L.A. County to buy downtown skyscraper for new HQ despite a ‘hell no’ from Hahn

The Los Angeles County Board of Supervisors on Wednesday approved the county’s purchase of the Gas Company Tower, one of downtown L.A.’s most prominent skyscrapers, paving the way for the transfer of thousands of workers and public services out of the city’s civic center.
With a 4-1 vote, the supervisors gave county officials the final green light to move ahead with buying the tower for $200 million.
The approval came over vehement objections from Supervisor Janice Hahn, who warned that the purchase would sound the death knell for downtown’s civic heart and shunt the county’s workforce to a “souless” office tower on Bunker Hill.
“None of you here are going to convince me that this is a good idea,” Hahn said before casting her vote against the purchase with a “hell no.”
County employees are currently based inside the Kenneth Hahn Hall of Administration, a 1960 building named after Hahn’s father, a longtime county supervisor.
The building is one of several county-owned properties considered vulnerable to collapse in a major earthquake. Officials have estimated that it will cost hundreds of millions to upgrade the buildings, making a new, presumably safer skyscraper an appealing alternative to some on the board.
“If we know this building is not seismically safe, then we have an obligation and a responsibility to take action,” Supervisor Holly Mitchell said from the room inside Hahn Hall where the board holds its weekly meetings.
County Chief Executive Fesia Davenport, whose office spearheaded the sale, promised the purchase “will save the county hundreds of millions of dollars” compared with the cost of upgrading the Hall of Administration and other county buildings.
No supervisors have toured the building themselves, according to a county spokesperson, though several of their staff members have visited.
The 52-story tower at 555 W. 5th St. was widely considered one of the city’s most prestigious office buildings when it was completed in 1991. It has nearly 1.5 million square feet of space on a 1.4-acre site at the base of Bunker Hill.
The price is a deep discount from the building’s appraised value of $632 million in 2020, underscoring how much downtown office values have fallen in recent years.
At $200 million, the county would get the Gas Company Tower for about $137 a square foot, a bargain by historical standards. The county also agreed to pay as much as an additional $5 million in closing costs on the transaction.
“This opportunity will not last forever,” Davenport warned, adding that the county could finance the purchase in part from money set aside for capital projects.
Hahn said the transaction was akin to “robbing Peter to pay Paul.”
“The money being used to pay for this purchase is being stolen from the funds that were meant to keep this building alive,” she said from Hahn Hall.
Richard Keating, the architect who designed the Gas Company Tower to appeal to corporate America, said it makes sense for a public entity to take ownership now.
“We’re looking at a decline in need for standard office use, meaning lawyers, architects and accountants are doing things differently” since the pandemic, Keating said. “City and county employees are still hard at work in their office spaces, but they’re tired, old, sometimes decrepit and oftentimes no longer up to code in terms of earthquake” safety requirements.
“It’s a perfect time to take advantage of some of these more or less empty office buildings.”
Moving hundreds of county workers into the Gas Company Tower also stands to lift shops, restaurants and other businesses in the nearby blocks by Pershing Square, he said. “I think it’s a good move all the way around.”
In recent years, the downtown office market has turned against landlords as many tenants reduced their office footprint in response to the COVID-19 pandemic, when it became more common for employees to work remotely.
Last year, the owner of the Gas Company Tower, an affiliate of Brookfield Asset Management, defaulted on its debt, and the property was put in receivership, in which a court-appointed representative took custody of the building to help creditors recover funds they lent to Brookfield. The building has about $465 million in outstanding loans.
Other major tenants in the Gas Company Tower include law firm Latham & Watkins and accounting firm Deloitte. The county will assume the tenant leases as landlord.
When the Gas Company Tower is formally owned by the county, it will be removed from the tax rolls. The building’s property tax bill last year was more than $7.1 million, according to real estate data provider CoStar.
Tenants would, however, be required to contribute to the tax rolls by an unspecified amount through a “possessory interest tax” that can be levied on private companies leasing public buildings. Tenants in privately owned office buildings also commonly pay a share of the landlord’s property taxes.
The building is in good condition with “a remaining useful life” of no less than 35 years, according to a recent property condition report prepared for the current owner that was obtained by The Times.
The report also said the tower and the World Trade Center garage at 333 S. Flower St. included in the deal require about $1.3 million to address urgently needed repairs and deferred maintenance. Additional long-term costs to maintain and modernize the properties were estimated at about $48.7 million over 12 years. Projected costs include roof repairs, refurbishing air conditioning systems and updating the elevators.
The county currently occupies about 16.5 million square feet of office space for 38 departments, which comprises 6.9 million square feet of leased office space and 9.6 million square feet of owned office space, Davenport said in a memo to the board recommending the purchase of the Gas Company Tower.
The county spends about $195 million per year on leased office space, and the property it owns “is in poor condition and old,” Davenport said. Nearly half of it is more than 50 years old.
By moving staff from both leased office space and aging buildings in poor condition, the county avoids paying rent and the “significant” costs of seismic retrofits and other needed renovations to old buildings such as aging air conditioning, plumbing and electrical systems, the chief executive’s memo said. Funds earmarked for seismic retrofits and other renovations of old buildings will be included in the payment for the Gas Company Tower.
The county inspected the building and will buy it “as-is,” Davenport said. The Department of Public Works reviewed a seismic report for the tower and agreed with its findings. A county spokesperson said the findings will remain confidential until the deal closes.
If the county elects to complete a seismic retrofit and other improvements to the Gas Company Tower, it can realize a future return on its investment by selling the building when the market recovers, Davenport said.
Southern California Gas Co. said in September that it is planning to move from its longtime headquarters in its namesake tower, where it has been a primary tenant since the building was completed, to another skyscraper a block north at 350 S. Grand Ave.
The utility signed a long-term lease for nearly 200,000 square feet on eight floors in the Grand Avenue building on Bunker Hill often known as Two California Plaza, its new landlord said, and is expected to move by spring 2026 after building out the new offices. SoCalGas will also have an office on the ground floor to serve customers.