Even in Los Angeles' bruised office market, trophy buildings can still start a bidding war.
Barings has shelled out $150.7 million for a two-building, 306,809 square-foot office campus in Playa Vista, or $511.73 per square foot, marking a 13% premium from the prior deal and the priciest office sale for Los Angeles since 2023, CoStar data shows.
The sale for the so-called I/O campus signals that capital is returning for the newest — and shiniest — offices in well-located spots throughout the nation. Recent top-dollar office deals in Los Angeles are taking place in Silicon Beach, the coastal stretch including Playa Vista and favored by media, entertainment and technology firms.
National office sales climbed 40% year over year in the first quarter, according to CoStar data.
The latest Silicon Beach deal marks a premium from the $132.7 million that Clarion Partners paid Lincoln Property Co. for the two buildings in 2014.
“The response from institutional investors for i|o at Playa Vista was exceptionally strong — a clear sign that institutional capital is re-engaging in the office sector,” said a statement from Kevin Shannon, co-head of U.S. capital markets at Newmark, who helped represent the seller.
The buyer, a global investment manager with a growing West Coast portfolio, is wagering that demand for high-design, amenity-rich office space near executive housing will hold — even with looming lease rollovers and an unsteady macro backdrop.
New York City-based investment firm Clarion Partners, which redesigned the two-building campus at 12130 Millennium Drive and 12180 Millennium Drive with Gensler in 2016, exits after bringing the property to 90% occupancy. The property benefited from a renewed appetite for “flight-to-quality” deals and attracted multiple offers before closing, Shannon said.
To be sure, most Los Angeles area office properties aren’t drawing that kind of attention. Remote work trends, higher interest rates and low leasing velocity continue to drag on pricing across much of the market. Greater Los Angeles office vacancy reached 16.1% during the second quarter, its highest point in decades. Recent tenant activity has been relatively restrained compared to the five years preceding the pandemic. But a small group of trophy assets — mostly Westside, mostly turnkey — are helping establish a post-correction benchmark.
The recently traded Playa Vista office campus opened in 2010 and was extensively renovated in 2016. The property has signed 78,000 square feet of new leases in the past two years. Collaborative indoor-outdoor workspaces, landscaped courtyards and its location near airports and transit have helped the campus outperform as broader demand lags, Shannon said.
For the record
In addition to Shannon, Newmark's Ken White, Rob Hannan, Laura Stumm and Michael Moll represented the seller in the deal. Newmark's Jonathan Firestone, Blake Thompson and Henry Cassiday provided support on debt strategy and financing.