LOS ANGELES—Cornerstone Real Estate Advisers has purchased 801 Tower, a 446,534-square-foot office building in Downtown Los Angeles, from the Mani Brothers Real Estate Group. The purchase price was undisclosed, however, industry sources unrelated to the transaction tell GlobeSt.com that Cornerstone paid approximately $190 million for the property.

“The acquisition of 801 Tower checked all the boxes for Cornerstone. It is a great real estate asset that we were able to acquire at a substantial discount to replacement cost and which has significant upside potential,” Chris Black, SVP of acquisitions for Cornerstone Real Estate Advisers, tells GlobeSt.com. “We also really like buildings within gateway cities that demonstrate favorable supply and demand fundamentals. The revitalization of Downtown Los Angeles and its transition to a 24-hour city presents strong prospects for future rent growth.”

Located at 801 S. Figueroa St. in downtown's South Park district, the 25-story office tower, which has 12,036 square feet of ground floor retail space, is positioned to benefit from the resurging downtown market, which is attracting office users from the Century City and West Los Angeles market where prices are skyrocketing. “Numerous development projects such as Metropolis and the new Wilshire Grand are currently under construction and will only improve an already exceptional location,” Black explains. “Additionally, the property's convenient access to freeways and the 7th Street/Metro Center Station is viewed as beneficial by prospective tenants.” 

It's true that the South Park submarket is attracting office users, and for that reason, multifamily demand in the market is also on the rise. To help supply the demand, Wood Partners has finished developing a new multifamily building in the South Park neighborhood. The developer is brining the 22-story 8^th+Hope property to market, and has already received significant interest. On the other hand, Cornerstone purchased the 801 Tower in an off-market transaction, so there was no competition with other buyers. Black adds, “During the acquisition process we were able to work with the seller to negotiate a long-term lease extension with the largest tenant in the building.”