The Bloc, a massive mixed-use complex in the heart of downtown Los Angeles, is on the block for sale as the commercial property market shows signs it is bottoming out with buildings changing hands at big discounts.
The complex fills a city block in the financial district with an office skyscraper, the high-rise Sheraton Grand hotel and a shopping center that is home to a Uniqlo and Alamo Drafthouse Cinema.
It is an unofficial downtown landmark that was considered chic when it opened as an indoor mall in the 1970s. For years, tourists flocked to the premier address at 7th and Flower streets.
By 2013, then-Macy’s Plaza had devolved into a dated, downscale relic that got little love despite its location near offices, hotels and a busy subway interchanget.
L.A. developer Wayne Ratkovich launched a challenging makeover project that included tearing the roof off the central courtyard to make it an outdoor shopping center, adding shops and restaurants along the sidewalk, and punching a portal to the 7th Street/Metro Center subway station.
Unexpected construction issues slowed work and helped drive costs well over the original $180-million budget to more than $250 million, and Ratkovich Co. sold its interest in the property in 2018 to one of its financial partners, National Real Estate Advisors, which is now selling the property.
The nearly 500-room Sheraton will be sold separately from the rest of the complex, said real estate broker Mike Condon Jr. of Cushman & Wakefield, who is managing the sale of the 1.2-million-square-foot office and retail portion of the Bloc.
Condon said a price hasn’t been set, but a real estate expert familiar with the property but not authorized to speak about it publicly said the office and retail portion is worth about $160 million.
Part of its potential lies in the future. The current owners have secured city permission to build a 41-story apartment or condo tower on top of the Bloc’s original 12-story garage. They also received city approval to add digital signage to all four sides of the complex, which could bring in advertising revenue to a new owner.
The former anchor Macy’s store at the Bloc closed last year, but Condon said that empty space could be desirable for a buyer with new plans for the complex.
“That vacancy is where a lot of the value for the project will be derived,” he said. “That’s the big opportunity.”
Downtown office towers have traded at a deep discount in recent years after occupancy plummeted in the wake of the COVID pandemic. Among the buyers have been owner-users such as fund manager Capital Group and Los Angeles County.
The drop in downtown office leasing appears to be waning, Condon said. “The office market probably found its floor sometime last year, and we have seen some positive leasing momentum across the market.”
