Rising Realty Partners Acquires 440 KSF PacMutual Building in Downtown L.A.
Rising Realty Partners, helped by funds controlled by the firm’s financial partner, Mount Kellett Capital Management L.P., has acquired the landmark 440,000-square-foot PacMutual building in Downtown Los Angeles. The new owner plans to transform the property into a “marquee lifestyle commercial office space for Class A local, regional and national tenants.”
“We’ve been observing a historic shift in how people use office space,” Nelson Rising, RRP’s CEO & chairman, said. “Tenants are seeking work spaces that fit their business and professional lifestyles.” Current occupancy on the building sits at 63 percent.
RRP plans to reposition the property to appeal to a wide variety of office users, and has engaged services firm Industry Partners to assist with the building’s transformation.
“We are seeing the boundaries of the creative office market shifting east,” Industry Partners founder Jim Jacobsen said. “With little or no space available in Santa Monica for creative users (who have )a requirement of 10,000 square feet, downtown Los Angeles is becoming a more attractive alternative.”
The RRP lease-up strategy will benefit from improving market conditions in the heart of the city. Downtown Los Angeles has attracted over 500,000 square feet of tenants from the west side and other areas in the last two years. As regional access to the area improves and housing options become more available in the downtown area, the trend is expected to continue.
According to a fourth-quarter 2011 report by services firm Jones Lang LaSalle Inc., office vacancy remained “stubbornly high” at 18 percent, but indications show that the commercial market has turned a corner. Lease renewals are the largest portion of signings, but tenants are holding on existing space rather than looking to downsize. Consequently, the amount of space to return to market has dropped when compared to prior years.