Union Bank Plaza Expected To Command $250M-Plus
Union Bank Plaza, a landmarked, 40-story tower in Downtown Los Angeles, is on the market, Bisnow has confirmed.
The KBS Realty Advisors-owned tower is 62% leased, and the weighted average lease term for those tenants is 7.7 years, according to marketing materials. The building is expected to fetch between $250M and $260M, according to real estate experts who spoke to Bisnow and according to Green Street, which was the first to report that the property was up for sale.
Built in 1967, the tower was designated a city historic-cultural monument in 2020 and was the first skyscraper to be designated as such. It takes up a full city block next to the entrance to the 110 Freeway. The property at 445 South Figueroa St. spans 677K SF and includes a 24.8K SF, two-story retail area and a 914-space parking garage.
“There’s a lot of dry powder on the sidelines that has been waiting to buy value-add deals,” said Kevin Shannon, co-head of U.S. capital markets for Newmark, which is marketing the Union Bank Plaza.
Some 84% of Downtown Class-A office tower owners hold onto properties long-term, “significantly reducing opportunities for new investors," marketing materials say. Shannon said he didn't know of any other buildings in Downtown that were for sale. The materials also note that the building is one of just four in Downtown that can accommodate tenants looking for floor plates of more than 100K SF of contiguous space.
Green Street reported KBS is selling because KBS REIT II voted in 2020 to liquidate its assets. KBS representatives didn't respond to a request for comment.
Like LA’s office market as a whole, Downtown’s office market has struggled throughout the coronavirus pandemic, sustaining high vacancy rates and a hefty amount of sublease space. Even earlier this year, as large leases were inked in some hot spots, experts cautioned that the office market had a long way to go to recover. A Q2 Avison Young report found Downtown had a 24.8% vacancy rate, a metric Cushman & Wakefield pegged at 21.4%.
KBS completed a $20M renovation on the property in 2020. Upgrades included a new lobby, an indoor-outdoor conference center, more elevators, a refreshed look for the property’s retail area, bike storage, electric car charging stations and a garden.
Materials advertising the property say that renovations to the property, including planned upgrades and tenant improvements, total closer to $65M. The renovations were announced in 2019, two years after a $280M sale of the property fell through.
