Flagging office market? Not according to JPMorgan, now hoping to sell a 1.4 million-square-foot office property in Santa Monica for $1.4 billion.
J.P. Morgan Asset Management has listed the Water Garden at 1620 26th Street, Green Street reported. The 17-acre campus, whose eight six-story office buildings are 84-percent occupied, is home to such tenants as Amazon.com and Sony.
The property listed weeks ago, as covered by The Real Deal, but previously the asking price was not disclosed.
The $1,000 per square foot ask is twice the going rate for high-end office properties in Los Angeles, which have ebbed this year as office demand has dwindled in response to the remote work trend.
The average price on trades of $25 million or more across the region this year is $505 per square foot, down 20 percent from last year’s average of $629 per square foot, according to Green Street’s Sales Comps Database.
If sold for $1.4 billion, the 17-acre Water Garden would be the nation’s largest single office trade since March, when Blackstone paid $1.4 billion for a 49-percent stake in One Manhattan West, a 2.1 million-square-foot building in New York.
A deal would also go against the grain of rising borrowing costs and falling sales prices and transactions nationwide.
J.P. Morgan Asset Management, a New York-based unit of JPMorgan Chase, acquired the property in 2001. Market experts say the offering is a signal of the firm’s waning confidence in the office sector and a way for it to take some chips off the table, according to Green Street.
In May, Amazon signed a deal to rent 200,000 square feet of offices at the Water Garden, considered the largest Westside office campus north of Interstate 10.
The park-like business center, linked by meandering waterways about two miles from the beach, also houses software giant Oracle, with 290,000 square feet, and Entravision, with 145,000 square feet.
The Water Garden, next to Hulu, Roku and HBO offices at the Colorado Center, is in one of the most expensive office markets in Greater L.A. The average asking rent for Class A office space in Santa Monica was $6.32 per square foot per month in the first quarter, compared to the $4.09 county average, according to Newmark.
That rate would peg Amazon’s lease at $15.2 million per year, according to the Commercial Observer.
The white buildings checkered with large green-tinted windows include cafes and restaurants, a fitness center, daycare center, childcare, banks and parking for nearly 4,200 cars. JPMorgan completed a $50 million renovation about six years ago.
The property, listed Nov. 4, is for sale for the first time since it was completed 30 years ago, and at a tough time for office real estate — facing rising interest rates, climbing vacancy rates during and the specter of remote work.
Occupancy in the Los Angeles area was at record low of 80 percent at the end of the third quarter, according to Newmark. The 9.8 million square feet of office space in Santa Monica was 80.6-percent occupied, with an average asking rent of $74.40 per square foot for premium offices.
The West Los Angeles submarket, which includes Santa Monica, has been hit by recent cost-cutting in the technology industry, the brokerage said.
Tech companies that once led much of L.A.’s office market are pulling back, with Amazon announcing a hiring freeze and Meta, parent company of Facebook, which will spend $3 billion through next year to consolidate its offices worldwide.
In response, major office investors in Los Angeles are heading toward the exits.
More than a quarter of L.A. offices are either vacant, available for sublease or will soon be available, for a record 25.4 percent availability rate, according to third-quarter report by Savills.
— Dana Bartholomew
The post Water Garden asking price: $1.4B appeared first on The Real Deal Los Angeles.
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