Why Is This Building So Expensive?
The One Wilshire building just sold for more than twice as much per square foot than its tonier downtown neighbors. Blame the Internet.
The One Wilshire building in downtown L.A. is not exactly what you’d call imposing. Built in 1966, from the outside it looks like an ordinary, blocky white office building, shorter than most of its neighbors and void of any particularly interesting architectural features.
So why did it recently sell for $660 per square foot, the highest price ever paid in the area? Keep in mind that the iconic U.S. Bank Tower, the tallest building in the West, sold several months earlier for only $260 per square foot.
So what’s up with this particular building? The answer lies deep within. It’s the primary terminus for most major fiber-optic cable routes between North America and Asia. In fact, it’s one of the top three telecommunications centers in the world. The other two are in New York and London.
About a third of the tenants in the building — who pay close to $4 per square foot rent, almost double what’s charged in the U.S. Bank Tower — are everyday clients like law firms and stockbrokers. But many of the other tenants are major telecommunications players. We’re talking Verizon Telecommunications, Sirius XM Radio, China Telecom and CoreSite, which graciously provided the photos for this article.
They, and numerous other companies keep their servers in One Wilshire, which has been specially equipped with tight security, heavy air conditioning, an awesome power supply and a huge number of backup generators.
In fact, if you were on the Internet today, used your mobile phone or paid with a credit card, chances are some of that data was handled by servers in One Wilshire.
One of the more curious aspects of the building is that technically it’s not even located on Wilshire Boulevard. The address is officially 624 South Grand Avenue.
It does sit near the eastern end of Wilshire, however. The iconic boulevard, which defines the Miracle Mile, runs through Beverly Hills and Century City, and ends at Ocean Avenue, has long been the business backbone of Los Angeles. It’s likely that developer S. John Kreedman decided on the name of the building thinking that using the word “Wilshire” would add some prestige and value.
These days, however, the name hardly seems to matter. You could call it the Titanic, and because of the way it’s been retrofitted, it would still be one the most important telecommunications buildings in the world. GI Partners, a private equity investor based in Menlo Park, Calif., certainly considered the $437.5 million purchase price to be a worthwhile investment.