Historic Tower May Become Housing
Transamerica Center Tower, a lonely landmark of chic 1960s office architecture south of the downtown financial district, is being purchased by Southern California developers who may convert the skyscraper to housing as part of a large-scale revitalization effort near Staples Center.
People familiar with the matter say that New Pacific Realty Corp. and Canyon-Johnson Urban Fund, whose partners include former Lakers star Magic Johnson, are expected to pay about $100 million to the parent company of Transamerica Corp. for three office buildings, including the signature 32-story tower. Three parking structures and 5.5 acres of adjacent land zoned for up to 1.5 million square feet of housing are included in the deal.
The transaction would make the site one of the largest real estate projects in the burgeoning South Park district of downtown, where the Staples Center arena has attracted a wide range of residential and retail developments that are in various stages of completion.
The skyscraper was the first in the city to surpass 28-story City Hall in height when it was opened in 1965 by Transamerica, one of the country’s largest insurance companies. The three office buildings of Transamerica Center were designed by Los Angeles architect William Pereira, whose portfolio also includes the Transamerica Pyramid in San Francisco and CBS Television City in Los Angeles.
Pereira, who also was an urban planner -- he developed the 93,000-acre master plan for the Irvine Ranch in Orange County -- believed that downtown’s central business district would grow to the south. And he encouraged Transamerica to buy comparatively inexpensive land near Hearst Corp.'s Herald-Examiner newspaper building at 11th Street and Broadway, according to Los Angeles architect Scott Johnson, a protege of Pereira’s.
But downtown’s financial district grew mostly north and west, leaving Transamerica Center as an outpost of urbanity in a nondescript commercial neighborhood.
“People say Bill Pereira got it wrong, but 50 years later, he may have been right,” Johnson said. “The verdict is still out.”
The buyers say they have not decided whether the main office tower will be turned into housing. Downtown real estate experts have considered it a prime candidates for residential conversion, with its small floor footprints and spectacular views.
“The big tower could be used for office space, but at the moment the market is soft, so it could also be used for very high-end residential,” said Los Angeles real estate broker John Cushman, chairman of Cushman & Wakefield Inc. Architect Johnson, who designed Fox Plaza in Century City, describes Transamerica Center’s style as “futuristic modern,” with its connecting skybridges, helipad and the glass-box restaurant floating above the observation deck on the main tower.
Among its amenities are ground-floor galleries, gardens, a food court and a 500-seat theater. It also has a fitness center with a high-quality basketball complex, which especially appeals to Magic Johnson.
“I’ve been driving around when I go to Laker games and looking at the Transamerica building and dreaming about what it will become,” said the former National Basketball Assn. star. “I’ve always wanted to do something downtown.”
Magic Johnson emerged as a player in the real estate industry in 1995 when he opened a movie theater complex in the city’s Crenshaw District. Canyon-Johnson, a Los Angeles-based real estate fund backed by the California State Teachers’ Retirement System and other investors, focuses on financing revitalization projects in urban areas. It has invested in a $125-million residential and retail complex under construction at Sunset Boulevard and Vine Street in Hollywood; that development is about 70% complete, according to Bobby Turner, co-managing partner of the fund.
Leading the acquisition of Transamerica Center is David Margulies, chief executive of Beverly Hills-based New Pacific Realty and a former partner at capital management firm Apollo Real Estate Advisors. His previous projects include the Sunset Millennium mixed-used development in West Hollywood.
He described Transamerica Center as “a real diamond in the rough that we thought we could revitalize and restore to modern standards.” The new owners are slated to spend as much as $50 million on improvements.
Construction could begin within six months, Margulies said. He expects the sale to close by the end of April. Soon after that, designs for new development will be completed, he said. If the main office tower is converted to apartments or condominiums, it could include more than 500 units.
The tower on Olive Street is now about 88% occupied by office tenants, who eventually would have to move. The 11-story Transamerica building on Hill Street also is 88% occupied, but the 10-story Broadway building is only about 40% occupied. The latter is being eyed by city officials as a potential site to relocate police headquarters personnel now in Parker Center, which is considered obsolete.
The Transamerica property east of Staples could be developed to include as many as 1,500 residential units, according to the buyers, which fits with city officials’ plans for the area.
“South Park is an area where we are promoting growth as a mixed-income, predominantly residential community,” said Donald Spivack, deputy administrator of the Los Angeles Community Redevelopment Agency. He called conversion of the tower to residential use “a fascinating idea. It could be an incredible landmark in the heart of South Park.”
Nearby property owners and managers are watching the development with interest. Dan Rosenfeld of Los Angeles-based Urban Partners, Hearst’s partner for the planned redevelopment of the unoccupied Herald-Examiner building, said discussions are underway with potential tenants, including the YWCA, that are willing to preserve its 1914 architecture.
Staples Center is the driving influence that has attracted a host of developers to South Park, he said. The planned second phase of hotel, retail, office and entertainment space around Staples would “completely transform the neighborhood,” he said.