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

Marina del Rey to Celebrate 60th Anniversary with Free Culture Jam Event

May 23, 2025

May 23, 2025

Family-friendly festival to feature music, art, games, and historic harbor tours The Los Angeles County Department of Beaches and Harbors,...

Bay Cities Deli Temporarily Closed After Health Violations

May 23, 2025

May 23, 2025

Eleven violation points were attributed to the presence of rodents and insects Bay Cities Italian Deli & Bakery, a popular...

Governor Announces Early Reopening of Pacific Coast Highway After Wildfire Closures

May 22, 2025

May 22, 2025

Major Stretch of PCH Reopens May 23 After Months of Wildfire-Related Closures Governor Gavin Newsom announced Wednesday that State Route...

Resilient Palisades Named Nonprofit of the Year by Sen. Ben Allen

May 22, 2025

May 22, 2025

Volunteer-led group honored for climate resilience work and wildfire recovery efforts Resilient Palisades, a grassroots environmental organization based in Pacific...

Habitat for Humanity L.A. Offers Aid to Wildfire-Affected Families

May 22, 2025

May 22, 2025

Organization launches assistance application for homeowners and renters in affected areas Habitat for Humanity of Greater Los Angeles has begun...

Summer at Annenberg Beach House to Include Sunset Picnics, Yoga Classes and the Annual Cardboard Yacht Regatta

May 22, 2025

May 22, 2025

The Beach House, located on the former Marion Davies estate, remains free and open to the public The Annenberg Community...

10th Annual MAINopoly: A Taste of Main Street Comes to Santa Monica This Weekend

May 22, 2025

May 22, 2025

Annual board game-inspired food event set for Sunday, May 25 The 10th annual MAINopoly: A Taste of Main Street will...

Palisades Bakery Aids Displaced Residents with Deliveries, Cookbook Donations After Fire

May 21, 2025

May 21, 2025

The bakery’s relief effort is aimed at ensuring that displaced residents continue to have access to familiar foods during recovery...

Palisades Home Damaged in Attic Fire, No Injuries Reported

May 21, 2025

May 21, 2025

32 firefighters worked for 36 minutes to bring the blaze under control A fire broke out Wednesday afternoon in the...

Last Thursdays Concert Series Returning to Venice Boardwalk

May 21, 2025

May 21, 2025

Shows will take place by the pergolas on the north end of the boardwalk at Dudley Ave., facing the beach...

Santa Monica Airport to Host Air Taxi Flights for VIPs and Fans During LA28

May 21, 2025

May 21, 2025

The aircraft will also support emergency services and security operations While Santa Monica will no longer serve as a competition...

$2.2M Awarded to LA County for Wildfire Prevention Ahead of 2025 Fire Season

May 21, 2025

May 21, 2025

The grants mark the first disbursement of funds from Proposition 4, a bond measure that provides millions for wildfire resilience...

(Video) Classic Cars and Hot Rods Showcased During Santa Monica Pier’s Locals Night

May 20, 2025

May 20, 2025

It Was The Last Locals Night of the Season It Was The Last Locals Night of the Season. pic.twitter.com/mUo6hMJpPZ —...

Getty Villa to Reopen Next Month with Mycenaean Civilization Exhibit

May 20, 2025

May 20, 2025

The Villa will operate on a limited schedule of Fridays through Mondays from 10 a.m. to 5 p.m., with access...