Coretrust Renews Full-Floor Lease in Los Angeles CBD

PeopleSpace extended its lease at FourFortyFour South Flower until 2031.

444 S. Flower St. Image courtesy of Coretrust Capital Partners

PeopleSpace has renewed its full-floor lease at Coretrust Capital Partners’ FourFortyFour South Flower in Los Angeles’ central business district. The workspace strategy, office furniture and custom architectural solutions firm agreed on a 10-year term for its 7,000-square-foot space on the second floor.

According to CommercialEdge data, Coretrust Capital Partners acquired the 914,343-square-foot office tower for $336 million in November 2016 from Hines Interests. In 2018, the property became subject to a $258.8 million loan, held by AIG.

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The 48-story tower is situated at 444 S. Flower St., on the corner with Fifth Street. The building includes floor plates averaging 22,286 square feet and a second-floor, 12,000-square-foot conference and event center named The Gallery, which comprises two multi-purpose rooms with teleconferencing facilities and other amenities. FourFortyFour South Flower also includes roughly 32,500 square feet of retail space. The downtown location allows for immediate access to multiple shopping, dining and entertainment destinations.

PeopleSpace also intends to modernize its Customer Experience Center, which will serve as a collaborative working lab and venue for industry events.

Haworth, an office furniture manufacturer, is a partner of PeopleSpace and it also occupies an entire floor in the building. Other FourFortyFour South Flower tenants include Equinox, Starbucks, Mendocino Farms, OmNom Organics, Citibank, Industrious and the U.S. Securities and Exchange Commission.

According to CommercialEdge, JLL serves as the leasing broker for the property.

Previously known as Citigroup Center, FourFortyFour South Flower gained popularity after appearing in the NBC television show L.A. Law, which aired between 1986-1994. When it was built in 1981, it was the fifth-tallest tower in Los Angeles. The steel and glass tower was designed by AC Martin & Associates.

Upgraded for a COVID-19 era

Coretrust has invested more than $25 million in upgrades to the building’s operating systems, common areas and amenities. Recent improvements include a 1,000-square-foot loggia terrace on the sixth floor of the building, which is part of a 22,500-square-foot Workplace Innovation Lab. The space is a proprietary collaboration with Haworth, Gensler and other companies in the industry aimed at demonstrating several different advanced office environments.

The building also includes touchless controls for the modernized elevators, garage entry, bathroom fixtures and other points of access.

Air quality improvements were also made through the installation of an ultraviolet germicidal irradiation in-duct purification system, upgraded MERV-14 rated air filters and continuous elevator air purification. The building is LEED Gold-certified, as well as Energy Star-certified. Additionally, FourFortyFour received a Tier 2 UL Verified Healthy Building Mark for air and water quality.

Randall Scott, managing principal of asset and property management at Coretrust, told Commercial Property Executive that such pandemic-response upgrades to building infrastructure will be increasingly important to office occupants. However, Coretrust clients have not requested significant changes to their spaces since the onset of the health crisis.

“This might be an indication that there is not a complete reinvention of the office happening so much as a reconsideration of how companies might utilize their space,” Scott said.

As for leasing activity in the metro, Los Angeles has been slow to recover, with few significant deals—such as FabFitFun’s full-floor lease with WeWork in West Hollywood. As of May, office vacancy in the metro reached 13.6 percent, a 190-basis-point year-over-year increase, the latest CommercialEdge report shows.

However, Coretrust is bullish on the market’s rebound. Senior Vice President of Asset Management Spike Whitney told CPE that he expects the downtown L.A. market’s recovery to be robust and long-lasting, as the city returns to a more normal level of activity.

“The consensus seems to be that with the reopening of in-person K-12 classroom instruction after Labor Day, most employers will expect most of their staff to be in the office at least three days per week. As that occurs, and the shakeout of hybrid work models ensues over the following months, we believe that these workplace practices, together with the accelerating economic recovery, will drive a substantial increase in net office demand,” Whitney said.

This article was updated to include comments from Coretrust executives and to mention the exact square footage PeopleSpace occupies at the property.

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