Brookfield DTLA’s EY Plaza Is Second Building To Go Into Receivership Amid Weakening Office Market
The 41-story Class A EY Plaza at 725 S. Figueroa St. is the second building to fall into receivership in downtown Los Angeles. in the past two months. (CoStar)
By Jack Witthaus
CoStar News
May 25, 2023 | 12:08 P.M.
A second office skyscraper has fallen into receivership in downtown Los Angeles in another sign of trouble for the biggest office market in America's second-largest city.
The 41-story Class A EY Plaza at 725 S. Figueroa St. has gone into receivership, according to a statement by Colliers, which was awarded the building's leasing and property management.
Gregg Williams, principal receiver of Newport Beach-based Trident Pacific, has been appointed receiver. The job of a receiver is to reposition distressed properties to later sell for creditors or prepare foreclosure for the real estate owned arm of a creditor.
Investors and owners are paying attention to downtown L.A.'s office market as similar struggles may play out in other cities across the U.S., according to Bloomberg. The U.S. office market's average vacancy is a record-setting 13%, according to CoStar data. Working from home, hybrid work and economic uncertainty are causing companies to rethink their physical space needs, crushing demand for office in cities across the nation.
EY Plaza's owner is Brookfield DTLA, which is partially owned by Canadian real estate giant Brookfield. The EY Plaza news comes after the 52-floor Gas Company Tower at 555 W. 5th St. fell into receivership after the same owner of EY Plaza, Brookfield DTLA, defaulted on loans related to the Gas Company Tower. The Gas Company Tower was roughly 27% empty when it went into receivership.
'Value Worth Protecting'
Meanwhile, EY Plaza is roughly 20% vacant, according to CoStar data. The around 968,000-square-foot building was built in 1985 and was designed by Chicago-based architect Skidmore Owings & Merrill.
“EY Plaza is one of the best office buildings in all of Los Angeles, and its value is worth protecting,” Sean Fulp, head of office capital markets for Colliers, said in a statement. Fulp is marketing the building for lease. “We will not sit back and wait for the market to determine its fate. The building is now very well capitalized, and we have a highly skilled team of management and transaction professionals to ensure it remains one of the premier options for tenants in downtown L.A.”
Brookfield DTLA warned investors in April that it may choose to foreclose on EY Plaza and its 54-story Wells Fargo Center North Tower. As of last month, mechanics liens had been filed on Wells Fargo Center North Tower and EY Plaza.
Brookfield DTLA had $2.3 billion of total consolidated debt as of March 31, including $1.1 billion maturing in 2023 and $400 million maturing in 2024. The properties in its portfolio were 77.3% leased as of April.
The firm is seen as a bellwether for the 69 million-square-foot downtown Los Angeles office space as it owns one of the largest office portfolios in the urban center. Downtown L.A.'s office market average rent is $39.60 per square foot, down 0.15% year over year and below the greater L.A. average of $42.31 per square foot, according to CoStar data. The market's vacancy is 18.5%, above the greater L.A. average of 14.9%.
For the Record
Colliers' Sean Fulp, Matthew Heyn and Ian Gilbert are marketing the building for lease. Colliers' Kevin Rude and Tina Minook are managing the property.