One Wilshire Tower May Change Owners

Just as various downtown L.A. interests have reached a tentative compromise on the proliferation of so-called telecom hotels, the building some have dubbed “the mother of all telecom hotels” may soon have a new owner.

The longtime landlord of the 30-story One Wilshire tower turned the 1960s-era building into a commercial success by making it the hub of the city’s telecom networks. Located at Wilshire Boulevard’s “foot” at Grand Avenue, One Wilshire has become the site where many types of phone and data networks converge.

The Paramount Group, controlled by Germany’s wealthy Otto Versand family, has owned One Wilshire for nearly 25 years. Paramount has been quietly negotiating to sell the tower to a technology-oriented real estate investment group affiliated with Washington-based Carlyle Group, reported online news wire Commercial Real Estate Direct. Downtown sources confirmed the deal is in the works and put the sale price in the range of $110 million.

A Paramount representative said the company doesn’t comment on potential changes to its portfolio, which includes several major New York commercial properties. A Southland-based Carlyle official involved in the company’s telecom real estate ventures didn’t respond to a request for comment.

Demand remains strong for telecom space downtown even though capital markets are becoming more skeptical about the field, which will probably experience more consolidation, said Jason Warner, a broker at Cushman & Wakefield. Hence, any buyer of a telecom hub such as One Wilshire would also acquire relationships with key companies likely to need space in other such facilities around the nation or perhaps the world.

The proliferation of telecom facilities in the heart of the financial district has generated concern that buildings occupied mostly by equipment rather than people could hurt efforts to create a vital 24-hour environment.

Various parties including the city, property owners, telecom businesses and the Los Angeles Conservancy have been discussing regulations aimed at preventing entire blocks or neighborhoods from “going black.”

Details of a proposed city ordinance may be presented as soon as today. The ordinance would prohibit telecom uses on office-building ground floors, where retail uses are preferred, and limit the ratio of upper-floor space dedicated to telecom uses depending on a building’s age. A conditional-use permit would be required to exceed those limits, which would be 80% for newer buildings and 25% for historic properties.

Telecom and related fields have ranked among the leading industries leasing space in older downtown office buildings--many of which had suffered from high vacancies amid downtown’s over-supplied office market. The trend has predictably attracted substantial real estate investment as well.

Dallas-based Nexcomm Properties is investing about $60 million to convert downtown’s historic Terminal Annex property into a multitenant high-tech and telecommunications facility. Other investors have also purchased office towers near One Wilshire, apparently with telecom-oriented renovations in mind.