Two decades ago, One Wilshire was just another fading office tower losing its white-collar tenants to splashy new skyscrapers nearby. Today the unassuming high-rise is one of the most valuable in the city, having sold for a record $437.5 million.
The reason for its transformation from ordinary to extraordinary: the Internet.
Built in 1966, the building has become one of the world's top three telecommunications centers and is widely regarded in the industry as the single most important telecommunications hub in the Western U.S.
FOR THE RECORD:
One Wilshire: In the July 18 Section A, an article about the sale of the One Wilshire office tower in downtown Los Angeles misspelled the name of building developer S. Jon Kreedman as John. —
Billions of phone calls, emails and Internet pages pass through One Wilshire every week because it is the primary terminus for major fiber-optic cable routes between Asia and North America
"You can't reproduce the connectivity," said real estate broker Kevin Shannon of CBRE Group Inc. "It's telecom gold."
From the street, the office building doesn't reveal its true identity, with a third of the space still home to law firms, stockbrokers and other traditional offices. But telecommunications firms occupy floor after floor.
At a sale price of about $660 per square foot, "this is the highest price per foot ever paid for a downtown L.A. office building, reflecting how much higher telecom rents are compared to downtown office rents," Shannon said.
By contrast, the more glamorous U.S. Bank Tower — the tallest building in the West at 72 stories — was sold in June for about $260 a foot.
GI Partners, a Menlo Park private equity investor, bought One Wilshire from Hines Real Estate Investment Trust. Houston-based Hines paid $287 million for the building in 2007.
The building is one of the three leading communications properties in the world, said Shannon, who represented the seller. The other two main hubs are 60 Hudson Street in New York City and Telehouse in London.
"Obviously our buyer thinks it's going to become more valuable, which should allow them to push rents even higher because of supply and demand," Shannon said.
Rents at One Wilshire are about $4 per square foot a month, roughly double the rent at U.S Bank Tower, according to real estate data provider CoStar Group.
Among the telecom tenants are Verizon Communications, Sirius XM Radio, China Telecom and data center provider CoreSite Realty Corp.
About a third of the building is standard office space for such tenants as stock brokerage Crowell, Weedon & Co. and law firm Musick Peeler.
The National Security Agency, which tracks overseas communications, is "not a direct tenant," a Hines spokeswoman said. The NSA is at the center of controversy over its monitoring of phone conversations, emails and other electronic communication.
One Wilshire, built as a standard office building, lies at the eastern end of Wilshire Boulevard, the commercial spine of Los Angeles that ends at Ocean Avenue in Santa Monica.
The building's developer, S. John Kreedman, came up with the idea of calling it One Wilshire even though its address is 624 S. Grand Ave.