Gas Co. agrees to stay in downtown L.A. offices
Suspense over whether the Gas Co. Tower in downtown Los Angeles would remain the headquarters of Southern California Gas Co. is over -- the big utility is staying put in its signature tower for the next 15 years.
Real estate industry analysts were watching to see whether the gas company might bail out on embattled landlord MPG Office Trust Inc., formerly Maguire Properties Inc., and move its offices elsewhere.
The gas company announced Wednesday that it would keep its more than 1,300 employees in 350,000 square feet in the building at 555 W. Fifth St., where it has been the anchor tenant since the tower was completed in 1991. The 50-story skyscraper was designed by Pasadena architect Richard Keating with the utility in mind -- its tapered blue glass crown is intended to evoke the image of a gas flame.
Terms of the agreement were not released, but MPG's average asking rent rate in the tower is almost $38 per square foot per year, according to real estate brokerage Cushman & Wakefield. For such a large space, however, the gas company will presumably pay a lower rate.
"We are extremely pleased with the renewal of this highly valued tenant," MPG President Nelson Rising said. "Southern California Gas Co. was the original tenant, and we are delighted they have elected to remain with us."
MPG reported a first-quarter profit in May, linked largely to the forgiveness of a $49.1-million debt it was unable to pay. The company is burdened with heavy debt, most of which it picked up in an aggressive expansion during the real estate boom of the mid-2000s.
The company has been laboring to reduce debt but has been battered by falling occupancy and rents during the economic downturn. The loss of a major tenant such as Southern California Gas would have been considered a sharp reversal for MPG.
Shares of MPG rose almost 5% to $2.67 on Wednesday morning shortly after the news was released.
-- Roger Vincent
Photo: Gas Co. Tower, center, has been home to Southern California Gas since 1991. Credit: MPG Office Trust Inc.