LA County Moves Closer to Buying Gas Company Tower in Downtown LA
Major Step Towards Purchase
LA County’s Board of Supervisors took its first major step Tuesday toward buying Gas Company Tower, one of the most prominent office skyscrapers in downtown Los Angeles. The looming purchase could move workers and public services out of existing county offices, including the well-known Kenneth Hahn Hall of Administration, which dates to 1960.
Concerns Raised
Supervisor Janice Hahn voted against the purchase, telling her colleagues she was concerned about the fate of the downtown civic center if the Hall of Administration shut down. The building is named after her father, longtime Supervisor Kenneth Hahn.
“I know there’s a tendency to jump on real estate deals,” she said. “We have to think bigger.”
Abstention by Solis
Supervisor Hilda Solis abstained from the vote, saying she wanted to see “a more comprehensive and practical plan” to address the county’s aging buildings before giving her support. She also noted that the county had already sunk about $25 million into a plan to make the Hall of Administration seismically safe and still had several buildings downtown in need of upgrades, including Men’s Central Jail.
“I want to make sure that we know exactly what we’re getting ourselves into before committing any funding to this purchase,” she said.
Purchase Price and Terms
The proposed price is a deep discount from the building’s appraised value of $632 million in 2020, underscoring how much downtown office values have fallen in recent years. The purchase price cannot exceed $200 million, and the board will need to vote again before the deal is finalized.
Real Estate Expert’s Perspective
Real estate broker Kevin Shannon of Newmark, who helped arrange the Union Bank Plaza sale to the Southwest Carpenters Pension Trust, said, “All these prices are a massive discount from only three years ago, when 915 Wilshire Blvd. traded for over $500 a foot. The world has changed.”
It makes sense for entities like the county and the Carpenters Pension Trust to buy their own buildings because they can lock in their occupancy costs long term, Shannon said.
About the Building
The 52-story tower at 555 W. 5th St. was widely considered one of the city’s most prestigious office buildings when it was completed in 1991. It has nearly 1.5 million square feet of space on a 1.4-acre site at the base of Bunker Hill.
Tenant Information
Major tenants in the Gas Company Tower include law firm Latham & Watkins and accounting firm Deloitte. Southern California Gas Co. has also signed a long-term lease for nearly 200,000 square feet on eight floors in the building and is expected to move to another skyscraper, Two California Plaza, in spring 2026.
Concerns and Issues
Seismic engineers are conducting an “in-depth evaluation” of how the building would respond in a major earthquake to determine whether the Gas Company Tower has vulnerabilities that need to be addressed.
A property condition report prepared for the current owner states that the tower and parking garage need about $1.3 million to address urgently needed repairs and deferred maintenance. Additional long-term costs to maintain and modernize the properties were estimated at about $48.7 million over 12 years.
Conclusion
The purchase of the Gas Company Tower by LA County could be a major step towards relocating county offices and public services from existing facilities. While there are concerns about the fate of the downtown civic center and the building’s seismically vulnerable state, the purchase price and terms seem favorable to the county.
FAQs
Q: What is the proposed purchase price of the Gas Company Tower?
A: The proposed price is a deep discount from the building’s appraised value of $632 million in 2020 and cannot exceed $200 million.
Q: Why is the county interested in buying the Gas Company Tower?
A: The county is looking to relocate workers and public services from existing facilities, including the Hall of Administration, which dates to 1960. The building is also seen as a valuable asset due to its prime location and potential for long-term cost savings.
Q: What are the concerns about the building’s seismic vulnerability?
A: Seismic engineers are conducting an evaluation to determine whether the building has vulnerabilities that need to be addressed. The property condition report states that the tower and parking garage need about $1.3 million to address urgently needed repairs and deferred maintenance.
Q: When is the county expected to finalize the purchase?
A: The board will need to vote again before the deal is finalized. No timeline has been announced for when the purchase is expected to be completed.
