SoCalGas Signs New Lease While Ditching Namesake Tower in Downtown L.A.
The utility giant’s new lease with CIM Group is for about one-third less space than its current HQ at the Gas Co. Tower.
By Nick Trombola September 12, 2024 2:49 pm
reprints
The Southern California Gas Company (SoCalGas) is leaving its beleaguered, longtime home in Downtown Los Angeles and downsizing at another office tower just one block away.
The company — the largest gas utility company in the U.S. — signed a 198,553-square-foot lease at the 52-story tower at 350 South Grand Avenue, dubbed City National 2CAL, with landlord CIM Group. The company is set to leave the foundering Gas Company Tower, its namesake and its headquarters since 1991, by spring 2026. The deal is Downtown L.A.’s largest lease transaction so far this year, according to CIM Group.
“SoCalGas had many options for its headquarters location. … This is another significant milestone for the property and we believe supports our commitment to ensuring that the building is a premier business location option in Downtown Los Angeles,” Shaul Kuba, CIM Group co-founder and principal, said in a statement.
CIM Group’s Geno St. John, along with Peter Hajimihalis and Hayley Blockley from JLL (JLL), represented the owner. Clay Hammerstein and Danny Rees from CBRE (CBRE) represented SoCalGas in the deal. Terms of the lease were not disclosed.
As part of its new agreement, SoCalGas’s name will replace City National Bank’s name at the top of the tower. SoCalGas’s office will be spread across eight floors and will be roughly one-third smaller than its space at the Gas Company Tower.
It was not immediately clear why the utility giant is leaving its former home at Gas Company Tower. A representative for the company did not immediately respond to a request for comment and more information. But the move is similar to others made by tenants at the Gas Company Tower. For example, the building’s second-largest user, law firm Sidley Austin, signed a 57,148-square-foot relocation lease at 350 South Grand Avenue. WeWork also closed its 92,000-square-foot location at the Gas Company Tower earlier this year.
CIM Group acquired the 1.4 million-square-foot City National 2CAL tower — then known as Two California Plaza — in 2014 for nearly $300 million, and upgraded its entrances and plaza in the years since. The owner attempted to market the property for sale in 2017 — hoping that the property would draw bids well over $500 million, according to The Real Deal at the time — but a deal never materialized. The sale attempt occurred not long after CIM Group landed a 300,000-square-foot lease from City National Bank, giving the tower its new namesake.
SoCalGas’s current headquarters is another can of worms, and the company’s departure is indicative of the property’s distress in recent years.
Once part of Brookfield’s collection of trophy office towers in Downtown L.A., the property experienced years of departing tenants and financial distress — accompanied by the rise in remote work and rising interest rates — culminating in Brookfield’s default last year on $784 million in debt tied to both it and the nearby 777 Tower.
The Gas Company Tower’s value has since plummeted some 66 percent just three years after a valuation of $632 million. Los Angeles County plans to purchase the tower for $215 million, Commercial Observer first reported at the time.
Nick Trombola can be reached at ntrombola@commercialobserver.com.
