"Everyone is banking on the recovery of downtown," Hild said. "Prices have moved (upward) everywhere else, and downtown is one of the last markets with high-class product and available space."
Nonetheless, some real estate observers say Starwood overpaid for the building. They note that the current rental stream will be insufficient to cover the new owner's mortgage payments, which means the investor group is betting on future rate increases as the downtown market tightens.
"It's a risky purchase," said veteran downtown broker Steve Bay, a senior vice president at Julien J. Studley Inc. "There's a lot of competing class-A space for tenants it's still a soft market."
Downtown had an overall vacancy rate of about 23 percent for the fourth quarter, virtually static from the third quarter, according to Cushman & Wakefeld of California Inc.
The red-granite towers north of the Bunker Hill district are about 98 percent leased, with the city of Los Angeles and law firm Lewis D'Amato Brisbois & Bisgaard being the largest tenants. The city signed a 275,000-square-foot, seven-year lease at the building last year to temporarily house some of its staff while City Hall undergoes rennovations. The city has several options to terminate its lease early, according to Brad Cox, a senior managing director at Cushman & Wakefeld who handles Figueroa Plaza's leasing.
After months of rumors, two noteworthy suburban properties are officially up for sale.
Marketing packages went out last week on the Prudential HealthCare campus in Woodland Hills, two one-story buildings with a combined 450,000 square feet of space. Prudential intends to lease back the west building once the complex is sold, according to Mark Williams, senior vice president of Secured Capital Corp.
Prudential developed the campus itself as an owner-occupant, but decided to sell after signing a 300,000-square-foot lease at the Garland Center building in downtown L.A. last year.
Farther north, the first independent studio built from the ground up in L.A. County in the past 50 years is officially on the block. The owners of Santa Clarita Studios are asking $15 million for the 110,000-square-foot facility.
Herman David, who designed the facility and is one of three co-owners, said they are selling so that he can transition into semi-retirement as a film consultant.
"I really enjoyed the business there were so many different personalities and productions coming through, but it's time to move on," said David, who had been a studio manager at 20th Century Fox Film Corp. before deciding to open his own studio.
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