A nonoperational building in downtown Los Angeles has sold ahead of its conversion into a hotel, the latest in the emerging trend of office properties being adapted for other uses.
Shivom LLC, based in Corona, California, bought the 70,744-square-foot office at 124 E. Olympic Blvd. for about $18 million, according to a statement by Cushman & Wakefield, which was involved in the deal. The seller was active Los Angeles-based real estate investment and development firm Jamison Services.
The buyer is working to transform the property in downtown's Fashion District neighborhood to a 149-room hotel with a rooftop pool, penthouse suites and ground-floor restaurants. Mama Shelter will be the hotel operator. The company also operates a popular Hollywood hotel known for its rooftop bar.
"Many experts recognize the lifestyle and boutique hotel segment in DTLA has been recently setting performance records, despite what is happening with other product types in the submarket," Cushman & Wakefield Vice Chairman Mike Condon Jr. said in the statement. "We expect this to be the first big news on new hospitality development demand but certainly not the last."
The deal comes after Jamison sold a roughly 50% interest in the adjacent California Market Center at 110 E. Ninth St. in June 2017. The property since has seen major renovations and has lured clothing giants Adidas and Forever 21 to take space this year in the upgraded building.
In another sign of demand, a nearby 26,000-square-foot building featuring a mural by the elusive artist Banksy at 908-910 S. Broadway sold to a Los Angeles-based personal injury firm Downtown L.A. Law Group in November.
The downtown L.A. hospitality market has a 73.3% occupancy, slightly below the greater L.A. average of 75.1%, according to CoStar data. The market's RevPAR, a hotel industry metric that measures revenue per available room, was $167.75. The market average for RevPAR is $156.96.
Downtown office space has struggled since the start of the pandemic. The downtown office market's average rent is $38.91 per square foot, below the greater L.A. average of $42.13 per square foot, according to CoStar data. The market's average vacancy is 18.4%, above the greater L.A. average of 14.6%.
For the Record
Cushman & Wakefield's Mike Condon Jr., Erica Finck, Connor Martin, McKenna Gaskill and Rob Hooks represented the seller in the deal. The buyer was represented by Jim DeRegt of Lee & Associates.