Lender Aames’ Planned Move Is a Big Boost for Downtown

In a boost for the struggling downtown Los Angeles office market, fast-growing Aames Financial Corp. said Thursday that it will move its headquarters into a gleaming Bunker Hill skyscraper, one of the largest corporate relocations into the area in recent years.

The 15-year lease for seven floors of space at Two California Plaza will bring an estimated 700 workers to downtown Los Angeles, which has lost numerous corporate headquarters over the years as a result of mergers and cutbacks. For example, Unocal moved from its landmark building on the Harbor Freeway to an El Segundo office park, and First Interstate Bancorp--housed in the city’s tallest building--was swallowed by San Francisco-based Wells Fargo.

“This helps the downtown market by soaking up excess space and raising its prestige,” said Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County.

However, like several other recent leasing deals involving downtown office space, Bunker Hill’s gain comes at the expense of another part of the city. In this case, Aames will move out of its current home in the Mid-Wilshire area, where many tenants are concerned about security and nearly a third of all office space is vacant. Many Mid-Wilshire tenants have moved to downtown skyscrapers, where owners have been filling up relatively new high-rises at some of the lowest rents in the region.

“The best deals in the city are right in downtown Los Angeles,” said Howard Sadowsky, regional manager for the real estate brokerage and investment firm Julien J. Studley Inc. “You can go from a [marginal] building in Mid-Wilshire and go to a great building downtown.”

Aames Financial, which is the corporate parent of Aames Home Loan, has been growing rapidly by lending to homeowners with credit problems. When it became apparent that the company would soon outgrow its Wilshire Boulevard headquarters, the company began looking for a larger home about a year ago. The firm considered sites in the San Fernando Valley and on the Westside before settling on downtown.

Under the terms of its lease, Aames will move into 175,000 square feet at Two California Plaza next May. It currently occupies about 100,000 square feet of space.

“Our relocation signifies another of many important milestones in Aames’ recent history and reflects our confidence in downtown Los Angeles,” Gary K. Judis, Aames’ chairman and chief executive, said in a statement.

Aames employees will be moving into a 52-story building that was foreclosed upon last year by a group of lenders led by Citicorp after the owners were overwhelmed by a large debt load and downtown Los Angeles’ plunging rents and occupancy levels. The Aames lease will leave the building about 85% full and help pave the way for the sale of the facility, according to downtown brokers.

“My understanding is that the sale is imminent,” said John Mitchell, senior vice president at Cushman Realty, which handles leasing at the building. “The owners have been negotiating with a buyer for some time.”