{"id":9205,"date":"2025-10-17T05:59:10","date_gmt":"2025-10-17T05:59:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/9205\/"},"modified":"2025-10-17T05:59:10","modified_gmt":"2025-10-17T05:59:10","slug":"downtown-la-office-buildings-are-selling-for-huge-discounts-tenants-arent-getting-the-same-deals","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/9205\/","title":{"rendered":"Downtown LA Office Buildings Are Selling For Huge Discounts. Tenants Aren’t Getting The Same Deals"},"content":{"rendered":"

Opportunistic buyers are scooping up Downtown Los Angeles office properties\u00a0including the likes of the Gas Company Tower and Aon Center,\u00a0drawn by the low prices that come with buildings that have a lot of empty space.\u00a0<\/p>\n

For many, the plan is to improve occupancy, raise the value of the property and either sell it for a profit or hold a valuable asset purchased affordably in a desirable location.\u00a0<\/p>\n

\u201cNatural logic would assume, okay, they bought it at a discounted basis, they can discount the rent, drive occupancy and then either sell or have a well-occupied building,\u201d Newmark<\/a> Senior Managing Director Jennifer Frisk<\/a> said.<\/p>\n

But while buildings are trading for discounts as deep\u00a0as nearly 70%<\/a>\u00a0in some cases, rents have dropped by a fraction of that amount.<\/p>\n

\"Placeholder\"\/<\/p>\n

\n Downtown Los Angeles has seen a handful of buildings change hands at discounted prices over the last couple of years.\n <\/p>\n

For the seven buildings that sold Downtown between December 2023 and June 2025, average asking rents were down 22.5% this year from a prepandemic average of $36.74 per SF to $28.48 in 2025 year to date, according to CoStar data.\u00a0<\/p>\n

That\u2019s a larger discount than Downtown\u2019s office stock as a whole has seen at the same time. Year-to-date, average rents Downtown are 7.9% lower than the prepandemic average.\u00a0 But for properties that are\u00a0as much as 33% vacant<\/a>, it feels like a drop in the bucket to Frisk and other brokers.\u00a0<\/p>\n

The difference isn\u2019t in the concessions, either.\u00a0<\/p>\n

Tenant improvement allowances for buildings larger than 5K SF have remained basically flat in LA, reaching $75.52 per SF in the third quarter, according to CBRE<\/a>, up less than 25 cents from the same period last year. Free rent for new leases has increased a bit, from 5.8 months in the third quarter of 2024 to 6.1 months this year.\u00a0<\/p>\n

NAI Capital Commercial<\/a> Executive Vice President Tina LaMonica said she hasn\u2019t seen these lower-basis buildings in Downtown get near that amount of free rent, and that in her experience touring buildings that have sold for a discount Downtown, she doesn\u2019t see them offer special concessions.\u00a0<\/p>\n

\"chart<\/p>\n

LaMonica did recently complete an off-market deal in a discounted building where rent was reduced. She said she\u00a0suspects that by not dropping rents or giving extra concessions freely, landlords have more freedom to give incentives for the right tenant.\u00a0<\/p>\n

Landlords, it seems, would rather pull levers other than price to fill their buildings, especially those who could still benefit from the much-discussed flight to quality. Buying at a discount just means more money to plow into upgrades to entice new tenants.\u00a0<\/p>\n

Discounted properties that have long held trophy status in LA\u00a0are unlikely to see rent\u00a0cuts that undermine the money spent by previous owners.<\/p>\n

\u201cI know how much money Brookfield had invested into this building,\u201d said Uncommon Developers Managing Principal Ryan Hekmat, whose company purchased 601 S. Figueroa for $210M in June.\u00a0<\/p>\n

Hekmat worked for previous owner Brookfield in 601 S. Figueroa for a decade before starting at Uncommon.\u00a0<\/p>\n

\u201cThese buildings aren’t being neglected,\u201d Hekmat said at a Bisnow event in September. \u201cA lot of these properties, the Class-A, the trophy properties, have the value for the investors to come buy it at a reset price and do things like convert it or lease it.\u201d\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"Opportunistic buyers are scooping up Downtown Los Angeles office properties\u00a0including the likes of the Gas Company Tower and…\n","protected":false},"author":2,"featured_media":9206,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[8865,7258,8868,48,52,51,47,50,49,3718,8867,8866,8870,8871,8869],"class_list":["post-9205","post","type-post","status-publish","format-standard","has-post-thumbnail","category-los-angeles","tag-cbre","tag-downtown-la","tag-jennifer-frisk","tag-la","tag-la-headlines","tag-la-news","tag-los-angeles","tag-los-angeles-headlines","tag-los-angeles-news","tag-los-angeles-office-market","tag-nai-capital-commercial","tag-newmark","tag-ryan-hekmat","tag-tina-lamonica","tag-uncommon-developers"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/9205","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=9205"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/9205\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/9206"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=9205"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=9205"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=9205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}