The high office vacancy rate in Downtown Los Angeles isn't deterring investment capital from scooping new opportunities. Lincoln Property Co. has sold its trophy asset the Wedbush Center at 1000 Wilshire for $196 million to Cerberus Real Estate Capital Management. The property is a 476,491-square-foot, 21-story office building in downtown Los Angeles that has recently undergone a $4 million renovation focused on the ground floor lobby, and has seen $27 million in renovation and upgrades since 2000.

“Downtown Los Angeles is becoming increasingly popular with investment capital,” Kevin Shannon, co-head of US capital markets at Newmark Knight Frank, tells GlobeSt.com. “The attractive discount to replacement cost found in this CBD can't be close to replicated in any other coastal gateway market nationally.  The appetite for this offering   was solid and the buyer depth was strong. More and more investment capital is getting comfortable with Downtown LA as a core office market. The Downtown L.A. lifestyle continues to be positively impacted by additional retail, hospitality and housing amenities just like other popular 24/7 CBDs.”

Shannon represented the seller in the deal, along with Senior Managing Director Rob Hannan, Managing Directors Laura Stumm and Michael Moll and Executive Managing Director Ken White. Shannon says the seller chose to bring the property to market because it was near stabilization and had completed its planned renovations. “The seller was looking to dispose of the asset because the rent roll was close to stabilization but also because two key project enhancements had recently occurred. First, the seller's ground floor lobby renovation, which included a cool bar area and restaurant with collaborative indoor and outdoor spaces had opened up,” he says. “The other game changer for the project was the opening of the Wilshire Grand, which eliminated a massive construction zone and added a prestigious amenity base adjacent to the location. Additionally, the capital markets environment from both a debt and equity perspective was solid. It was time.”

While the Downtown market has seen slow growth, renovated properties do perform well in the market. As a result, this property was very attractive to investors.  “Capital loves renovated office product throughout the greater Los Angeles basin and Downtown L.A. is no exception,” adds Shannon. “The lift in market rents because of the renovation makes the existing rent roll safer and provides the next owner mark to market upside.”