Downtown LA’s Trust Building Sells at Less Than Half Its 2016 Price
By Greg Cornfield June 29, 2023 4:05 pm
reprints
In its quest for ever more space, the University of California — Los Angeles (UCLA) scored a sweet deal in Downtown L.A. thanks to sinking office property values.
The university announced Thursday it acquired the historic Trust Building for new classrooms and administration offices. UCLA did not disclose the sales price, but sources told the L.A. Times the deal came in at less than $40 million.
Rising Realty and Lionstone Investments acquired the 11-story, 334,000-square-foot building at 433 Spring Street in June 2016 for $80.4 million, property records show. Additionally, Rising Realty, which is headquartered in the building, recently performed an estimated $40 million makeover, per the Times. The building is almost completely vacant.
JPMorgan Chase (JPM) provided $91.7 million in financing in July 2017.
The building opened 95 years ago this month in the Historic Core neighborhood, according to the L.A. Conservancy. Originally the headquarters of the Title Insurance and Trust Company until 1977, it also briefly served as the home of downtown’s Central Library after a 1986 fire.
The Historic Core neighborhood, like much of Downtown L.A., has experienced an overall revitalization in the past decade characterized by new hotels, apartments, condominiums and other commercial developments, but it has recently seen a number of businesses move out, primarily as a result of the COVID-19 pandemic and its ongoing economic impacts.
Prices for L.A. office buildings have dropped 43 percent this year, the steepest decline in the nation, while office sales volume is down 47 percent, according to a recent report by Commercial Edge. And downtown is home to the market’s highest vacancy rate and biggest price cuts. Further, homelessness also dominates downtown and continues to rise.
UCLA, which is L.A. County’s fourth-largest employer and “the most-applied-to university in the nation,” said it has long sought to expand its presence in the heart of the city. Proponents of the deal hope the university’s reputation and its projected influx of students, faculty and staff boost the area.
Renamed UCLA Downtown, the building on Spring Street will initially house programs and administrative offices for UCLA Extension, which focuses on workforce education and skills training. It also has the potential to host classrooms as well as research, office and social spaces.
The university told the Times it expects to begin classes in the building later this year, and that it’s not precluded from eventually developing the site to accommodate more undergraduate and graduate students with housing nearby.
Stephen Cheung, president and CEO of the nonprofit L.A. County Economic Development Corporation, said the deal also can open up opportunities for the university to collaborate with a range of community partners.
“It is exciting to see UCLA continuing to expand its presence across our region with this new acquisition in Downtown Los Angeles,” Cheung said. “There are many opportunities for partnership between higher education and the business, nonprofit, governmental, philanthropic and local communities, and having a greater presence downtown is a tremendous way to further strengthen UCLA’s connections across our city and county.”
Trust Building occupants will include the UCLA real estate department along with current tenants Rising Realty, KTGY Architecture + Planning and the corporate offices of the José Andrés restaurant group. The popular chef also agreed to open a rooftop restaurant at the Trust Building.
The Trust Building acquisition comes after the university bought a 24.5-acre campus in Rancho Palos Verdes and an 11-acre residential site in San Pedro for $80 million in September 2022. The new downtown site and Rancho Palos Verdes locations will aid the University of California in achieving its 2030 goals of significantly growing enrollment.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
