Corporate Executives’ Living Choices May Contribute to LA Office Space Decline

Brookfield fails to pay a $465 million loan package for the Gas Company Tower at 555 W. 5th St. and $319 million in loans for 777 S. Figueroa St.

A wave of defaults on office towers has hit downtown Los Angeles as demand for office space continues to decline. Brookfield Corp., a major office owner in the area, defaulted on $784 million worth of loans on two towers, according to an SEC filing on February 10th. And while these defaults are occurring far from the Westside, the fact that many corporate executives live in areas like Palisades and Santa Monica could be contributing to the decline of downtown in a work environment changed by a pandemic.   

Brookfield failed to pay a $465 million loan package for the Gas Company Tower at 555 W. 5th St. and $319 million in loans for 777 S. Figueroa St. The loan on the 52-story Gas Company Tower was comprised of a $350 million mortgage loan, a $65 million mezzanine loan and a $50 million junior mezzanine loan. The 52-story tower at 777 S. Figueroa St. was made up of a $269 million mortgage and a $50 million mezzanine loan.

This is not an isolated incident as other buildings have also faced foreclosure due to missed payments. In January, Oaktree foreclosed on Coretrust Capital Partners’ 48-story tower at 444 S. Flower St., which it had purchased in 2016 for $336 million with a Bank of China loan of $230 million that year. After missing the due date on its loan with Oaktree in 2021, Coretrust and Oaktree reached a forbearance agreement for Coretrust to pay by May 31 last year, but when they missed their payment, Oaktree initiated foreclosure proceedings.

Similarly, last year saw the Broadway Trade Center at 801 S. Broadway foreclosed upon as Starwood Capital acquired the building through public foreclosure auction after it defaulted on loans.

The pandemic’s shift towards remote work has caused demand for office space in downtown Los Angeles to plummet even further with vacancy rates hovering around 22%, according to Jones Lang LaSalle Inc.’s Q4 report from last year. Asking rents averaged out at $3.86 per square foot during this period while LA County had an asking rent of $4.14 per square foot.

As companies continue to embrace remote work policies post-pandemic, it remains uncertain how long it will take before demand returns to pre-pandemic levels or if businesses will permanently change their approach toward commercial real estate altogether.

“The office environment downtown is not appealing,” Shlomi Ronen, a managing principal and founder of Dekel Capital told the LA Business Journal. “I don’t know of a single company CEO who wakes up in the morning, has a home in Beverly Hills or in the Palisades or Pasadena and says my goal is to go spend my day living and working in downtown.”

Related Posts

Historic Venice Post Office Building to Become a New Hub for Creatives

November 5, 2024

November 5, 2024

“The Lighthouse” will offer workspace, production facilities, career development, and artist studios in Venice’s iconic Windward Circle By Zach Armstrong...

DuPont Clinic Issues a Statement After City of Beverly Hills is Held Accountable By CA Attorney General Bonta

November 5, 2024

November 5, 2024

AG Rob Bonta Intervenes in Unprecedented Case, Defending Abortion Access Attorney General Rob Bonta launched an investigation after reports that...

The Willows: 30 Years Going Strong

November 5, 2024

November 5, 2024

Founded in 1994, The Willows Community School, located in Culver City, California, is a Developmental Kindergarten through 8th grade non-profit, co-educational...

Palisades Art Association to Host Juried Art Show

November 4, 2024

November 4, 2024

Artists Are Welcome to Submit up to Three Artworks The Pacific Palisades Art Association will hold its annual Juried Art...

Activist Named 24th Senate District’s “2024 Woman of the Year”

November 4, 2024

November 4, 2024

In Addition to Working With the Alzheimer’s Association, She Has Been Active in the Stop Asian Hate Movement Senator Ben...

Santa Monica Pier Bridge to be Replaced in $29M Project

November 4, 2024

November 4, 2024

The Updated Design Includes Expanded Walkways, Modern Lighting, and New Railings Santa Monica has finalized the design for a new...

Owner of Matthew Perry’s Former Home Calls Property “Piece of Paradise”: Report

November 3, 2024

November 3, 2024

In an Instagram Post, She Explained, “The Moment I Walked into the Home, I Knew It Was ‘The One’ Anita...

H5N1 Detected in LA County Wastewater, Health Officials Urge Precautions for Residents

November 3, 2024

November 3, 2024

Los Angeles County Investigates Low-Level H5 Avian Flu Detected in Wastewater The Los Angeles County Department of Public Health is...

L.A. Artist to Discuss Debut Exhibit With Morleigh Steinberg at ARCANE Space

November 1, 2024

November 1, 2024

The Event Will Give Attendees a Chance to Engage With Maskrey, Whose Solo Debut Exhibition Opens Nov. 2 Los Angeles-based...

Dia De Los Muertos 2024: Here’s Where To Celebrate The Holiday Tradition This Weekend

October 31, 2024

October 31, 2024

Los Angeles Has a Variety of Ways to Explore Latino Culture and Honor Ancestors Starting just after Halloween, Dia de...

Registration Opens for 10th Annual Palisades Turkey Trot

October 31, 2024

October 31, 2024

The Turkey Trot Will Raise Funds for Several Charities, Including Day of Giving, Local Firehouses #69 and #23, and Desita.org...

(Video) Downtown L.A. Reacts to World Series Victory

October 31, 2024

October 31, 2024

The Dodgers Are World Series Champs For The Eighth Time https://www.tiktok.com/t/ZTFtyDDKn/

Michael Mina’s Egyptian-Mediterranean Restaurant Opens in Santa Monica

October 31, 2024

October 31, 2024

Inside, the 270-Seat Restaurant’s Interior Draws Inspiration From Greek and Egyptian Coastal Aesthetics Renowned chef Michael Mina has opened his...

Here’s Why West L.A. Stunk So Bad This Week

October 31, 2024

October 31, 2024

Coastal Communities Were Blanketed by an Intense Smell Brought on by an Oceanic Phenomena Sarena Snider had just returned to...

Los Angeles Dodgers Win 2024 World Series in Thrilling Comeback Against Yankees

October 30, 2024

October 30, 2024

Dodgers Claims the Championship Title With a Stunning Victory The Los Angeles Dodgers are World Series Champions as of 8:56...