US Bank Tower

MPG Selling U.S. Bank Tower for $367.5 Million

Posted on March 16, 2013 ยท Posted in Property Acquisition

The iconic U.S. Bank Tower is being sold by MPG Office Trust to a group of Singapore investors for $367.5 million. The 72-story circular office tower has been a fixture of LA’s skyline since it was completed in 1989 but occupancy has dropped following the recession as Downtown LA has struggled to attract and keep tenants.

The tower is the tallest building in the Western United States (though the Transbay Tower is set to exceed it when completed in 2017) and was designed by the firm of legendary architect I.M. Pei. The property contains 1.3 million square feet of space but the latest figures indicate that the tower is only 60% leased meaning that roughly 520,000 square feet is currently vacant.

In addition to the high vacancy rate in Downtown Los Angeles, sources believe the lack of interest in the iconic building is a result of the shape which is less efficient for tenants relative to square or rectangular floor plates. The properties layout may also need to be redone as the age of large executive offices and clustered cubicles has given way to more open floor plans that foster collaboration between employees and departments.

The property has gone through three different names originally known as the Library Tower then the First Interstate Bank World Center. The building has been known as the U.S. Bank Tower since 2003 when it was leased by U.S. Bancorp and has been featured in a number of films including the 1996 Sci-Fi blockbuster Independence Day.

The seller, MPG Office Trust Inc. (the remnants of Maguire) is looking to pay down debt and observers noted the price was fair considering the size and location. The buyer, Overseas Union Enterprise, is well know in Asia where it operates a variety of commercial properties including hotels, office and residential properties.