- The BofA Plaza’s appraisal dropped to $188.9M, down from $605M a decade ago, reflecting severe challenges in LA’s office market.
- Brookfield DTLA’s portfolio faces mounting pressures, with 6 of 7 properties in default on a combined $2.2B in debt.
- Central business district office values in the U.S. have fallen 53% since March 2022, highlighting the sector’s ongoing struggles.
According to Bloomberg, the 55-story Bank of America Plaza, built in 1974 and renovated in 2009, saw its appraised value plummet by 69% over the past decade.
Digging Deeper
As of July, the building was 79% leased, but its $400M in CMBS debt matured on Sept. 1 without repayment or refinancing.
Brookfield Asset Management, which owns the property, remains in discussions about the loan’s future, according to spokesman Andrew Brent.
CWCapital, the loan’s special servicer since July, declined to comment on the matter.
Bigger Picture
The challenges at BofA Plaza mirror broader issues in Brookfield’s Downtown Los Angeles (DTLA) portfolio. Six of the seven properties in the portfolio are in default, including the Gas Company Tower, which was once valued at over $630M
The County of Los Angeles recently agreed to purchase the Gas Company Tower for an amount not exceeding $200M—another significant valuation loss.
The struggles at BofA Plaza are also emblematic of a wider decline in office properties across U.S. central business districts:
- CBD Office Value Decline: According to MSCI Inc., office values in central business districts fell 53% from March 2022 to September 2024.
- Vacancy Rates: Downtown LA faces some of the worst metrics, with a 38% availability rate in 3Q24, per CBRE Group.
- CMBS Delinquency: According to Bloomberg, the office sector CMBS delinquency rate jumped to 9.3% in October from 5.7% a year earlier.
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Mixed Signals
Despite struggles in the office sector, other segments of commercial real estate are faring better. A Green Street report shows overall property prices have risen 3% YTD through October.
Nick Goodman, President of Brookfield Corp., offered a cautiously optimistic outlook during a recent earnings call, highlighting improving liquidity in capital markets. He noted Brookfield has secured $30B in financings in recent months, with CMBS markets remaining “very active.”
Looking Ahead
The fate of Brookfield’s BofA Plaza and broader DTLA portfolio remains uncertain as negotiations continue. Meanwhile, the precipitous decline in office values underscores the mounting challenges facing urban office markets nationwide.
As cities grapple with high vacancy rates and shifting work trends, the outlook for commercial office properties in central business districts remains bleak, even as other sectors begin to recover.
