Another DTLA Office Tower May Sell

Why It Matters

The deal underscores the lingering distress in the DTLA office market and signals how owners are restructuring assets to manage debt and preserve cash flow.

Key Takeaways

• Sale price $92.5M equals $129 per square foot
• Tower 46% occupied, TCW Group downsized
• Manulife expects $10M loss, uses proceeds for debt
• Banc of California signs 11‑year lease, gains naming rights
• Downtown LA office market still struggling post‑COVID

Pulse Analysis

Downtown Los Angeles continues to grapple with an office market that has yet to recover from the pandemic’s shock. Vacancy rates remain high, and the area faces additional pressures from a growing homeless population and heightened crime concerns. Recent transactions, such as Capital Group’s purchase of the Bank of America Plaza and Los Angeles County’s $200 million acquisition of the Gas Company Tower, illustrate a mixed landscape where some investors double down while others retreat.

Manulife U.S. REIT’s proposed sale of the TCW Tower reflects a strategic move to cut losses and shore up its balance sheet. By accepting a $92.5 million price—about $129 per square foot—the REIT anticipates a $10 million shortfall but plans to channel the cash into early debt repayment, improving liquidity. The building’s occupancy, just 46% at year‑end 2025, underscores the challenges landlords face, though the recent 11‑year, 40,000‑square‑foot lease to Banc of California, which also secured naming rights, offers a modest upside.

For investors and city officials, the transaction signals a broader trend of asset rationalization in a market still searching for a new equilibrium. While some owners are willing to accept lower valuations to reduce exposure, others are betting on long‑term recovery by acquiring undervalued properties. The outcome of the council vote will likely influence future negotiations, potentially encouraging more creative uses for under‑occupied office towers, such as mixed‑use conversions or public‑private partnerships aimed at revitalizing downtown’s economic fabric.