sources familiar with the deal. KBS REIT acquired the same building from Hines for $208 million in 2010, records show, and also completed a $20 million renovation.

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Manhattan Office Vacancy Rate Hits Record High as Leasing Still Struggles

Manhattan’s office leasing activity in the first quarter of 2023 was still slow, continuing a trend set in the last three months of 2022, and the borough’s vacancy rate hit a record high, according to reports. Only 4.6 million square feet of office was leased in the first quarter of 2023 and Manhattan ended the quarter with a vacancy rate of 16.1 percent across the 470 million square feet tracked by JLL, according to the brokerage. That’s after Colliers found a 43 percent decline in leasing in the fourth quarter compared to the same period in 2021. And Class A trophy properties — which have thrived during this rough leasing market — have started to see some distress.

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