Los Angeles Office Market Sees Half of Sales Close at a Loss Over Past Year

The Los Angeles metropolitan office market experienced significant distress over the past year, with half of all office sales between Q2 2025 and Q2 2026 closing at a loss. This trend is largely attributed to lender-driven sales, where financial institutions are offloading properties after defaults. Kevin Shannon, co-Head of Capital Markets at Newmark, noted that sales involving a lender as the seller almost invariably result in a loss.

Several high-profile transactions exemplify this, including Brookfield Properties' sale of Bank of America Plaza for $210M, significantly less than its prior valuation, following a $400M CMBS loan default. Brookfield also sold 333 S. Grand Ave. (Wells Fargo Center North) out of foreclosure for an estimated $150M. DivcoWest sold a Glendale office building for $70M, less than half its 2017 purchase price. Larger buildings, over 100,000 square feet, were particularly affected, with nearly 80% selling at a loss, according to Colliers data.

Conversely, profitable sales tended to be lower-rise properties in affluent Westside areas, such as Hudson Pacific Properties' $150M sale of Element LA to Riot Games, and Alo Yoga's $90M acquisition of the La Peer building in Beverly Hills. While LA's 50% loss rate mirrors the national average, the city lags behind markets like San Francisco and New York City in deal volume and velocity, primarily due to a sputtering entertainment industry and the absence of a strong economic engine like AI or financial services. For developers and investors, this indicates a bifurcated market with opportunities in specific sub-markets and property types, alongside ongoing challenges in larger, distressed assets.