Business Tenants Become Buyers, Reports Los Angeles Times
Downtown Los Angeles is seeing a wave of occupant buyers as office rents and values dip. Business tenants become buyers, reports Filmogaz.com, as firms seize a rare buying window.
Major transactions
The city intends to purchase a 35-story tower at 865 S. Figueroa St. for the Department of Water and Power. Fund manager Capital Group agreed to pay about $210 million for the 55-story Bank of America Plaza on Bunker Hill.
Other occupant buyers include Riot Games and the Los Angeles Department of Water and Power. These moves reflect a shift from leasing to ownership by large tenants.
Who is buying and why
Capital Group said owning its building would make it the best landlord for its offices. The firm framed the deal as a long-term move to control its space and costs.
Industry brokers note timing is key. Newmark broker Kevin Shannon said buyers anticipate the market is near its trough and want to act now.
Market context
Downtown Los Angeles has faced chronic oversupply since the construction boom of the 1980s and early 1990s. The pandemic pushed occupancy lower and accelerated the decline in values.
Investors say conditions have at least stabilized. That belief helps explain why renters with capital are choosing to buy buildings.
Vacancy and availability
CBRE reported nearly 40% of office space in the financial district was available at the end of last year. Overall downtown vacancy rose from 14% in 2019 to 34%.
Those figures underline the pressure on landlords. They also reveal why tenants can negotiate acquisitions at lower prices.
Implications for the market
Tenant-led purchases reduce the pool of traditional buyers. They also shift the ownership mix toward occupiers with long-term commitments.
Analysts will watch whether these deals stabilize valuations or trigger further consolidation. For now, the trend highlights a strategic response to a buyers’ market.
- Address noted: 865 S. Figueroa St., 35-story tower for DWP purchase.
- Capital Group deal: ~ $210 million for 55-story Bank of America Plaza.
- Vacancy: downtown rose from 14% (2019) to 34%; financial district availability ~40%.
