Newmark had a busy day Wednesday facilitating the close of two substantial deals in Los Angeles, totaling more than $360 million, including the sale of a 1 million square-foot office building in downtown.

In L.A.’s biggest office deal of the year, Uncommon Developers purchased the property at 601 S. Figueroa St. for $210 million, or $202 per square foot.

Newmark represented the seller, Brookfield Properties, which has owned the Class A, 52-story office tower building for nearly a decade.

Kevin Shannon, co-head of U.S. Capital Markets at Newmark, sees this deal as an indicator of where the market is heading.

“It’s a sign of the market recovering, but (it’s) also a sign that the building is an exceptional trophy,” Shannon said. “It’s one of the best buildings in downtown.”

The worst is over

It’s no secret that the downtown office landscape has been turned on its head, considering that before the pandemic, buildings like 601 S. Figueroa were selling for more than $500 per square foot.

Nevertheless, Shannon asserted that the worst is over, pointing to a turnaround after velocity bottomed in the first quarter of 2024.

“Patient family office capital like Uncommon recognizes the discount to replacement cost and discount to prior peak pricing opportunity that downtown L.A. offers,” Shannon said. “This is especially true for the Class A trophies like 601.”

Shannon said the buyer anticipates long-term ownership and plans to make some upgrades to the common areas of the building in hopes of attracting new leases. The building is currently 72% leased and is anchored by an outpost of Big Four accounting firm PricewaterhouseCoopers.

With its octagonal structure and glass halo, the building has a “power business card status in the city,” said Rob Hannan, vice chairman in Newmark’s El Segundo office. It features a 75-foot atrium in its lobbies, a fitness center, an open-air plaza and dining areas.

In addition to Newmark’s involvement, Jordon Garcia, Sean Fulp and Mark Schuessler of Colliers advised the buyer, and Alex King of Nuveen coordinated the efforts for the selling partnership.

Shifting to the westside

Moving to the westside, Newmark represented Clarion Partners in its $150.7 million sale of i|o at Playa Vista, a 300,000 square-foot office building, to Barings.

Shannon said this deal is “a clear sign that institutional capital is re-engaging in the office sector,” noting a “highly competitive” bid process.

First built in 2010, this property underwent a redesign in 2016 and has stayed above a 90% occupancy rate since then.

Laura Stumm, a vice chairman at Newmark, said i|o’s near-term expirations on leases did not scare off investors.

“The willingness of institutional investors to take on leasing uncertainty is a clear vote of confidence in both the Playa Vista submarket and the broader office recovery,” Stumm said in a statement. “The market continues to reward high-quality assets, and this sale reinforces that trend.”

In the last two years, the campus, which features two buildings with indoor and outdoor workspaces, has filled 78,000 square feet with new leases. Its name stands for “interaction optimized” as the campus’ facilities were designed to offer collaborative work environments.