Chase Plaza is a 15-story, 105,000-square-foot office tower occupied by 14 tenants. It is located at 888 West 6th Street.

LOS ANGELES—Investor demand for quality office product is picking up in the Downtown Los Angeles market. Chase Plaza has traded hands between two unnamed investors for $50 million in a highly competitive sale that drew international attention. The sale serves as an example of the changing market, which is getting more popular among tenants and still offers a relative value for investors to markets like West Los Angeles.

“We had more activity on this building than any other buildings we have sold in the last 12 months,” Phillip Sample, SVP at CBRE, tells GlobeSt.com. “Most of the demand is not coming from local investors but from the East Coast and abroad, specifically. Foreign investors and companies alike are flocking to Los Angeles, trying to capitalize on our employment talent in downtown. Westside companies are looking to gain access to this growing talent pool. We expect rents will continue to climb as we anticipate further increases in demand for office space.” Sample and his CBRE colleagues Brad Chelf, Chris Caras, and Michael Shustak represented the seller, which was described as a partnership between a New York-based group and a local investment company, and the buyer in the transaction.

The increase in investor demand for properties like Chase Plaza aligns with a increase in demand from creative tenants for space in the market. Creative tenants have been courted to the market, but are just one brand of new tenants, which include co-working spaces and professional services firms “We are currently completing leases for different types of tenants from the Westside we haven't seen in Downtown before,” says Sample. “It is a very exciting time. This growing tenant demand is justifying some of the sales pricing we are seeing now. Downtown just saw a few larger lease deals that are supporting office rents. Downtown Los Angeles is gaining momentum and finally becoming an urban center that can compete with other major metropolitan markets such as San Francisco and Chicago.”

As a result, property values and rental rates are beginning to rise, and investors that haven't made the plunge are now wanting to get into the game. “The increase in demand for downtown office space is pushing pricing. We are starting to complete deals that justify the rents we have been forecasting, and the pricing is going up accordingly,” Sample explains. “Investors have been watching the L.A. office market and this particular part of town. 2016 has been a year of confidence building. They are seeing this area continue to transform and thrive, and money that's been sitting on the sidelines is now making moves.”

Chase Plaza is a 15-story, 105,000-square-foot office tower occupied by 14 tenants. It is located at 888 West 6th Street.