Downtown Los Angeles office properties, including prominent buildings like the Gas Company Tower and Aon Center, are attracting buyers taking advantage of steep discounts driven by high vacancy rates. These investors aim to boost occupancy and increase property values with plans to either sell at a profit or hold valuable assets in prime locations, according to BisNow.
Rents Drop Less Than Prices
While some buildings have changed hands at discounts nearing 70%, rents have only fallen modestly in comparison. For example, the average asking rent for seven buildings sold between late 2023 and mid-2025 dropped about 22.5% to roughly $28.50 per square foot, a steeper decline than the overall Downtown office market, which saw rents fall just under 8% from pre-pandemic levels. Yet many of these properties still face vacancy rates near 33%, making rent reductions feel insufficient to some brokers.
Concessions Remain Tight
Contrary to what might be expected, tenant incentives like improvement allowances and free rent have stayed largely steady. Tenant improvement allowances for larger spaces remain flat, with a minor increase to $75.52 per square foot in the third quarter of 2025.
Meanwhile, free rent offers have risen slightly from 5.8 to 6.1 months year-over-year. However, brokers note that many discounted properties are not offering these concessions freely, suggesting landlords prefer to selectively negotiate incentives for the right tenants.
Landlords appear to favor investing in property upgrades rather than lowering rents to attract tenants. With extra capital from buying at discounted prices, many investors are pouring money into improvements that appeal to the “flight to quality” trend among tenants seeking premium office environments.
Trophy Properties Maintain Value
Even buildings long considered “trophy” assets in Downtown LA maintain strong rent levels, reflecting significant investments made by previous owners. For example, the $210 million purchase of 601 S. Figueroa by Uncommon Developers underscores confidence in the value of these premier properties.
The new owners see opportunities to reposition these buildings through leasing and conversion without undermining past capital improvements.
