Finance  ·  Sales

CO’s Most-Read SoCal Stories for 2023: Office Woes and Industrial Grows


It was a tumultuous year for commercial real estate in Southern California as the market dealt with heightened distress in the extended wake of the pandemic, combined with rising interest rates and persistent economic headwinds.

The volume of investment sales for all asset classes — from apartment buildings and hotels to office towers and Hollywood studios — declined dramatically compared to 2022, and a big portion of the deals that did close in 2023 were done at sizable losses to the seller. Even as the region maintains its status as the top industrial market in the nation, warehousing real estate also saw significant signs of “normalizing.”

SEE ALSO: Distress Looms Over U.S. Offices Heading Into Summer: Report

Commercial Observer’s six most-read Southern California stories in 2023 illustrate a year defined by the collapse of office values due to the stark decline in demand (no stories about leases made even the top 10), as well as the resilience of e-commerce and the supply chain and storage industries. 

Blackstone sells Orange County office towers at a loss
It’s more than unusual to see a real estate titan like Blackstone (BX) forced to eat such a measurable loss, which is why it was a landmark deal for the year when the company sold the Griffin Towers in Orange County for 36 percent less than what it paid to acquire the campus in 2014.

Barker Pacific Group and Kingsbarn Realty Capital acquired the 560,000 square feet of Class A office space in Santa Ana for $82 million in early April, signaling the start of many similar trades throughout the region, mostly at even larger losses. The Griffin Towers aren’t a lost cause, though. Optima Tax Relief is moving into a 38,090-square-foot space after signing a 40-month lease in the fall.

Union Bank Plaza in Downtown L.A. sells at a big loss
On top of the challenges already facing office real estate, assets in the city of L.A. have an extra hurdle: Measure ULA, which increased transfer taxes by 5.5 percent on deals over $10 million. It went into effect April 1 and put more pressure on owners of struggling assets to sell before then. 

That’s why KBS sold the Union Bank Plaza tower in Downtown L.A. for such a big discount on March 30. Joel Schreiber’s Waterbridge Capital bought the 701,888-square-foot office tower for $104 million. KBS paid $208 million for the same building over a decade ago, and also completed a $20 million renovation.

The sale was particularly painful after the owners missed out on several more lucrative bids. RC Acquisitions backed out of a $280 million deal for the property in 2019 before the pandemic. Harbor Associates was separately under contract in May 2022 for $165 million, but dropped out of the deal a few months later. Even Waterbridge was set to close for $155 million in October 2022 but continued to drag out the process until reaching an agreement on a much lower price.

NASCAR sells Calif. Auto Club Speedway for $559M
The third most-read SoCal story marked the end of an era for the race car industry, and a significant expansion of the industrial development era. Shortly after the checkered flag waved on the final NASCAR race to take place at what was the 122,000-seat Auto Club Speedway, CO was first to break the news that Ross Perot Jr.’s Hillwood Development put down $559 million to acquire most of the 633-acre property in San Bernardino from NASCAR.

CBRE (CBRE) Investment Management is converting 364 acres into a major logistics development called Speedway Commerce Center, which will be the first phase of an incredible 6.6 million square feet of warehousing space set to rise at the location.

Brookfield pays $72 million for 40 acres of dirt
The land grab continuing in the Inland Empire is on a different level, especially when large properties with nothing on them are trading hands. Brookfield (BN) Properties put down $72 million for less than 40 acres of empty land in San Bernardino County, about 55 miles east of Downtown Los Angeles. The property is notably near a Target distribution center, and about a mile and a half north of the Rialto Airport and an Amazon fulfillment center.

Another SoCal office sells at a big loss
Yes, this is getting awfully repetitive, but it was a truly bad year for office sales in Southern California. Thus, the next most-read story was a major loss in Orange County, as an Ares Management (ARES)-controlled firm sold the 394,000-square-foot One Pacific Plaza for just $42 million. That’s 66 percent less than the $124.5 million the office campus traded for less than five years prior.

Brookfield-managed fund defaults on L.A. office towers
It was like the floodgates of distress bursting open in Downtown Los Angeles when a fund managed by Brookfield defaulted on loans tied to two skyscrapers: the Gas Company Tower and the 777 Tower, which carry loans totaling $784 million. It was the first in a wave of defaults and big-name landlords handing the keys over to lenders after property values started to sink below their outstanding loan balances.

Gregory Cornfield can be reached at