LA Companies Buy Office Buildings as Values Bottom Out

Major tenants in downtown Los Angeles are purchasing the office buildings they previously rented as property values have plummeted following a pandemic-era market collapse. This shift toward owner-occupancy is becoming a dominant trend in the local real estate market, with owner-users now accounting for nearly half of all downtown office deals.

The trend is driven by a combination of soaring vacancy rates and depressed asset values, which have created opportunities for wealthy renters to acquire their properties at bargain prices. Entities such as Riot Games, the Los Angeles County government, and fund manager Capital Group have transitioned from tenants to owners.

Capital Group has agreed to pay approximately $210 million for the 55-story Bank of America Plaza located atop Bunker Hill, a building where the firm already maintained offices. The Los Angeles Department of Water and Power is also considering the purchase of 865 S. Figueroa St. In downtown Los Angeles.

We knew the best landlord we could possibly have would be ourselves

Mike Gitlin, Capital Group Chief Executive

Market Bottoming and Investment Recovery

Industry analysts and brokers indicate that the Los Angeles office market is stabilizing after a prolonged decline. Data from the first half of 2025 showed $1.8 billion in office investment sales, signaling a recovery in activity.

Investment volume saw a significant spike in the second quarter of 2025, with sales totaling nearly $1.2 billion. This figure more than doubled the $467.7 million recorded in the second quarter of 2024. According to a report from Newmark, five transactions exceeding $100 million contributed to this surge.

The increase in transaction volume is attributed to a growing number of market comparables, which provide the price transparency necessary for investors to return to the market. Sean Fulp, the head of capital markets for Colliers U.S. Southwest, stated that there is now sufficient information for institutional investors to assess the market’s trajectory.

Kevin Shannon, a property broker at Newmark, noted that the lack of data points in previous years served as a primary barrier to transactions. He indicated that the current increase in comparable sales has provided buyers and sellers with clearer bearings on pricing.

Distress and Economic Viability

Despite the increase in sales, the downtown Los Angeles office sector remains under significant pressure. The market is currently facing a vacancy rate of approximately 25%.

Reports indicate that roughly 47% of the office inventory in Los Angeles is economically unviable. This distress is largely the result of hybrid work patterns and increased borrowing costs, which have suppressed leasing activity.

This environment of financial pressure has created a pipeline of opportunities for value-seeking buyers. Properties with occupancy levels below 70% are increasingly entering the market as loan maturities approach, allowing occupant businesses to seize ownership of their workspaces.

The current market dynamics suggest that while the broader office sector continues to struggle with occupancy, the availability of distressed assets has turned the crisis into a strategic advantage for large-scale tenants with the capital to purchase their own real estate.