TrizecHahn Buying 2 Top Long Beach Office Towers
TrizecHahn Corp., a large Toronto-based, publicly held real estate company that has been aggressively buying downtown office buildings across the United States, is making a move on the heart of Long Beach.
Last week TrizecHahn bought one of Long Beach’s premier office towers, Landmark Square, for $86 million from a partnership including broker John Cushman, co-founder of Los Angeles-based Cushman Realty Corp.
Long Beach real estate sources said TrizecHahn also is about to buy another top downtown tower, Shoreline Square, from its Japanese owner for a price estimated at $60 million or more.
TrizecHahn is paying less for the properties than it would cost to build them today and is doing so at a time when the downtown Long Beach office market is showing solid signs of recovery from its painful depression of the early- and mid-1990s.
The Canadian company has been buying up office towers in North American central business districts --such as downtown L.A.’s 41-story Citicorp Center--while selling off its huge portfolio of regional malls.
TrizecHahn representative Tabb Davis said the company bought the 24-story Landmark Square at about 75% of its estimated “replacement cost.” She said the 440,000-square-foot building at 111 W. Ocean Blvd. is 86% leased, offering the new owner the potential to lease the vacant space at current market rents and improve its yield.
Current tenants include Wells Fargo, Merrill Lynch and accountancy Windes & McClaughry. Davis noted that TrizecHahn is enthusiastic about Long Beach’s future, given the ongoing improvements in rents and vacancies as well as substantial public-sector investments into downtown’s infrastructure.
TrizecHahn bought “the highest-quality office building in Long Beach” at a time when the downtown office market “is beginning its recovery,” added A. Martin Morgenstern, national managing director with Cushman affiliate Cushman Investment Services, which brokered the sale on behalf of Cushman Investment & Development Corp. and its partners.
Statistics from brokerage Grubb & Ellis Co. show that downtown Long Beach’s office vacancy rate dropped from nearly 24% at mid-year 1997 to just over 17% a year later as the market’s tenants collectively grew by more than 262,000 square feet. Accordingly, the rental rates Class A building owners are asking have climbed during that period, from an average of $1.64 per square foot monthly at mid-1997 to $1.74 at the end of June.
A TrizecHahn affiliate is also the lead developer of the $385-million retail-entertainment redevelopment project proposed as the cornerstone of Hollywood’s revitalization. The 640,000-square-foot project slated for the high-profile intersection of Hollywood Boulevard and Highland Avenue would include a theater that would host the Academy Awards.
Real estate sources said TrizecHahn is about to close its purchase of the 21-story Shoreline Square at 301 E. Ocean from an affiliate of Japanese construction and real estate giant Taisei Corp. Davis declined to comment on Shoreline Square, and a Taisei representative didn’t return calls Monday.
Shoreline Square is 75% leased, according to the independent Co-Star real estate database--suggesting additional opportunities for TrizecHahn to take advantage of the improving tenant demand. Several other Japanese owners of U.S. commercial real estate have recently sold or expressed interest in selling properties they acquired or developed when values were higher in the 1980s.
Both Shoreline Square and Landmark Square opened during a development boom that lasted from the late 1980s to the early 1990s. Shoreline, Landmark and a third major tower completed during that era--the World Trade Center’s first phase--collectively expanded downtown Long Beach’s overall office space inventory by some 40%.
