west6thstreet DOWNTOWN LOS ANGELES, CA 61% LEASED, VALUE-ADD, MIXED-USE INVESTMENT OPPORTUNITY DATA CENTER OFFICE RETAIL JUNE 2018
ONE WILSHIRE executive summary NKF Capital Markets, as exclusive advisor, is pleased to present the opportunity to acquire 530 West 6th Street, a 160,359 square-foot, mixed-use (data center/office/retail) property (the Property) located in the heart of Downtown Los Angeles and directly adjacent to One Wilshire the single most important point of connectivity in the western United States. The Property was built in 1928 and renovated in 1999, 2008 and 2016 with enhancements focused on the lobby, elevators, and cooling system. Approximately 71% of the building's rentable space is associated with data center use, generating a rental premium of 189% over office space. Consequently, at 61% leased, the Property provides an investor with the opportunity to create value via lease-up with the benefit of strong in-place data center income. west6thstreet
investment highlights Premier Technology Location Adjacent to One Wilshire 530 West 6th is located at the epicenter of Downtown Los Angeles' technology infrastructure and amenity base and boasts direct connectivity to One Wilshire. One Wilshire is widely recognized as the single most important point of connectivity in the western United States, connecting North America and Asia via more than 300 telecom providers six times the number at any other connection point in Los Angeles. 530 W 6th s proximity to this landmark building makes it a top alternative for tenants seeking access to a global telecommunication hub. Neighboring technology giants include Pacific Bell, MCI/ Verizon, Sprint, AT&T and Digital Realty Group. There are only 10 data center buildings in all of Los Angeles County over 100,000 square feet, 50% of which are located within walking distance to 530 W 6th Street. High Barriers to Entry Data Center Space The significant investment in tenant improvements for telecom tenants leads to higher tenant retention ratios than typical office users and provides an extremely stable cash flow stream. Approximately 71% of the rentable square footage in the building is associated with data center use and 85% of this space is currently leased to a strong roster of technology tenants that includes Paetec, Quadranet, Corporate Co-location, Zayo Group and Level 3 Communications. Increasing construction costs, coupled with the lack of available data center space, makes data center space in CBD locations extremely scarce and prohibitively expensive to build new today. Strong Existing Cash Flow with Significant Upside Potential The Property is currently 61% leased, providing an investor with the opportunity to add value via lease up of remaining vacancy. However, 71% of the Property s rentable space is associated with data center use, commanding a rental premium of approximately 189% over office rents. This strong data center occupancy provides investors with the benefit of significant cash flow while leasing up current vacancies. 530 W 6TH COMPONENT SUMMARY RSF % Total RSF % Leased # of Tenants Telecom 113,561 71% 85% 10 Office 33,745 21% 0% 0 Retail 10,172 6% 0% 0 Storage 2,881 2% 0% TOTAL 160,359 100% 61% 10 Create Value Through Office & Retail Lease-Up The Property s largest vacancies currently exist on the ground floor (10,172 square feet) and floors 11 and 12 (24,324 square feet). The ground floor is ideally suited for restaurant use due to its size, location proximate to Restaurant Row, outdoor seating potential and 25-foot ceiling heights. The 11th and 12th floors are ideally suited for creative office users, offering exposed brick walls and open ceilings in a prime financial district location. property summary 530 West 6th Street Los Angeles, CA 90014 ADDRESS 160,359 RENTABLE SQUARE FEET 61% OCCUPANCY 13 (+ basement level) STORIES 1928/1999/2008 & 2016 YEAR BUILT/RENOVATED 5144-004-012 PARCEL NUMBER Executive Summary 3
west6thstreet
Positive Leasing Momentum And Tenant Migration Since 2013, DTLA has experienced over 1.1 million square feet of positive net absorption, which has spawned office rent growth of approximately 22% over this same time period. Driving this growth has been expansion in the service sector and traditional tenant base, organic growth of new tenants, and in-migration of tenants from other markets. In the past seven years, 59 tenants have migrated into, or opened offices in Downtown Los Angeles, accounting for nearly 2.2 million square feet of office space. DTLA s Urban Renaissance With the infusion of more than $27 billion of capital since 2000 in residential, retail, hospitality and cultural amenities, Downtown Los Angeles remains in the midst of one of the preeminent urban renaissance stories found anywhere in the United States. This renewal has transformed Downtown into an energized magnet destination for businesses, residents, and visitors alike. The Property offers the investor a rare opportunity to acquire a valueadd mixed use building in a highly central Downtown Los Angeles location that stands to benefit from the region s tremendous growth and momentum. Booming Residential Market More than 7,000 residential units have been added to Downtown Los Angeles in the last five years, increasing Downtown s population by more than 200% since 2000. With 12,303 units under construction and 29,383 additional units in various stages of planning, Downtown s population is expected to double in the next five years. This growth in Downtown s residential population has been fueled by a migration of the labor pool s prized millennial class to the area, transforming Downtown into a vibrant 24-hour urban community. This dramatic population growth is one of the driving forces behind the attraction of employers, retailers, hoteliers, and a large array of cultural amenities to the area. 71% of the Property's rentable space is associated with data center usage Executive Summary 5
INVESTMENT SALES CONTACTS KEVIN SHANNON Co-Head, U.S. Capital Markets T +1 310 491 2005 kevin.shannon@ngkf.com CA RE Lic #00836549 LOCAL MARKET CONTACT GIBRAN BEGUM Managing Director T +1 213 596 2281 gbegum@ngkf.com CA RE Lic #01455990 KEN WHITE Executive Managing Director T +1 310 491 2006 ken.white@ngkf.com CA RE Lic #01788506 FINANCING CONTACTS DAVID MILESTONE Executive Managing Director T +1 310 491 2015 david.milestone@ngkf.com CA RE Lic #01515842 LAURA STUMM Senior Managing Director T +1 310 491 2020 laura.stumm@ngkf.com CA RE Lic #01914207 BRETT GREEN Senior Managing Director T +1 310 491 2009 brett.green@ngkf.com CA RE Lic #01892016 ROB HANNAN Executive Managing Director T +1 310 491 2014 rob.hannan@ngkf.com CA RE Lic #01505847 GUILLERMO BOISSON Senior Associate T +1 310 491 2035 guillermo.boisson@ngkf.com CA RE Lic #01950782 The broker for a purchaser of the property shall be entitled to receive a real estate commission only in the event that broker and the property s owner execute a written commission agreement, containing the manner of calculation of that commission and all conditions to its payment, and the satisfaction of those conditions. Absent a written agreement to the contrary between that broker and NKF, that broker shall not look to NKF for payment of such a commission or any other compensation. Although all information furnished regarding property for sale, lease, or financing has been obtained from sources deemed to be reliable, that information has not been verified by NKF and no express representation is made nor is any to be implied as to the accuracy thereof by owners, affiliates, managers, employees, general partners and agents. That information is subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice and to any special conditions imposed by NKF s client, owners, affiliates, managers, employees, general partners and agents. Corporate License #01355491