Adidas signs Los Angeles’ largest office lease in more than a year

The German athletic shoe and clothing maker has leased 107,000 square feet in a new Brookfield Asset Management redevelopment, the developer said. According to Brookfield, the deal — a major expansion of Adidas’s Los Angeles operation for marketing, sales and design — is the largest lease signed in the city of Los Angeles in more than a year.

According to people familiar with the matter, in 2017 Brookfield bought a controlling stake in the 2.5-million-square-foot complex known as the California Market Center, with the property valued at $440 million. It was the center of the fashion-industry at the time. The developer has since spent nearly $250 million to consolidate those firms into one of its three buildings and redesign the remaining space for a range of office tenants.

Adidas, which now only has a small office in downtown Los Angeles, will initially occupy the top floors of two interconnected buildings. Brookfield senior vice president John Barganski said the company was attracted to the property because of its proximity to new hotels, apartments, bars, restaurants and cultural attractions.

It didn’t hurt that the location was close to the Crypto.com Arena sports complex, formerly known as the Staples Center, where the Los Angeles Lakers, Clippers and Sparks play professional basketball and the Kings play hockey. “In our marketing materials we identified how many stairs it was from our location to Staples,” Mr. Bargansky said.

Like most US markets, the city of Los Angeles has been slammed by the pandemic, with office vacancies among the highest in the US. The vacancy rate rose to 19.6% in the third quarter of last year, compared to 15.7% a year ago. Downtown Center Business Improvement District.

According to commercial real estate services firm JLL, the broader regional Los Angeles office market had a vacancy rate of 19.2% at the end of the third quarter, higher than cities such as Chicago, New York, Boston and Washington, D.C. Los Angeles had a vacancy rate of 13% at the end of 2019, JLL said.

Downtown Los Angeles has long been a major office district for law firms, accounting firms, and government agencies. But in recent decades, most of the growth in the Los Angeles area has happened in other markets, such as Santa Monica, West Los Angeles and Culver City.

Downtown became more competitive after the opening of the Staples Center and Walt Disney Concert Hall nearly two decades ago, followed by apartment, hotel and retail development. According to the Downtown Center Business Improvement District, the apartment occupancy rate was 93.6% at the end of the third quarter, up from 85.2% a year earlier.

Despite the popularity of remote working, Mr Bargansky said Brookfield is betting that office space will remain the primary location where work will take place in the future.

“We know they will be back,” he said.

This story has been published without modification to the text from a wire agency feed