The company that owns New York’s Rockefeller Center is making a foray into L.A.’s up-and-coming Arts District.
Tishman Speyer is close to buying two office buildings leased by Hyperloop One, a high-speed tube transport startup, said several sources close to the deal. Escrow is set to close as soon as this week, with the deal valued at roughly $25 million, or about $660 a square foot.
This is more than triple the price paid by the Borman Group and Lion Real Estate, which purchased the buildings for a total of $7.8 million between 2014 and last year. The co-owners converted the industrial buildings into office space, and Hyperloop moved in last year.
The trade could mark the beginning of a new acquisition cycle in downtown’s Arts District. Tishman would be the first major investor to purchase an office property there that has been fully developed and leased to a noteworthy tenant. Other office projects are still in the works: Shorenstein Properties’ Ford Factory, Hudson Pacific Properties’ Fourth & Traction, Atlas Capital Group’s Row DTLA, and Blatteis & Schnur Inc.’s At Mateo.
The deal also indicates incredibly high office property values for a neighborhood that still has scant office tenants – and none of them top-credit quality. Although Warner Music Group Corp. recently signed a long-term lease for the Ford Factory, it won’t move in for a couple of years, and there are as yet no indications that other blue-chip companies might follow.
BuzzFeed last year backed out of a potential deal for the same property.
At $660 a square foot, the Hyperloop deal is still below rates in traditional office hot spots. In Santa Monica, for example, the Lantana building is in escrow for $825 a square foot.
The Hyperloop property, on Sacramento Street, comprises 23,785 square feet in a post-and-beam building along railroad tracks. The site next door on Bay Street holds 14,193 square feet within three buildings.
Mark Borman, co-founder of the Borman Group, declined to comment, as did a Tishman representative. News of the transaction was first reported online by the Real Deal.
Real estate reporter Daina Beth Solomon can be reached at [email protected]. Follow her on Twitter @dainabethcita for the latest in L.A. real estate news.
