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801 Tower Sale Sets Record for Downtown

Mani Bros. pays $240 a square foot for the high-rise in L.A.'s financial district.

August 29, 2003|Roger Vincent | Times Staff Writer

A Los Angeles real estate firm bought 801 Tower, a high-rise in the financial district, for $105 million, the highest purchase price on a square-foot basis ever recorded for a downtown office building.

Family-owned Mani Bros. paid about $240 a square foot for the distinctive 24-story pink granite tower at the southwest corner of Figueroa and 8th streets, partner Simon Mani said.

The sellers were CommonWealth Partners and the California Public Employees' Retirement System.

Japanese real estate giant Shuwa Investments Corp. shocked the U.S. commercial real estate industry in 1986 when it paid a reported $640 million -- or about $237 a square foot -- for 2.7-million-square-foot Arco Plaza. That has been regarded as the high-water mark for downtown real estate.

The higher price for 801 Tower reflects the financial district's improving status as a cultural and residential area and transit hub, said real estate broker Bob Safai of Madison Partners, who represented the buyers in the deal.

"It tells you downtown is a dynamic market and that people are now starting to appreciate its resurgence with all the multifamily housing being built," Safai said.

Recent downtown office purchase prices included $190 a square foot for BP Plaza, $172 a square foot for Union Bank Plaza and about $200 a square foot for KPMG Tower, according to real estate data tracker CoStar Group. A sale at $240 a square foot would surpass any central business district price confirmed since 1990.

But downtown doesn't lead the region in pricing. Fox Plaza in Century City sold for $492 a foot in 2000. And prices have been far higher in other cities. A high-rise at 150 Spear St. in San Francisco sold for about $400 a square foot in 2001. In New York, 399 Park Ave. sold for $679 a foot in 2002, said Craig Farrington, a CoStar researcher.

In Los Angeles, the second-quarter vacancy rate for downtown office space was 19.9%, with landlords asking for an average rent of $2.04 a foot, compared with 17.9% and $1.98 a year earlier, according to a recent Cushman & Wakefield report.

The New York-based brokerage said in the report that downtown L.A. was the nation's only central business district considered to be on the upward swing of the real estate cycle based on rent and overall vacancy trends, employment forecasts, tenant base and projects in the construction pipeline.

"We are extremely confident about the current strength and the future growth of the downtown area," Mani said.

801 Tower is 95% leased. Its tenants include Chubb Group of Insurance Cos., law firm Squire, Sanders & Dempsey and Zucca restaurant, according to CoStar.

The building was erected in 1992 for $175 million by a joint venture of Japanese developers Takenaka Corp. and Mitsubishi Banking & Trust.

The tower is sheathed in polished pink granite and topped with a distinctive crystalline cap. It houses a sculpted courtyard titled "Zanja Madre," an artwork by Andrew Leicester.

The Minneapolis artist filed a copyright infringement suit against Warner Bros. in 1995 for using his sculpture as the basis for a studio set design in the movie "Batman Forever." Leicester lost the suit. An appeal in federal court also was rejected, he said.

For Mani Bros., the purchase is the biggest acquisition to date. Among its commercial holdings are 9000 Sunset, Piazza del Sol and Sunset Medical Building, all on the Sunset Strip. The company also owns Portofino Plaza in Santa Monica and the 24-story Figueroa Tower in downtown Los Angeles, where it is headquartered.

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