Arco Plaza Wins Star Tenant
The Bank to the Stars is heading downtown.
City National Bank, headquartered in Beverly Hills, is expected to announce today that it will lease 310,000 square feet of space in Arco Plaza. It will be the largest lease deal in downtown Los Angeles this year and the latest sign that the central business district’s commercial real estate market is recovering.
For the record:
12:00 AM, Nov. 21, 2003 For The Record
Los Angeles Times Friday November 21, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 50 words Type of Material: Correction
Bank lease -- An article in the Business section Thursday about City National Bank’s leasing of space in Arco Plaza misstated the assets of the Beverly Hills-based bank. City National’s assets total $12.8 billion, not $27.5 billion, which is the amount of the bank’s investment and trust assets under management.
Under terms of the 15-year lease agreement, Arco Plaza’s landmark twin towers eventually will be renamed City National Plaza, returning a bank’s moniker to the downtown skyline after the disappearance of financial institutions such as Security Pacific and First Interstate during the last two decades.
“This is a huge vote of confidence in downtown Los Angeles because we know they were looking at other locations in Southern California,” said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., a nonprofit group that has its offices in Arco Plaza.
Terms of the lease were not disclosed, but brokers specializing in the downtown market estimated the deal at $120 million, based on a price per square foot ranging from $24 to $30.
City National, the largest bank based in Southern California, will start moving into Arco Plaza next year as it consolidates more than 20 departments housed in offices downtown and elsewhere in Los Angeles.
When the move is completed by 2006, the bank expects to have about 800 employees on 12 floors in the property’s south office tower at 555 S. Flower St.
“This will work best for our clients and our colleagues,” said Russell Goldsmith, City National’s chief executive. “We are committed to Los Angeles. It’s a recognition that we are the largest local bank here.”
City National, which long has catered to a high-end and celebrity clientele, will maintain its headquarters in Beverly Hills. The company, with $27.5 billion in assets, said last month that its deposits in the third quarter had risen 23% from a year earlier.
City National will take up space being vacated by Bank of America Corp. and several law firms. BofA earlier this year announced plans to move employees from Arco Plaza and consolidate its downtown space at 333 S. Hope St., on top of Bunker Hill. The bank said one of the reasons it was moving was that Arco Plaza’s landlord said it wanted to raise rents.
Arco Plaza is owned by Thomas Properties Group, which bought the 2.7-million-square-foot property this year for $270 million, less than half what it sold for 16 years ago.
With its twin 52-story towers, Arco Plaza was once considered one of the best corporate addresses in the city, home to Fortune 500 petroleum company Arco, which owned the property with Bank of America before selling it. Arco was acquired by British oil company BP in 2000.
“We are just delighted to have them for a tenant,” James A. Thomas, who heads Thomas Properties, said of City National.
Currently, Bank of America and BP are the largest tenants in Arco Plaza, Thomas said. But City National will be the largest when its move is complete, he said.
The entire property, which is located in the heart of downtown on Flower Street, between 5th and 6th streets, will be renamed City National Plaza in September 2005. Thomas Properties has embarked on a five-year, $125-million program to transform the plaza with restaurants, retail outlets and special lighting.
“City National has been looking all over Southern California. This is such great news for downtown that we are able to keep them,” said broker Joe Faulkner, executive managing director of Charles Dunn Co., a regional commercial real estate brokerage company. “It’s a big, big statement.”
The market for downtown Los Angeles office space this year is considered by brokers to be on the upward arc of the real estate cycle, based on rent and overall vacancy trends, employment forecasts and projects in the construction pipeline.