San Francisco-based real estate company SteelWave purchased the 150,451-square-foot property from Pico Rivera-based CEG Construction.
The Switchyard is located at 500 and 540 S. Santa Fe Ave., near the Los Angeles River and the 4th Street bridge.
The property holds two buildings that were vacant at the time of the sale. SteelWave plans to add murals, paint the exterior of the buildings, add outdoor seating, improve the landscape and upgrade the lobbies.
Cushman & Wakefield Inc.’s Mike Condon Jr., Steve Marcussen, Erica Finck and Bailey Dawson represented the buyer and seller in the transaction.
“This is a best-in-class campus that may present a tenant with a unique opportunity to create a custom headquarters campus in the famed Arts District, and that provides quick access to a centralized freeway network, walkability to notable dining and entertainment amenities, and in an increasingly popular area with a rapidly changing tenant landscape including fashion, media and entertainment, and tech that continues to transform the surrounding neighborhood into a true live/work/play community,” Marcussen said in a statement.
Cushman & Wakefield’s Pete Collins, Brittany Winn, Scott Menkus and Alexa Delahooke advised on leasing while Rob Rubano, Brian Share, Joseph Lieske, Ernesto Sanchez, Keith Padien and Greg Napper helped arrange financing for the acquisition.
“The headlines for the past year for the future of office have been somewhat bleak, but the sale of The Switchyard is a pivotal moment for enthusiasm and a sign that the recovery is in fact here as evidenced by the amount of institutional investor interest in the portfolio,” Condon said in a statement. “This closing dispels many of the unfounded fears that office investment would not return at the quickened pace we are seeing.”
The two buildings making up the Switchyard are both low-rise, Class A office structures.
The property at 500 Santa Fe Ave. has roughly 100,000 square feet across five stories. It has ground-level retail leasing opportunities and a penthouse with an open deck. It was built in 2019.
The property at 540 Santa Fe Ave. has a two-story office building with nearly 51,000 square feet of space. It was built in 2012.
Both have parking.
Dawson said that in the last quarter, there were nearly 1 million square feet of new lease inquiries at pre-pandemic pricing, which gave the buyer more confidence in purchasing the property.
“The most challenging aspect of selling and valuing vacant or value-add office assets for repositioning through the pandemic has been the lack of leasing data that can assist underwriters on getting to pricing — questions like, ‘Where are rents? What concessions have changed? How much demand is there?’ were all unanswered, and it was a bit of crystal ball-ization to predict where pricing should shake out until recently,” Dawson said in a statement.
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