Bank of America Corp. has renewed its office lease in downtown Los Angeles and taken more space as competition for office tenants heats up among landlords.
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The third largest U.S. bank by assets extended and expanded its anchor lease at Bank of America Plaza to 218,000 square feet from 163,000 square feet, according to Brookfield Properties, which owns the 55-story building.
The lender, one of the biggest office tenants in the area, will relocate its regional Merrill Lynch and U.S. Trust offices to Bank of America Plaza.
"There were a lot of choices for the bank," said Bert Dezzutti, senior vice president at Brookfield Properties overseeing the Southern California region. "To renew and expand their location is a significant milestone for downtown L.A. as a location of choice." He declined to provide details about the terms of the lease. Bank of America didn't respond to a request for comment.
Los Angeles has experienced an uptick in office supply in the past year as major development projects were completed. C3 in Culver City added 280,000 square feet of office space, while Downtown Wilshire Grand has 18 floors of office space totaling around 365,000 square feet.
To remain competitive, some office-building owners in downtown L.A. have been aggressively retooling their assets with ambitious lobby and plaza renovations, according to property consultancy JLL. In the Bunker Hill area, where Brookfield owns four buildings including the Bank of America Plaza, it has added food options, tenant services and landscaping improvements.
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Asking rents in greater Los Angeles rose to $3.21 a square foot a month in the third quarter of 2017 from $3.10 the previous quarter, but the vacancy rate rose to 13.8% from 13.3% during the same periods, according to data from real estate consultancy CBRE.
Downtown L.A. has been a hotbed of construction activity in recent years, with numerous cranes dotting the skyline as property developers, including some from China, built high-rise residential, hotel and mixed-use properties.
There hasn't been as significant an increase in the construction pipeline for office space in the area, Mr. Dezzutti said. He added that while there might be some oversupply of housing, it would likely be absorbed.
"We're not overly concerned," said Mr. Dezzutti.
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(END) Dow Jones Newswires
January 23, 2018 17:23 ET (22:23 GMT)