Landmark office tower is sold
One World Trade Center, a landmark tower in downtown Long Beach, has been sold for $149 million in another sign that the long-suffering Long Beach office market is reviving.
The city’s office market has been weak with high vacancies since it was overbuilt in the late 1980s during a commercial real estate boom. But the addition over the last few years of thousands of downtown residences and the improving shopping scene are helping attract more renters to the city’s office towers.
Legacy Partners, a Foster City, Calif., real estate investment company, bought the 27-story tower from G REIT Inc., the principals announced Friday. G REIT, run by Santa Ana-based Triple Net Properties, acquired the property for $113.6 million in 2003.
The 573,000-square-foot building overlooking the bay along West Ocean Boulevard is 88% leased to a mix of public and private tenants including the U.S. Customs Service, the FBI and Morgan Stanley.
The transaction was part of a plan to sell all 27 of G REIT’s buildings and take profit in a hot market, said Jeff Hanson, a senior executive of Triple Net, a commercial real estate investment firm.
“The appetite by private as well as institutional capital is unprecedented in Southern California, including Long Beach and the South Bay,” he said.
Bidding for One World Trade Center was aggressive, said David Doupe of Jones Lang LaSalle, the brokerage that represented the seller. All three finalists were investment advisors for pension funds looking to expand their real estate holdings.
Legacy owns a building across the street and expects that Long Beach will continue to improve, said Scott Word, a senior vice president. The company plans to reach out to new residents in the area with improved shops and restaurants intended to draw night foot traffic to One World Trade Center.
The granite-and-glass tower opened to great fanfare in 1989, touted as the first of four buildings in what was to be the $550-million Greater Los Angeles World Trade Center in downtown Long Beach. But the real estate market collapsed with a recession starting in the early 1990s. The other World Trade Center towers weren’t built and the value of the first building, completed at a cost of $147 million, fell as tenants disappeared and the Long Beach market grew depressed.
But downtown Long Beach vacancy, as high as 26% in 1995, fell from 14.7% in 2005 to less than 12% last quarter, according to Cushman & Wakefield. Office rents will grow as much as 8% this year and an additional 10% next year, Doupe predicted.
“I won’t say we have totally turned the corner,” he said, but “downtown Long Beach is starting to become a destination.”
Long Beach has added about 2,500 apartments and condominiums downtown in the last three years, and 2,500 more should be completed in the next two years or so, said Pat West, the city’s director of community development.
The city has also spent about $200 million in the last five years on such public improvements as parks, libraries and street work. “What you are seeing is a major commitment to redevelopment,” West said
The city has also encouraged downtown retail development, especially along Pine Avenue.
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