Pioneer Picks Another Downtown L.A. Plum

Hong Kong-born real estate investor Goodwin Gaw’s Pioneer Capital Investments has purchased the historic One Bunker Hill office building in downtown Los Angeles for more than $21 million.

The 12-story tower at 5th Street and Grand Avenue--originally developed in 1931 as Southern California Edison’s headquarters--is the fifth downtown building Pioneer and its partners have purchased in the last three years.

A Pioneer Capital affiliate bought the architecturally lauded building from Equitable Life Assurance Society, which financed about two-thirds of the sales price. Equitable had taken the property back from its previous owner--One Bunker Hill Associates, which oversaw a costly renovation--in lieu of more than $24 million in outstanding mortgage debt in 1993.

The downtown office market hasn’t recovered from the early 1990s recession as fully as other districts, such as the Westside. Hence, investment in top-quality office towers has been relatively flat, although a few major investors including Sam Zell’s Equity Office Properties Trust and the California Public Employees Retirement System pension fund (in partnership with Los Angeles-based CommonWealth Partners) have recently purchased some of downtown’s newest skyscrapers.

But a few local investors such as Pioneer Capital and the Hertz Group have been snapping up older office properties. Pioneer and partners also own 818 W. 7th St., 612 S. Flower St., 611 Wilshire Blvd. and 700 Wilshire Blvd. The 7th Street and 611 Wilshire buildings have leased well since Gaw and associates purchased them, while 700 Wilshire is still undergoing renovations. The empty Flower Street building will ultimately be redeveloped, possibly as a residential building, Gaw said.

“The downtown market has been treating me well,” Gaw said, adding that he is looking for other buildings to buy.

Investors who buy older properties frequently must spend substantial sums on renovations that help the buildings compete for tenants with downtown’s large inventory of newer high-rises. Two of downtown’s newer high-rises have reportedly sold for between $170 and $200 per square foot of rentable office space. By contrast, Pioneer’s purchase of One Bunker Hill factors to about $87 per square foot.