The office tower at 1000 Wilshire in one of downtown Los Angeles’ busiest commercial corridors was once considered a steady trophy in the city’s office market. Today, it’s become a case study in how quickly fortunes can shift.
The 22-story tower’s appraised value was slashed this month to $60.5 million, down 69% from the $197.5 million mark when its loan was originated in 2018, according to Morningstar. The property has been in special servicing since landlord Cerberus Capital Management missed its March 2025 loan maturity, the credit agency reports. Cerberus did not immediately respond to CoStar's request to comment.
Occupancy had already slid to 67% by year-end 2024, and its largest tenant, Wedbush Securities, plans to vacate by the end of this year.
The sharp devaluation highlights the mounting pressure on downtown Los Angeles office properties as high vacancy, weak demand and higher borrowing costs reshape the market. Lenders and investors are watching closely because distressed valuations can ripple through loan pools, depress sales for nearby properties, and influence whether other landlords can refinance or sell without taking significant losses.
"The Wedbush building going into special servicing is yet another example of the tremendous headwinds the Downtown Los Angeles office market has been facing," said Catherine Yeh, CoStar director of market analytics for Los Angeles. "No building is too iconic to fail in this difficult environment."
In downtown Los Angeles, remote work, tenant retrenchment and a flood of sublease space have pushed the office vacancy rate to a historic high of 22%, nearly double the nation's average.
Meanwhile, distressed office property sales have been climbing. Brookfield’s sale of Figueroa at Wilshire closed 42% below its 2005 purchase price, giving Uncommon Developers room to offer aggressive terms. Other downtown office towers getting a reset are The Gas Company Tower at 555 W. Fifth St., sold last year for about 68% of its 2020 price, and 777 Tower at 777 Figueroa, traded last year at 70% of its 2013 price.
Losing a tenant
Built in 1986, 1000 Wilshire was once considered a prime address in the city’s financial district, attracting law firms, investment managers and other professional services tenants. The 22-story tower’s location along one of downtown’s main commuter corridors made it a visible part of the Los Angeles skyline.
Financial planning firm Wedbush Securities, whose name is still on the building's exterior, has anchored the tower for more than a decade, occupying multiple floors. It will soon move out of the building in a relocation to a smaller space at 225 S. Lake Ave. in Pasadena, where well-kept streets and fewer public safety issues appeal to tenants and employees.
Wedbush's planned departure will leave a significant hole in the rent roll and could trigger further write-downs if the space remains vacant. Smaller tenants, including professional service firms and nonprofits, have also exited the property in recent years, adding to the property’s leasing challenges, according to CoStar data.
The loan, part of the GSMS 2018-GS10 commercial mortgage-backed securities pool, is one of several downtown Los Angeles office loans now in special servicing. Morningstar notes the building’s debt service coverage ratio fell sharply in recent quarters, making refinancing at current rates unlikely without new equity.
Special servicers could pursue a range of resolutions, from a discounted foreclosure to a discounted sale to an investor willing to reposition the property, experts say.
There are bright spots in the region, with some of the neighborhood's premier properties seeing a bump in leasing activity in recent months. In June, 2 Cal Plaza at 350 S. Grand Ave. on Bunker Hill signed about 40,000 square feet of direct leases, according to CoStar data. And the nearby U.S. Bank Tower at 633 W. Fifth St. landed a 70,000-square-foot deal this month, underscoring tenant preferences for upscale space in high-profile properties.