SteelWave Acquires Creative Office Campus in the Lost Angeles Arts District
Cushman & Wakefield has brokered the sale of The Switchyard, a 150,451 SF Class A creative office campus located in the Arts District, Los Angeles for US $80 million.
San Francisco-based SteelWave acquired the modern two-building campus developed recently in two phases over the past decade from Los Angeles-based CEG Construction for $80 million. The buildings were vacant at the time of sale.
Cushman & Wakefield Vice-Chairman, Mike Condon Jr., led colleagues, Steve Marcussen, Erica Finck and Bailey Dawson, with Cushman & Wakefield represented both buyer and seller in the investment transaction. The firm’s Pete Collins, Brittany Winn, Scott Menkus, and Alexa Delahooke also provided market leasing advisory, while Rob Rubano, Brian Share, Joseph Lieske, Ernesto Sanchez, Keith Padien, and Greg Napper assisted the buyer with financing.
“The headlines for the past year for the future of office have been somewhat bleak, but the sale of The Switchyard is a pivotal moment for enthusiasm and a sign that the recovery is in fact here as evidenced by the amount of institutional investor interest in the portfolio. This closing dispels many of the unfounded fears that office investment would not return at the quickened pace we are seeing,” comments Condon Jr.
“The most challenging aspect of selling and valuing vacant or value add office assets for repositioning through the pandemic has been the lack of leasing data that can assist underwriters on getting to pricing—questions like, ‘Where are rents? What concessions have changed? How much demand is there?’ were all unanswered and it was a bit of crystal ballization to predict where pricing should shake out until recently,” adds Bailey Dawson, one of the team’s analysts. “We can directly attribute the successful sale to our leasing partners of Steve Marcussen, Brittany Winn, Pete Collins, Scott Menkus, and Alexa Delahooke who over the last quarter demonstrated nearly 1 million square feet of new inquiries and began trading paper with several large tenants at pre-pandemic lease pricing prior to close, giving our buyer the confidence to be the first to make a big bet. We expect that SteelWave will be rewarded for recognizing the recovery sooner than most.”
The Switchyard consists of two adjacent, low-rise, Class A office buildings centrally located in the Arts District at 500 & 540 S. Santa Fe Avenue near the Los Angeles River and 4th Street bridge. Constructed in 2019, the 500 property consists of a newly constructed creative office building totaling approx. 100,000 sf in five stories, and that also offers ground floor retail opportunities. The building also features a unique penthouse with an open deck area. The 540 property consists of a two-story office building totaling 50,888 sf that was built in 2012. Both buildings feature secured parking and gated and secured entry.
SteelWave intends to institute a well-conceived capital program that will elevate the building’s exterior by using different paint schemes and mural applications. Additionally, SteelWave will make transformative improvements to on-site amenities including outdoor seating, enhanced landscaping, upgraded lobbies and thoughtful signage and branding.
Steve Marcussen, Executive Director says: “This is a best-in-class campus that may present a tenant with a unique opportunity to create a custom headquarters campus in the famed Arts District, and that provides quick access to a centralized freeway network, walkability to notable dining and entertainment amenities, and in an increasingly popular area with a rapidly changing tenant landscape including fashion, media and entertainment, and tech that continues to transform the surrounding neighborhood into a true live/work/play community. The Switchyard is a huge project for the area.”