The trophy office tower located at 1055 W. 7th Street in Downtown Los Angeles, formerly known as the ARCO Tower, presents a compelling investment opportunity. Currently owned by an entity affiliated with Thomson Reuters, the property is primed for residential conversion. A key advantage is the full entitlement already secured for this transition, eliminating the need for costly and time-consuming structural retrofits.
Acquired in December 2007 for $184 million, the property boasts significant potential, according to a marketing flyer by Newmark who is leading the sales efforts on behalf of the owner. With 622,160 square feet of space, the 33-story tower could comfortably accommodate up to 686 residential units. Constructed in 1989, the building features floors averaging between 18,756 and 20,576 square feet, adaptable for various apartment layouts. Additionally, an existing 9-story parking structure with a 1,116-car capacity ensures sufficient parking, which would be an attractive feature for potential future residents.
Newmark serves as the exclusive advisor for the property, presenting investors with two distinct opportunities. Interested parties can form joint venture partnerships with the current sponsor to execute the redevelopment vision or choose to acquire fee-simple interest in 1055 W 7th for full ownership.
The approved conversion plan strategically maximizes the building’s inherent advantages. Residents will enjoy a mix of market-rate studio, one, two, and three-bedroom apartments that could range in size from 545 to 2,092 square feet. An additional 34,000 square feet could be dedicated to amenities, including a rooftop amenity deck with panoramic views and a pool. The tower’s location, overlooking the 110 Freeway, offers both convenience and visibility within the vibrant Downtown Los Angeles market.
Market analysis highlights an increasing demand for high-end housing in this particular area of Downtown Los Angeles, further underscoring the potential of this redevelopment project. Investors can also rely on the building’s existing structural integrity, advantageous location, and conversion strategy to be part of perhaps one of the largest commercial to residential conversions on the West Coast.
Commercial office to residential conversion holds a unique appeal in today’s market for several reasons. Firstly, the lingering effects of the pandemic have left many commercial office spaces underutilized as remote or hybrid work models persist. Converting these spaces into residential units addresses the growing demand for housing in many urban areas, helping to alleviate housing shortages. Additionally, conversions capitalize on existing infrastructure, reducing construction waste and potentially offering faster, more cost-effective solutions compared to new residential developments. This adaptive reuse approach can also revitalize urban areas, bringing residents into districts previously focused on daytime commercial activity.
Newmark’s Kevin Shannon and Ken White are leading the institutional investment sales efforts. Chris Benton, Anthony Muhlstein, and Gabe Munson provide specialized expertise on the multifamily marketing initiatives.
