In the early days of the pandemic, the Pacific Design Center’s largest tenants had to close its offices.
WeWork — which to that point had proved more reluctant than other co-working firms to shut down locations — shuttered its 120,000 square feet at the massive complex’s Red and Green buildings, after reports that an employee had tested positive for the virus.
A few months later, the pandemic appeared to put some pressure on the West Hollywood complex’s finances as well. Owner Steve Cohen sought Covid-19 relief for a CMBS loan on the Red Building. Those issues appear to have to have been resolved — servicer commentary notes that relief was canceled and the loan will be removed from the watch list. The loan was never delinquent, according to Trepp.
Cohen Brothers Realty acquired the property in 1999 for $165 million, and developed the 420,000-square-foot Red Building in 2012. The 610,000-square-foot Blue Building — nicknamed Blue Whale — and 390,000-square-foot Green Building had been built in 1975 and 1988, respectively.
The Red Building was refinanced with a $196 million CMBS loan in 2018, while the Blue and Green buildings received a $145 million CMBS refinancing in 2014. Ratings documents for these deals provide an inside look at the property’s finances.
Close behind WeWork, is Cedars-Sinai Medical Center, which has about 114,000 square feet of office space and the Red and Blue buildings.
- WeWork inks 70K sf lease at Pacific Design Center’s RedBuilding
- WeWork takes another 54K sf at Pacific Design Center
- AI firm Poletus signs 21K sf lease at Green Building
- Studio behind “Moonlight” inks lease at Pacific Design Center
- Cedars-Sinai’s latest lease gives it 100K sf at Pacific Design Center
The newer Red Building commands noticeably higher rents than its two older neighbors, with most major tenants paying more than $50 per square foot in base rent annually. The building was 74-percent leased to 12 tenants at the time of its refinancing, and is now reportedly 100-percent leased following deals like a 6,300-square-foot expansion from marketing firm Digital Brand Architects and a 25,000-square-foot lease with A24, the studio behind films like “Moonlight,” “Lady Bird,” and “Ex Machina.”
The Blue and Green buildings, meanwhile, were 73-percent occupied by about 200 tenants in 2014, and occupancy has since dropped slightly to 69 percent according to the latest surveillance report from Kroll Bond Rating Agency.
The buildings’ rent roll has also changed significantly, and the top five tenants at present are entirely different from six years ago when various affiliates of the Interpublic Group of Companies accounted for more than 20 percent of the rent roll.