Opportunistic buyers are scooping up Downtown Los Angeles office properties including the likes of the Gas Company Tower and Aon Center, drawn by the low prices that come with buildings that have a lot of empty space.
For many, the plan is to improve occupancy, raise the value of the property and either sell it for a profit or hold a valuable asset purchased affordably in a desirable location.
“Natural logic would assume, okay, they bought it at a discounted basis, they can discount the rent, drive occupancy and then either sell or have a well-occupied building,” Newmark Senior Managing Director Jennifer Frisk said.
But while buildings are trading for discounts as deep as nearly 70% in some cases, rents have dropped by a fraction of that amount.
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For the seven buildings that sold Downtown between December 2023 and June 2025, average asking rents were down 22.5% this year from a prepandemic average of $36.74 per SF to $28.48 in 2025 year to date, according to CoStar data.
That’s a larger discount than Downtown’s office stock as a whole has seen at the same time. Year-to-date, average rents Downtown are 7.9% lower than the prepandemic average. But for properties that are as much as 33% vacant, it feels like a drop in the bucket to Frisk and other brokers.
The difference isn’t in the concessions, either.
Tenant improvement allowances for buildings larger than 5K SF have remained basically flat in LA, reaching $75.52 per SF in the third quarter, according to CBRE, up less than 25 cents from the same period last year. Free rent for new leases has increased a bit, from 5.8 months in the third quarter of 2024 to 6.1 months this year.
NAI Capital Commercial Executive Vice President Tina LaMonica said she hasn’t seen these lower-basis buildings in Downtown get near that amount of free rent, and that in her experience touring buildings that have sold for a discount Downtown, she doesn’t see them offer special concessions.
LaMonica did recently complete an off-market deal in a discounted building where rent was reduced. She said she suspects that by not dropping rents or giving extra concessions freely, landlords have more freedom to give incentives for the right tenant.
Landlords, it seems, would rather pull levers other than price to fill their buildings, especially those who could still benefit from the much-discussed flight to quality. Buying at a discount just means more money to plow into upgrades to entice new tenants.
Discounted properties that have long held trophy status in LA are unlikely to see rent cuts that undermine the money spent by previous owners.
“I know how much money Brookfield had invested into this building,” said Uncommon Developers Managing Principal Ryan Hekmat, whose company purchased 601 S. Figueroa for $210M in June.
Hekmat worked for previous owner Brookfield in 601 S. Figueroa for a decade before starting at Uncommon.
“These buildings aren't being neglected,” Hekmat said at a Bisnow event in September. “A lot of these properties, the Class-A, the trophy properties, have the value for the investors to come buy it at a reset price and do things like convert it or lease it.”
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