-Aecom Technology Corp. inked a deal for 120,000 square feet at One California Plaza with landlord Beacon Capital Partners. The 16-year deal brings the building’s occupancy up to 88 percent. Terms were not disclosed but the deal is likely valued at more than $44.8 million based on asking rates.
-Lewis Brisbois Bisgaard & Smith signed a 15-year lease for 215,000 square feet at U.S. Bank Tower, 633 W. Fifth St., with landlord OUE Ltd., a Singapore developer and operator. The new deal is valued at $115 million.
-DoubleLine Capital expanded by 40 percent at 333 S. Grand Ave. to 52,000 square feet in an 11-year deal with Brookfield Office Properties. The deal is valued between $25 million and $30 million.
-Meyers Nave Riback Silver & Wilson agreed to move to a full floor at Aon Center, 707 Wilshire Blvd., from the U.S. Bank Tower. The law firm inked a deal for 19,000 square feet with landlord Shorenstein Properties.
-Hudson Pacific Properties Inc. bought the former Coca-Cola manufacturing plant, at 963 E. Fourth St., in the Arts District in an off-market deal in May for $49.3 million. Goldstein Plating Investments and Atlas Capital Group bought the 120,000-square-foot for $19 million in April 2014.
A number of large lease deals defined the second-quarter office submarket in downtown Los Angeles.
The activity amounted to tenants taking more than 94,069 square feet off the submarket, pushing the vacancy rate down three-tenths of a point to 18.3 percent in the second quarter compared with the previous period, according to Jones Lang LaSalle Inc.
“There’s never a whole lot of noticeable change in the market quarter over quarter, but tenants are starting to get smart about the fact that the market is only going up and it’s a good time to lock in good long-term leases,” said George Crawford, a broker in Charles Dunn Co. Inc.’s downtown office.
Among those deciding to commit to downtown long term last quarter was Lewis Brisbois Bisgaard & Smith. The law firm renewed its 215,000-square-foot lease at U.S. Bank Tower for 15 years with Singapore-based landlord OUE Ltd. It previously signed a temporary lease at the building, at 633 W. Fifth St., last year after the DaVinci apartment fire damaged its longtime home at 221 N. Figueroa St., which is not counted in downtown statistics.
The firm could have chosen to move back into its old building, leaving a hole in the downtown office market, but instead chose to stay at the trophy 72-story tower.
That’s significant for the area’s vacancy rate.
“It’s only about 1 percent, but it’s a 1 percent decrease in vacancy in the overall market in one fell swoop,” said David Kluth, executive managing director at Newmark Grubb Knight Frank’s downtown office.
It wasn’t the only large deal done.
Aecom Technology Corp. signed a 16-year lease for about 120,000 square feet at One California Plaza, at 300 S. Grand Ave., with landlord Beacon Capital Partners. The Century City engineering and construction firm will move its employees from its former headquarters at City National Plaza, at 515 S. Flower St.
Class A asking rates rose 13 cents to $3.45 a square foot, according to JLL.
It’s the largest quarter-over-quarter increase in rental rates the neighborhood has seen since the third quarter of 2013, when rates jumped 17 cents to $3.22.
Some of that increase was caused by the tightening vacancy rate, but some of it also can be attributed to one landlord, which owns more than half of downtown’s core office buildings.
“(Brookfield Office Properties Inc.) is a Class A landlord and it’s pushing rates, leaving room for other Class A building owners to undercut them a little but still push rates,” Charles Dunn’s Crawford said.
At the least, he added, tenants are catching on to the trend and many are renewing early.
For example, insurance services firm Sullivan Group renewed its 28,000-square-foot lease at 800 W. Sixth St. with landlord Charles Dunn for 10 years last quarter, two years before its expiration.
Sales remained strong in the second quarter and the Arts District continued to be one of the hottest spots.
Hudson Pacific Properties Inc. bought the former Coca-Cola manufacturing facility, at 963 E. Fourth St., in May for $49.3 million from Goldstein Planting Investments and Atlas Capital Group. That partnership acquired the site for $19 million in April 2014. GPI and Atlas had planned to turn the 120,000-square-foot building into a creative office space but hadn’t begun construction before Hudson acquired it. It’s likely Hudson, which specializes in space for tech and media tenants, will transform the building into creative space.
– Jacquelyn Ryan
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