Capital Group, Riot Games lead tenant buying wave as LA office prices collapse

• Capital Group buying office tower for about $210 million
• Downtown LA vacancy hits 34%, driving steep price declines
• Owner-users now make up nearly half of office deals

What is happening in downtown LA

Downtown Los Angeles is seeing a major shift as tenants turn into buyers, taking advantage of falling office values. Companies like Capital Group, Riot Games, and public agencies are purchasing buildings they once leased.

“We knew the best landlord we could possibly have would be ourselves,” said Mike Gitlin.

This trend is accelerating as office prices drop sharply from pre-pandemic levels.

What is driving the shift

Office values in downtown LA have fallen due to high vacancy and reduced demand since the pandemic. Vacancy has surged to around 34%, up from 14% in 2019, creating buying opportunities at deep discounts. Buildings are now trading far below replacement cost, with some assets selling at a fraction of prior valuations.

“Everyone knows we’re near the bottom of this cycle,” said Kevin Shannon.

What tenants are doing

Large occupiers are choosing ownership to control costs and space. Capital Group is buying the Bank of America Plaza and plans to consolidate operations there. Riot Games also purchased its headquarters campus to secure long-term control. Public sector buyers are also active, including the Los Angeles Department of Water and Power, which is considering acquiring a major office tower.

What this means for landlords

This trend puts pressure on traditional office landlords. As tenants become owners, leasing demand weakens, making it harder to fill vacant space. Landlords may need to reposition assets or sell at discounted prices to compete.

What this means for investors

For investors, this is a clear distress opportunity cycle. Office buildings are trading at historically low prices, attracting buyers with long-term strategies. However, risks remain tied to demand recovery and ongoing remote work trends.

What this means for the market

Downtown LA is entering a new phase where pricing has reset, and new types of buyers are stepping in. The rise of owner-users signals a structural shift in how office space is utilized and valued. Los Angeles office real estate is transitioning from investor-driven to user-driven ownership as the market resets.