DTLA - The U.S. Bank Tower, one of the most iconic buildings in Downtown Los Angeles, is on the market.
OUE USA Services Corp., a subsidiary of the Singapore-based Overseas Union Enterprises, put the 72-story building up for sale this month. It has 1,342,908 square feet of office space, as well as a sky-high viewing deck complete with a glass slide on the face of the building.
The likely buyer will be a major investment company with a history of acquiring top-tier assets that is looking for a “gateway” property in Downtown, according to local real estate experts.
The distinctly shaped edifice originally known as Library Tower opened at 633 W. Fifth St. in 1989. It was the tallest building west of the Mississippi River until the arrival of the Wilshire Grand Center in 2017.
Originally developed by Maguire Thomas Partners, it has appeared in numerous television shows and films, and famously was blown up by aliens in Independence Day.
The building could fetch as much as $700 million, or approximately $500 per square foot, according to brokers. That’s a step up from the most recent comparable transaction, the 2017 sale of One California Plaza on Bunker Hill, which sold for $465 million, or $460 per square foot, according to Tom Bohlinger, managing director with the brokerage firm Jones Lang LaSalle.
Bohlinger pointed to rising office rents and investment in Bunker Hill as reasons for the potential price.
Peter Johnston, senior vice president with OUE USA Services Corp., did not specify an asking price, but said that the tower is more stable than when the company bought it.
“We’ve put a lot of money into it, bringing it from around 52% leased to pretty close to 85%,” Johnston said. “I just think we’re interested in testing the market.”
OUE acquired the building in 2013 for $367.5 million. The company embarked on a major renovation in 2015, spending approximately $50 million to transform the lobby — adding a large video screen, among other features — and on improvements to the office space.
The most attention-grabbing component of the work was the OUE Skyspace complex on the upper floors. It includes observation areas and a 45-foot glass slide affixed to the exterior of the building that allows brave visitors to swiftly descend from the 70th to the 69th floors. OUE has marketed Skyspace as a tourist attraction, charging $25 for regular admission, with another $8 to try the slide.
“The asset was neglected when OUE got it. Many of its big tenants had left,” Steve Marcussen, executive director with the brokerage firm Cushman and Wakefield, said. “It had some real challenges, and OUE started investing a tremendous amount of money into it from the beginning.”
Bohlinger said that OUE’s improvements make the building attractive for a buyer. He said upgrades to the overall area, and work on the nearby Regional Connector, could also spark interest.
The sale comes as Bunker Hill is on the rise, Bohlinger said. He pointed to the start of construction on Related Companies’ Frank Gehry-designed The Grand at First Street and Grand Avenue, plus overhauls of the Music Center Plaza, Wells Fargo Center, and an expansion of the Colburn School. He said interest in the area could fuel higher rents in the future, making a property like the U.S. Bank Tower desirable.
Current tenants include the tower’s namesake, US Bank, plus Marsh & McLennan Companies, HMC Architects and others.
Marcussen said Class A office space in Bunker Hill and the Financial District tends to rent for approximately $4.50 per square foot, which he said is less expensive than new space in the Arts District and Historic Core, and well below the Westside, where office space can hit $10 per square foot.
Real estate observers do no expect the tower to be on the market for long, given its location, recent improvements and the general health of the economy.
“It’s a global asset. They don’t come on the market very often anywhere in gateway cities,” Marcussen said. “It’s very well leased already.”
Johnston said that OUE hopes to find a buyer before the fall.
Real Estate Finance & Investment first reported the news of the building going up for sale.
© Los Angeles Downtown News 2019