Downtown L.A.’s Oceanwide Plaza Project Could Get a Second Shot at Life

Covering 4.61 acres, the development — currently half-finished husks of luxury towers dappled in spray paint and graffiti tags — has been, is, and will be about trying to achieve a vision. Initially, Oceanwide Plaza was a Chinese developer’s beachhead into the United States — what they marketed as the “most significant mixed-use development in the history of Downtown Los Angeles” — and a chance to sell glittering condos to wealthy foreign buyers. Now, after the unfinished site became a globally celebrated urban canvas and “skyscraper playground” for graffiti artists and even BASE jumpers, it’s a symbol of the state of the city’s downtown; decay and neglect, or the creativity and chutzpah the former can catalyze. 

And in the near future, as bankruptcy court proceedings inexorably move toward a September sale, the site may become a real estate folly, or a legendary turnaround job ready to soak up the spotlight during the 2028 Olympics. It’s far from a standard adaptive reuse, suggests Colliers (CIGI) Executive Vice President Mark Tarczynski, one of the lead brokers in charge of the Oceanwide auction. He confirmed to Commercial Observer that right now, they’re in negotiations with a stalking horse bidder for the property and trying to finalize a contract by mid-August.

“It’s 1.7 million square feet of GLA [gross living area] — that’s a large project,” said Tarczynski. “The biggest challenge is, only a handful of people can pull it off. Right now, the challenge is, will the city cooperate and be a partner in getting this done before the Olympics?”

Initially, the vision was to ride a wave of construction that was reshaping Downtown Los Angeles in the 2010s. Chinese developer Oceanwide purchased the site, then a surface parking lot across from the arena formerly known as Staples Center, from New York-based real estate firm Moinian Group in December 2013 for $174 million. 

Led by Lu Zhiqiang, an engine factory worker turned tycoon whom Forbes once estimated to have a $2.7 billion fortune, Oceanwide was part of a wide-ranging Chinese conglomerate involved in energy banking and high-rise developments, including numerous towers in Wuhan. The Los Angeles project, initially dubbed Figueroa Central, was the firm’s second U.S. project, and indicative of that decade’s rush of Chinese capital into the country. A luxury 183-room Park Hyatt Hotel with a nightclub and spa, 504 oversized, luxury condos, and a two-level, open-air galleria would spread across a podium and three towers. It was “designed to become an extension of the energy permeating from Staples Center and LA Live,” said Oceanwide CEO Thomas Feng in 2018.

“This site deserves landmark architecture, and we’ve been advised that it’s the prime residential site in downtown,” said Mark Nay, then senior associate vice president at CallisonRTKL, the project architects.

It came as part of a string of billion-dollar megaprojects sought to supercharge the city’s downtown renaissance, including the Grand LA and Metropolis.

“At the time, it was in line with the trajectory of Downtown L.A. and made perfect sense,” said Suzanne Holley, president of the DTLA Alliance, a coalition of local property owners. “At the time they broke ground, downtown real estate was really hot. Downtown Los Angeles is really a residential community. We always had a need for additional residential, and occupancy rates were high.”

Retail was in demand from the growing residential population, and the signage permit gave the building an additional source of revenue. Add in the EB5 mechanism to sell units to Chinese and overseas buyers seeking citizenship, and it all added up, said Sonnet Hui, L.A.-based general manager and vice president of Project Management Advisors.

Oceanwide, then riding a wave of Chinese investment in trophy properties in the U.S., would soon wipe out. An escalating U.S.-Chinese trade war led to the Chinese government stemming the flow of money out of the country in 2017. Chinese investors sunk $17.3 billion in U.S. property in 2016, according to Rhodium Group, but just $377 million in 2018. This slowly created substantial cash flow problems for Oceanwide, which its owners unsuccessfully tried to fix by looking for funding in the U.S., in effect soliciting a construction loan midway through construction. 

By January 2019, with the project 50 to 60 percent complete, construction ground to a halt, payment to contractors stopped, and bills piled up. According to a March 2024 motion filed in the case, at least $370 million of liens are held: $170 million to LA Downtown Investment, a business entity that solicited construction funding from Chinese investors; $185 million to Lendlease; and $15 million to the Los Angeles County Tax Collector. JLL was engaged to help sell the property in late 2019 and early 2020, but the only interested buyers made offers “below an acceptable price” for the owners. 

