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Oaktree deals blow to struggling LA tower with relocation plans

Investment firm to depart longtime hub as it signs one of downtown's largest office leases
Oaktree Capital Management will soon relocate its downtown Los Angeles headquarters to the City National Plaza tower. (CoStar)
Oaktree Capital Management will soon relocate its downtown Los Angeles headquarters to the City National Plaza tower. (CoStar)
CoStar News
July 8, 2025 | 8:28 P.M.

One of the country's largest alternative asset managers is preparing to relocate its downtown Los Angeles headquarters as part of a move expected to further exacerbate the financial challenges facing its soon-to-be-former hub.

Oaktree Capital Management signed a deal to fill about 220,000 square feet in the City National Plaza complex at 515 S. Flower St., marking one of the largest deals to be signed in the Los Angeles office market over the past half-decade, according to CoStar data. However, the departure from its longtime space several blocks away in the Wells Fargo Center at 333 S. Grand Ave. deals another blow to a property that has faced yearslong foreclosure warnings.

Oaktree has been headquartered in the 54-story North Tower at the Wells Fargo Center for about a quarter of a century, according to CoStar data, and its looming exit will result in a nearly 214,600-square-foot hole for the Brookfield DTLA-owned building.

Aside from the traditional tenant-landlord relationship, Oaktree's ties with Brookfield run deeper, since parent company Brookfield Asset Management took a majority stake in the distressed-debt investment firm in 2019.

Similar to other landlords across the country, Brookfield DTLA has had to contend with a bevy of pandemic-affiliated challenges that have complicated the financial outlook for a host of office properties, especially if they're older or facing maturing loans.

The Wells Fargo Center North Tower now faces more than $500 million in defaulted debt, including a more than $37 million mezzanine loan from Oaktree itself, according to information filed with the Securities and Exchange Commission. The tower is part of a downtown Los Angeles office portfolio that the Brookfield affiliate owns that has struggled to build occupancy and regain financial footing in the wake of the pandemic.

Neither Brookfield DTLA nor Oaktree immediately responded to CoStar News' requests to comment.

Shifting market

Brookfield DTLA saw two other properties in its regional portfolio go into receivership in 2023 — the roughly 1.3 million-square-foot Gas Company Tower and the 910,000-square-foot EY Plaza tower — and previously warned its investors that lenders could choose to foreclose on the 1.4 million-square-foot Wells Fargo Center North Tower.

Office landlords' financial security has become a significant selling point for prospective tenants on the hunt for new space. Distressed debt or cash flow issues hamper the ability to invest in property upgrades, finish-out work or add amenities, all of which help property owners compete in cities that are still contending with depressed demand and leasing activity.

Many of the challenges are especially acute in Los Angeles, where the office market is at its weakest position in decades, according to CoStar analysis.

Vacancy rates have hit historic highs, climbing to over 16% from the 10% reported in early 2020. Downtown Los Angeles is faring even worse as tenants continue to downsize or vacate their downtown spaces, collectively handing back about 2 million more square feet than they leased in the past year, according to CoStar data.

Brookfield DTLA reported about $2.9 million in lease revenue for the first quarter of the year, according to filings, a significant decline from the more than $3.4 million it posted for the same period in 2024 — and a figure that doesn't account for Oaktree's impending departure.

It isn't yet clear when Oaktree will officially vacate 333 S. Grand. When it does, it will join other heavyweight tenants such as TCW, Boston Consulting Group and law firm Paul Hastings, among others, over at City National Plaza just around the corner.

The roughly 3.5 million-square-foot City National Plaza complex includes two office high-rises as well as some retail and parking. CommonWealth Partners acquired the portfolio for $858 million in 2013, according to CoStar data.

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