Value of Downtown LA’s Gas Company Tower Sinks 57% in 2 Years: Trepp
From $632 million in 2021 to $270 million now, the 52-story building is worth much less than the financing tied to it
By Greg Cornfield July 19, 2023 10:05 am
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The Gas Company Tower in Downtown Los Angeles has been perhaps the nation’s most prominent example of office distress and declining demand, and now we have a dollar figure on the toll it’s taken.
The value of the 52-story tower at 555 West Fifth Street is down 57 percent — from $632 million in 2021 to $270 million — according to Trepp. That puts the space at under $200 per square foot rather than over $450 per square foot two years ago.
The sharp decline is on pace with the startling drop in the values of traded office assets so far this year in L.A., which has seen the steepest decline in the nation at 43 percent — from $412 per square foot last year to $237 per square foot.
Brookfield (BN) earlier this year defaulted on a $350 million CMBS loan tied to the more than 1.4 million-square-foot Gas Company Tower and a parking garage. There’s also more than $100 million in mezzanine financing tied to the building.
The Gas Company Tower was put into a receivership in April, and, since then, the L.A. Housing Department started negotiations to move into nearly 300,000 square feet at the 32-year-old building, Commercial Observer reported. That’s good news because law firm Sidley Austin, which is the second-largest tenant at the tower, recently signed a lease at a nearby office building for much less space and will soon vacate the Gas Company Tower.
Office availability is at an all-time high in L.A., according to a recent Savills report, with 26.6 percent of the total office market either vacant, soon to be vacant, or available for sublease.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
