In the heart of downtown Los Angeles, a growing trend in the commercial real estate market is taking shape—property owners are increasingly feeling the financial squeeze. Jamison Properties, a Koreatown-based real estate company, has recently put up for sale a distressed office building at 811 Wilshire Boulevard, which spans over 337,000 square feet. The sale also includes an adjacent parking garage at 616 South Figueroa Street. This move highlights a larger issue within the market, as commercial properties continue to face the pressure of changing demands in a post-pandemic world.
The building’s office occupancy rate has sharply declined in recent years, dropping to only 35% by the end of last year. What's more concerning is that leases with several remaining tenants are about to expire, and this could push the vacancy rate even higher, leaving Jamison with more financial pressure. This situation becomes even more complicated considering the company's significant debt load, which exceeds $200 million and covers seven other Jamison-owned properties totaling more than 2.4 million square feet.
A significant part of this dilemma stems from Jamison’s default on a $35 million commercial mortgage-backed securities loan tied to the building. The loan, initially taken out in 2014 for $39 million, was set to mature last year. However, Jamison failed to repay it on time, and the loan was handed over to special servicers. This default adds to the growing financial strain on the company, as it seeks to address its obligations across its real estate portfolio.
In 2003, Jamison purchased 811 Wilshire Boulevard for $26.5 million, but now, with the building's aging structure—dating back to 1960—and decreasing office demand, the company finds itself in a tough position. Older commercial buildings often face significant challenges in terms of modernization costs, especially when competing with newer, more flexible spaces in a rapidly changing market.
This issue is not unique to Jamison Properties. Many prominent companies are navigating similar struggles. Take Apple, for example, which has had to rethink its real estate strategy as remote work becomes more prominent. Apple had previously invested heavily in expanding its office space globally, especially in areas like San Francisco and Los Angeles. However, with the rise of remote work, Apple is reassessing its real estate needs and exploring more flexible models. Tim Cook, Apple’s CEO, has publicly stated that the company would remain adaptable, transitioning away from traditional office models in favor of a more flexible approach.
Retail giants are also adjusting their strategies. Walmart, for instance, has faced the pressures of e-commerce growth and has had to close certain stores, while simultaneously shifting its focus to flexible retail spaces. Walmart’s adaptation includes turning some of its traditional stores into "retail service centers" to cater to new consumer demands. These moves reflect the larger trend of companies reshaping their real estate portfolios to align with the evolving landscape of work, shopping, and living.
Coming back to Jamison Properties, the sale of 811 Wilshire Boulevard underscores the challenges facing the Los Angeles office market, which has been sluggish in the aftermath of the pandemic. During the pandemic, many businesses transitioned to remote work, drastically reducing the demand for traditional office spaces. As companies continue to embrace hybrid and remote work models, the need for expansive office spaces has significantly decreased, leaving companies like Jamison with growing vacancies in their buildings.
Similar trends are unfolding globally. In London’s Canary Wharf, once a bustling financial hub, property owners have been repurposing office buildings into residential spaces or mixed-use developments. This shift is a direct response to the financial sector’s slowdown and the increasing popularity of remote work. For real estate companies, such transformations are essential in addressing the new reality of office space demand, allowing them to maintain higher occupancy rates and maximize returns on their investments.
For investors, this changing landscape presents both challenges and opportunities. While some cities continue to see strong demand for commercial real estate, others, like Los Angeles, may be experiencing a structural shift away from traditional office space. Real estate companies that can quickly adapt to these changes—whether by pivoting to flexible workspaces or repurposing properties for new uses—will likely be the ones to thrive in the coming years.
Looking ahead, the future of commercial real estate is anything but predictable. Different types of properties will play distinct roles in different markets. Companies that can accurately forecast these shifts and respond proactively will position themselves for success. For now, though, Jamison Properties’ struggle to offload its LA office building serves as a reminder of the evolving dynamics in the commercial real estate sector—where adaptability is key, and the ability to innovate may turn today’s challenges into tomorrow’s opportunities.