Owners Asking $425M for Broadway Trade Center in Downtown LA
The historic 1.1 million-square-foot property is ready for redevelopment
By Greg Cornfield November 2, 2020 10:50 amreprints
Waterbridge Capital and Continental Equities have asked $425 million — roughly $395 per square foot — for the vacant Broadway Trade Center in Downtown Los Angeles, Commercial Observer has learned.
Since this article was first published, ownership has expressed that the listing is “unpriced.” Off-market listings obtained by CO show the asking price started at $425 million.
CO reported in August that the owners were again shopping the massive property after attempting to secure $251 million in bridge financing. Starwood Property Trust previously provided a $213 million loan, and that funding was extended in 2019. Waterbridge and Continental acquired the property in August 2014 for $122.3 million, property records show.
The nine-story building includes approximately 1.1 million square feet on 2.7 acres at 801 South Broadway. It covers half a city block, with frontage on Eighth Street, Hill Street and Broadway, and it’s completely vacant.
CBRE is the exclusive brokerage handling the property. Their marketing materials from earlier this year explain that the building is currently entitled for office, retail, restaurant, hotel and residential use. The four floors above ground-floor retail were designated to be creative or traditional offices. The two top floors are considered to be well-suited for hotel use with 108 to 186 rooms, designed by architecture firm Omgivning.
Office space in Downtown L.A. has struggled for decades, and had a 24 percent vacancy rate after the third quarter this year, according to a recent report from Savills. But even worse is the Broadway corridor, which includes a collection of some of the most underutilized historic buildings in the nation.
The building is a historic-cultural monument, and it has a long and storied history, particularly by L.A.’s standards. It first opened about 112 years ago as the Hamburger & Son’s Department Store, and was the largest department store west of the Mississippi River at the time. It was later acquired by the now-defunct May Company, which in its own right was also one of the most well-known landlords in the region for decades.
In the 1990s, the building was transformed into the Broadway Trade Center, a mixed-use garment manufacturing building, until 2014 when Waterbridge and Continental Equities took over. They first removed 267 garment tenants that were under month-to-month leases, demolished the full interior, and restored the facade.
Due to its historic status, redevelopment plans must be approved by additional city departments, including the Office of Historic Resources, the Cultural Heritage Commission and the Community Redevelopment Agency. However, it is also eligible for an expedited approval process through L.A.’s Adaptive Reuse Ordinance, as well as up to 60 percent reduction in property taxes through the Mills Act, and a 20 percent federal historic rehabilitation tax credit.
Correction: This article has been corrected to reflect that CBRE is the exclusive on-market brokerage for the property. A previous version stated Compass and CBRE were managing the listing off-market.
UPDATE: After this article was first published, the property’s owners told CO that the listing is “unpriced.”