Then COVID hit. 

“That’s when the real concern and uncertainty about the project sunk in,” said Holley. “It’s become a symbol of everything that’s gone wrong.” 

In a 2020 annual report, Oceanwide said that the project’s “valuation amount is insufficient to cover the costs incurred.” The complex sat incomplete for years, as exposure to the elements and expiring warranties for materials and products slowly deteriorated the complex’s structure and value. William Witte, CEO of Related California, called it a “carcass of an overscale development.” 

The continued loss of Chinese capital led to the crumbling of Oceanwide’s firm’s $3.5 billion U.S. property empire, including seizures and attempted sales of unfinished properties in New York, San Francisco, and Hawaii, along with an inability to pay contractors. Cranes left the Downtown L.A. site in November. (To make matters worse for the company, Oceanwide was even sued by a bank in China in 2023 for $1 billion due to a failing tower in Wuhan.)

The resulting lack of on-site security — the firm that patrolled the inactive site sued in 2023 for missing payments — explains how taggers managed to simply walk in, walk up, and get to work. They were supposedly inspired by an event at the Art Basel fair in Miami in December, when a hospital set for demolition was turned over to a team of graffiti artists. A trio of L.A. graffiti artists, Akua, Sour and Castle, supposedly made one of the first tags at the end of 2023, but it was near the top of the tower and hard to spot from the ground. The success of those pioneers and others like them eventually filtered out via videos on Instagram, TikTok and Citizen. By the last weekend of January 2024, the buildings became a street art icon. One Angeleno even had the image tattooed on his back. 

The following Tuesday morning, a pair of trespassers were arrested shortly after midnight — currently, criminal charges have been filed against 24 people, with three convictions — and by that Friday, local Councilman Kevin de León introduced a motion calling for the graffiti to be removed and for the city to pay for private security. L.A. has since spent millions on the site. At one point in February, LAPD had nearly 20 officers patrolling the project and cars parked on all four corners of the site, with another on constant patrol. Currently, concertina wire tops a fence surrounding the site. 

Holley said in the weeks after the development became a social media sensation, graffiti across the neighborhood was up 500 percent. Ultimately, the solution could come only via a transaction. L.A. started an abatement process on Feb. 17, unpaid construction firm Lendlease filed an involuntary bankruptcy petition in February, and in May creditors sued Oceanwide to force the sale that’s anticipated for this September. 

“It was supposed to be the building,” one of the lawyers involved in the bankruptcy and sale told Bloomberg. “To me, it’s heartbreaking.”

The future of Oceanwide remains a potential billion-dollar question; the March filing suggested the development would cost $1 billion to finish. There’s certainly demand for residential units; Downtown Los Angeles has built 25,000 since 2010 and construction continues at a rapid pace. But proposals remain scattered and uncertain. Everything from a casino to affordable housing has been suggested for the site, and some have argued the retail space might make more sense as a venue for something like indoor golf or pickleball. Some, like Holley, argue that it’s likely to become a multi-use project like it was originally intended. 

But managing to both purchase and finish the development remains a complicated puzzle. Hui pointed to the potential for significant weather damage, and the need for a forensic analysis to determine costs and what’s possible. The project topped out and much of it was sealed against the weather, but it has still endured years of moisture, plus the expansion of joints and materials during hot days and cool nights. There’s also the question of unit size; the condos were oversized, and might prove challenging to sell. Shrinking them, however, would perhaps be more difficult. The concrete floors, built with a process called post-tension slab, would require punching holes and making structural shifts — Hui compared it to cutting a hole in a trampoline — as well as city assistance in navigating a maze of permitting changes such a shift would require. 

Bidders for the project need to have their proposals in by Aug. 15, and can begin touring the project in late July. (The elevators have just been restored, so a tour doesn’t require scaling a 52-story walk-up.) After a month of vetting, an auction will take place on Sept. 15. So far, 91 people have signed confidentiality agreements to take part in the process, said Tarczynski, though not all will submit bids. He can’t put names to plans, but he can say with certainty that the graffiti you see today is going away, as nobody wants an apartment with graffiti covering the windows. But that doesn’t mean it won’t be referenced.  

“Some buyers are strongly considering art space inside the project,” Tarczynski said. “Some are considering a wall devoted to graffiti as a homage to what happened.”