One possible future of the office may be self-storage. Case in point: A for-sale 14-story, roughly 300,000 square-foot Los Angeles office building is being considered as a self-storage conversion opportunity by investors.
That's according to Michael Moore, senior managing director of Newmark, who is marketing the building. The property, near Los Angeles International Airport at 5901 W. Century Blvd., also has fielded interest from hotel owners, apartment owners and investors who want to keep the space as an office.
No deal is finalized for the office building. However, the self-storage conversion conversation is another sign of the shifting demand for underutilized office space, which has faced weakening demand due to economic uncertainty and the popularity of working from home. Self-storage space, meanwhile, has seen its demand moderate this year, brokerage firm Marcus & Millichap said in its 2023 self-storage national investment forecast.
The Century Boulevard property's marketing as a potential self-storage space has been shared on real estate social media in recent days as office properties are being mulled for different uses around the nation. Moore said he himself has never worked on an office-to-self storage conversion, but these types of deals are not unheard of. Offices in suburban Chicago and Rockville, Maryland, have undergone self-storage conversions, but none of these offices were more than a few stories tall.
Of course, tall self-storage buildings are nothing new in Los Angeles. A self-storage property that rises 14 stories was built in 1926 in Hollywood and still stands today. Glendale-based storage giant Public Storage operates a 12-story facility in New York City.
"This is something the market is dictating," Moore said, adding that some of the other conversion opportunities for the Century Boulevard building make more sense to him.
The office building near the airport is roughly 60% leased and opened in 1968, according to CoStar data. The building's asking price is $25 million, down from its original asking price of $40 million, according to marketing materials.
The property is on a ground lease for another 92 years, the listing said. The office owner is cooperating with the lender, which is facilitating the sale, according to Moore.
The LAX office market has faced challenges for decades, said Ryan Patap, senior director of market analytics for CoStar Group in Los Angeles. The market has a 35.1% vacancy rate, more than double the greater Los Angeles average of 15%, according to CoStar data.
"This has always been an area that has struggled to attract tenants," Patap said.
Bids for the Century Boulevard office property are due by September 7, and a buyer may be awarded a few weeks later, Moore said.