Yahoo Finance Downtown Los Angeles' Infamous Graffiti Towers Put Up For Sale
Oceanwide Plaza started as a set of ultraluxury mixed-use skyscrapers that were intended to serve as bookends to downtown Los Angeles' rebranding as a modernized urban paradise. Instead, a developer default resulted in a national scandal where the unfinished towers became so popular with graffiti artists that Oceanwide was unofficially known as "the Graffiti Towers." The property is finally being put up for sale.
On paper, Oceanwide Plaza seemed like the perfect match for downtown Los Angeles. Situated adjacent to the Crypto.com Arena (home of the Los Angeles Lakers and the Los Angeles Clippers) and LA Live entertainment district, Oceanwide Plaza's combination of luxury condominiums, retail suites, hotels and apartments was a perfect fit. The original developer, China-based Oceanwide Holdings, began developing this masterpiece in 2014, a time when interest rates were low, and China's economy was booming.
Unfortunately for Oceanwide Holdings, things changed by 2019, at a time when the Oceanwide Plaza was tantalizingly close to completion. The exoskeleton of the towers, with its stairs, windows, and concrete floors was already done when the Chinese government decided to restrict funds for developments being done outside the country. That's about the time contractors ceased to be paid.
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One by one, the contractors who weren't getting paid stopped working. Then the COVID crisis hit in 2020, and construction on Oceanwide Plaza ground to a halt. By the time things began to return to "normal" again in 2021 and 2022, Oceanwide Holdings was in desperate financial straits, with interest rates already on the rise. Unable to refinance, and already drowning in debt, Oceanwide Holdings simply abandoned the project.
That's when it became famous for all the wrong reasons. It wasn't long before squatters, graffiti artists, and BASE jumpers realized there was little more than a chain-link fence and a part-time guard securing Oceanwide Plaza. Soon, the towers were covered from head to toe in graffiti and BASE jumpers were filming live YouTube videos of their exploits. An exasperated LA City Council was forced to set aside millions of dollars to help secure the premises.
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By the time Oceanwide Plaza's General Contractor Lendlease filed an involuntary Chapter 11 proceeding for $400 million in February of 2024, Oceanwide Plaza had become known nationwide as "The Graffiti Towers." With that in mind, the news of the development being listed for sale by Coliers and Hilco real estate brokerage came as a great relief to both city leaders and owners of nearby properties.
Ironically, the fact that Oceanwide Plaza is partially completed might make it an attractive investment opportunity for the right buyer. It still has an outstanding location and about 2/3 of the construction is already done. Coliers and Hilco estimated Oceanwide Plaza's "as-is market value" at roughly $450 million and estimated that it will require an additional $850 million to complete. Although those numbers sound astronomical, Coliers and Hilco believe Oceanwide Plaza presents a great opportunity for the right investor.
In an interview with the LA Times, Broker Mark Tarczyznski speculates that the most likely purchasers are institutional investors such as REITs or sovereign wealth funds. He is bullish on the building's potential but recognizes there is a limited number of people who can afford such an undertaking. "I think there’s a broad range of buyers," he said, "but the pool of buyers is small because of the size of the project."
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