Trizec Properties Inc. has won the bidding for Figueroa at Wilshire, one of downtown L.A.'s most prestigious addresses.

The New York-based real estate investment trust is buying the 1 million-square-foot tower at 601 S. Figueroa St. for about $365 million, according to several sources close to the deal.

Trizec spokesman Dennis C. Fabro declined to comment on the pending transaction, although he noted that the company remains focused on downtown office properties. "Downtown L.A. is a key market for Trizec," he said.

The 52-story building, formerly called Sanwa Bank Plaza, is owned by a partnership of Hines and Deutsche Immobilien Fonds AG.

John Eichler, a senior director at Cushman & Wakefield Inc., said Figueroa at Wilshire is one of the best-located and best-designed office buildings in the downtown market.

"It's one of the top trophy buildings in the marketplace," said Eichler, who didn't work on the deal. "It's one of the highest quality buildings downtown."

The deal comes as the downtown office market continues to strengthen, fueling landlord confidence. Preliminary second-quarter figures from Grubb & Ellis Co. show vacancy rates dropping during the April-June period while asking rents remained flat.

Average vacancy in downtown office buildings fell nearly a point to 17 percent, according to J.C. Casillas, a Grubb & Ellis research analyst. A year ago, vacancy rates downtown hovered above 19 percent.

"There continues to be an upward trend in occupancy and a downward trend in vacancy," Casillas said. "On the whole, conditions are improving."

At just over $350 a square foot, Trizec is paying roughly the same rate it paid for another prime downtown building, 333 S. Hope St., now called Bank of America Plaza. (Another prime property, the 777 Tower at 777 S. Figueroa St., traded hands to Maguire Properties Inc. for a similar amount in March.)

In the downtown market, Trizec also owns Ernst & Young Plaza at 725 S. Figueroa St. All three of Trizec's buildings have been purchased since 2004.

"It looks like Trizec wants to grab all the nicest buildings downtown," said Tom Bohlinger, a senior vice president at CB Richard Ellis Inc., who wasn't involved in the deal.

Construction of Figueroa at Wilshire was completed in 1990. The 53-story building, designed by L.A.-based architecture firm A.C. Martin Partners Inc., was developed by a partnership of Hines and Mitsui Fudosan. It has a distinctive 36-foot-high fire and water sculpture, "L.A. Prime Matter," by California artist Eric Orr.

Eichler said Figueroa at Wilshire is the first "trophy" high rise to come to market since Bank of America Plaza, a deal where Cushman & Wakefield represented the seller, Beacon Capital Partners LLC.

"I definitely think Trizec is interested in owning trophies in downtown Los Angeles," he said. "They have been very active as far as purchasing buildings more active now than they have been in past years."

Unlike the Bank of America Plaza, Figueroa at Wilshire could have some considerable leasing challenges.

The former Sanwa Bank had a lease for 220,000 square feet, but was purchased by Bank of the West, which subleased much of the space. When the lease comes up, Bank of the West likely won't renew, leaving tenants to negotiate directly with the new landlord if they want to stay. Brokers expect some of those tenants to move elsewhere.

The building already lost two large law firms: Hennigan Bennett & Dorman LLP is decamping for a 41,500-square-foot pad at the TCW Building and Heller Ehrman LLP is moving to Bank of America Plaza.

Still, bidding for the property was spirited, sources said. Finalists included Maguire Properties Inc., Thomas Properties Inc. and German investment firm Rreef Funds LLC.

Eichler said Trizec should be able to lease the space at rates higher than the industry average. "It's a desirable building," he said. "They have a lot of space to lease but Trizec is very competent at filling space."

Secured Capital Corp. had the listing and represented both sides on the deal. Messages seeking comment from Secured Capital weren't returned.

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