In one of the largest transactions ever recorded in the downtown Los Angeles office market, The Ratkovich Company, known for transforming well-located but aging and often neglected properties into creatively designed, dynamic urban spaces, has purchased the landmark Macy’s Plaza in downtown Los Angeles in a transaction valued at $241 million, Colliers International has announced.
Colliers Senior Vice President Richard Schnell, who has worked with the development firm for decades in locating properties that occupy valuable locations but whose owners have let the buildings fall into disrepair or worse, represented Ratkovich in the off-market transaction.
Developer Wayne Ratkovich, often called a visionary for his longtime focus on urban infill and rehabilitation projects in Southern California, began working with Colliers’ Schnell two years ago to find a suitable site for his particular brand of development – taking aging, neglected, often-historic buildings or developments and returning them to either their original grandeur, as he did at the Oviatt Building and the Fine Arts Building in downtown Los Angeles, or completely renovating urban eyesores that are situated on valuable land like Macy’s Plaza.
“This site is considered the premier central location in the downtown region due to its location in the heart of the financial district, just a block or two to L.A. Live and Staples Center,” said Schnell. “It is, without a doubt, the most-coveted development location in the downtown region. Every developer who is active downtown has had their eye on this property, but no one was able to assemble all the pieces until now.”
Built some 40 years ago, the once vibrant, mixed-use retail, hotel and office center, which occupies an entire city block in the center of the downtown business core at 700 Seventh St., will be re-designed into a more open, welcoming center for a new and different type of consumer, many of whom live and work in the downtown region. The price tag for the renovation, which will be designed by the well-known architecture firm of Johnson Fain, has been estimated at $160 million.
“Working together, we identified the most valuable downtown properties whether they were on the market or not,” said Schnell. “This one-owner site was not on the market and the owner told us we could never get financing even if he was interested in selling.” Schnell explained. “When we came back with our offer, he suddenly changed his mind.”
Publicly lauded for his longtime focus on urban infill and rehabilitation projects like the long-neglected Macy’s Plaza, Ratkovich has stated that the only way Los Angeles, which is constrained by an ocean, a mountain range and a desert, can remain a vibrant, growing metropolis, is by making more efficient use of land and buildings in areas previously settled.
According to Schnell, Macy’s Plaza fits that description perfectly. It is probably the most coveted location in all of the downtown region, yet it has been allowed to deteriorate to the point where the tenants that are there want out of their leases, and there are no new tenants showing any interest in leasing space there despite its location.
“Walking into the plaza today is like going back in time about four decades,” said Schnell. “Nothing has changed in terms of the buildings or anything else. It is old, dirty, dilapidated and in need of cleaning and basic maintenance. Most importantly, though, is that any expert will tell you that this one square block is the most valuable and well-located potential development site in the downtown core.”
Schnell said this development, which occupies an entire square block, was not on the market when he approached the owner, Jamison Properties, with an unsolicited offer from Ratkovich. Over the next 18 months, the transaction was finalized.
The site, which is bounded by Seventh Street on the north, Eighth on the south, Flower on the west and Grand on the east, currently includes a 33-story office building, a 23-story Sheraton Hotel, and a shopping mall totaling nearly 350,000 square feet on two levels. One of the the retail shopping levels has been closed for months. The development firm will renovate the entire site over the next two years, Schnell noted.