An office building in LA sells for $153.5 million, $115 million less than its sale price a decade ago

An office building in LA sells for $153.5 million, $115 million less than its sale price a decade ago, per MW.

Real estate development company Newmark Group Inc. announced on Friday the completion of the sale of the 62-story Aon Center in downtown Los Angeles for $153.5 million. The deal is described as the largest fourth-quarter transaction for office space in the Western United States. The buyer, Carolwood LP, a Los Angeles-based private-equity firm founded in 2014, secured the purchase of the building located in the heart of the city's financial district.

Carolwood LP had initially served as a backup buyer in Newmark's sales process for another Los Angeles property, 801 Grand, which was sold for $46 million earlier in the year. The Aon Center, constructed in 1974 and extensively renovated in 2020, had been previously acquired by San Francisco-based real estate management company Shorenstein for $268.5 million in 2014.

Newmark reported receiving 18 offers for the Aon Center, and the 1.1 million-square-foot building was 64% leased at the time of the sale. Notable tenants include Aon and international law firm Morrison & Foerster. Newmark highlighted the building's diverse tenant roster, with the largest occupant utilizing no more than 7% of the space.

The sale reflects the challenges faced by office buildings in the wake of the pandemic, with an overall vacancy rate reaching a 30-year high of 18.2% in the second quarter. According to Jones Lang LaSalle Inc. (JLL) data, the physical U.S. office occupancy rate ranged from 40% to 65% in the spring of 2023.