‘50s-Era Downtown High-Rise Slated to Be Turned Into Hotel
A local investment group has purchased an empty office building in the heart of downtown Los Angeles and plans to transform the 1950s-vintage tower into the central city’s first major new hotel in nearly a decade.
The proposal involving the 12-story former bank building at 6th and Flower streets--next door to the historic California Club--is a sign of better times for downtown hotels. The downtown occupancy rate has climbed from below 50% in 1993 to nearly 70%--the highest in more than 10 years. In addition, the opening of Staples Center last fall has attracted the attention of hotel developers and operators, according to industry observers.
“There is a perception that the downtown market has become more viable than in the past . . . with Staples having opened and the convention business being strong,” said hotel consultant Bruce Baltin of PKF Consulting.
The office-to-hotel conversion is one of several proposed projects under study. Catellus Corp. has had preliminary discussions with hotel operators about opening a 250-room hotel as part of its historic Union Station property on the eastern edge of downtown. Meanwhile, developer Tom Gilmore--who is in the process of renovating a handful of historic buildings into loft housing--has announced plans to open a boutique hotel on Spring Street.
Many downtown players are also closely watching to see if Los Angeles Arena Co.--which owns the Staples sports complex adjacent to the Los Angeles Convention Center--will finally be able to develop a long-planned hotel with more than 1,200 guest rooms. A large hotel near the Convention Center is considered essential in attracting large groups and events to Los Angeles.
“We are still talking to a number of [hotel] operators,” said Ted Tanner, who heads real estate operations at Los Angeles Arena Co. The hotel would allow “the Convention Center to maximize the benefits it can bring to the city of Los Angeles.”
Instead of building new hotels from scratch, some developers are considering saving money and time by renovating existing structures. Such a transformation is apparently in the works for the former Bank of California’s regional headquarters, which has been empty since 1992 after the bank was merged into Union Bank of California.
The sale of the building closed last week, according to broker Bill Puget of Cushman Realty, who represented the seller, Union Bank of California. The buyer--Columbia Development, a Manhattan Beach-based hotel investment and development firm--could not be reached for comment. The sale price has yet to be disclosed.
The structure’s location, size and adjacent parking lot make it a prime candidate for hotel conversion and it has attracted substantial interest from hotel investors and operators, according to industry observers. The building’s 1956 design and extensive use of marble, granite and and stainless-steel surfaces are also distinctive. The property could accommodate about 200 guest rooms.
Many office buildings across the nation have been reborn as hotels in recent years as lodging companies try to expand in lucrative downtown markets, where demand for guest rooms remains high but available sites are scarce and expensive. Last fall, for example, the 71-year-old San Diego Trust & Savings Bank building in downtown San Diego reopened as a 246-room Courtyard by Marriott hotel.
The relatively low prices for older downtown office towers make them attractive alternatives to higher-priced properties in other parts of the Los Angeles area, according to Alan Reay, president of Atlas Hospitality Group. “The price they can get for a [downtown] building is a pretty good deal [over] what they can get in Westwood or Santa Monica.”
The Los Angeles Conservancy--the area’s leading historic preservation group--supports the Bank of California tower’s conversion into a hotel, according to Ken Bernstein, head of preservation issues. The building, designed by the late architect Claude Beelman, is one of the area’s most significant examples of the postwar modernism style popular in corporate architecture during the 1950s. It was built by the Keck family to serve as headquarters for Superior Oil Co., which the family sold to Mobil Oil in the early 1980s.
Bernstein said preservationists have been concerned that the building might be gutted, as have many other downtown buildings, for use as a telecommunications switching station.
“We would rather see a building like this in active use as a hotel,” he said.
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Market on the Mend
The hotel market in downtown Los Angeles has slowly improved since bottoming out in the early 1990s.
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Source: PKF Consulting
