Los Angeles County is considering purchasing the Gas Company Tower, a prominent downtown skyscraper, for $215 million in a foreclosure sale. This price is significantly lower than the building’s $632 million appraisal in 2020, reflecting a sharp decline in downtown office values in recent years.
The deal is pending approval from the Board of Supervisors and follows intense negotiations by county real estate officials. If finalized, the purchase could potentially relocate county offices from existing locations, such as the Kenneth Hahn Hall of Administration, which has been in use since 1960. The county is currently assessing the property’s condition, including potential structural issues, a process expected to take two to three months.
The county has stated that it submitted a nonbinding “letter of interest” for the Gas Company Tower, citing the opportunity to acquire a high-value asset amid significant price reductions in commercial real estate. Supervisor Janice Hahn has expressed reservations about the purchase, emphasizing her concerns about moving county services from the Civic Center and the lack of a detailed plan.
Completed in 1991, the 52-story Gas Company Tower at 555 W. 5th St. was once one of the city’s premier office buildings, featuring about 1.4 million square feet of space. The tower is situated on a 1.4-acre site and was recently renovated in 2023. It is currently over half leased to tenants such as Southern California Gas Co., Deloitte, and Latham & Watkins.
The building’s previous owner, an affiliate of Brookfield Asset Management Ltd., defaulted on its debt, leading to the property’s receivership. The Gas Company Tower has approximately $465 million in outstanding loans. The recent downturn in the downtown office market, driven by rising interest rates and increased remote work, has affected property values, leading to more foreclosures and discounted sales.
The county views the Gas Company Tower as a potential alternative to the costly seismic retrofitting of its existing downtown properties. It owns 33 buildings deemed vulnerable to earthquake damage, including the Kenneth Hahn Hall of Administration. The county has committed to upgrading these buildings within the next decade, a project estimated to cost hundreds of millions of dollars.
