An iconic piece of Los Angeles architecture known as the Binoculars Building has hit the market in a test of whether property that doubles as public art can overcome weak investor demand for office space.
Landlord W.P. Carey has listed for sale the roughly 79,000-square-foot office property a few blocks from the Venice Boardwalk that's fully leased to tech giant Google, according to marketing materials. The New York-based investment firm, which purchased the building at 340 Main St. for more than $18 million several decades ago, has hired CBRE to help market the quirky site as the Los Angeles office market struggles to regain its post-pandemic footing.
Google has leased the entirety of the Binoculars Building since 2011, along with a handful of other properties across Greater LA. Its lease for the building expires in late 2030.
W.P. Carey has been weighing a potential sale for the iconic building since 2023 when it spun about 60 office properties into a separate real estate investment trust.
Price details have not been publicly disclosed, and W.P. Carey did not immediately respond to requests for comment.
'Competitive process'
While the Silicon Valley tech giant has considerably slashed its global real estate footprint over the past several years, the days of major subleasing or termination efforts appear to be stabilizing as Google commits to various slices of its portfolio and even shows signs in investing in future growth.
The company's tenancy alone is a significant draw for investors, and sales of single-tenant, tech-leased properties have long played a significant role in helping to prop up the national investment market. Tech tenants including Apple, Alphabet's Google and Meta provided a source of reliability and certainty for investors in an otherwise turbulent market, and properties with long-term leases tend to command some of the highest prices in any given market.
Lingering impacts of the pandemic, however, coupled with many tech companies' efforts to downsize their real estate portfolios, has meant some buyers have stuck to the sidelines as they wait out any market uncertainties.
Sales volume nationally has plummeted by more than 55% over the past year to $35 billion, according to CoStar, a nearly 15-year low. Yet, on a quarterly basis, sales held steady throughout 2023 and even ticked up in the early months of 2024 as significant discounts pushed an expanding group of investors to take advantage of more deals, data shows.
Los Angeles, in particular, has been among the hardest-hit markets in the country as it grapples with record-high vacancies and softening demand. At nearly 28%, the vacancy rate for the area around the Binoculars Building is one of the highest in the region, according to CoStar data. That's in large part because it has one of the highest concentrations of tech and creative tenants in the Los Angeles metro, many of which have been quick to dump large swaths of space that landlords are now scrambling to fill.
Even so, the Binoculars Building's one-of-a-kind nature is likely enough to draw multiple offers, said CBRE listing broker Todd Tydlaska. There has already been strong interest in the property, and the sale will likely be a "competitive process."