Developer Robert F. Maguire said Monday that he planned to build a high-rise office building in downtown Los Angeles, the first significant addition to the city's skyline in 14 years.
The proposed 50-story tower at Figueroa and 7th streets might also signal the beginning of a round of office development that would expand the city's financial district.
The building, to be called 7+Fig, also would extend recent downtown development that includes billions of dollars of residential and entertainment projects.
"We think it will be a stunning building in a terrific location. We think it can do very well," said Maguire, who developed some of the best-known buildings of the last downtown development boom, including U.S. Bank Tower, the tallest skyscraper in the West at 72 stories.
Maguire "has always been one of the great visionaries of downtown," said real estate broker Chris Cooper of Cushman & Wakefield. "He built so much of the skyline that he appreciates the new model emerging there."
Los Angeles architect Richard Keating of Keating/Khang Architecture has prepared a preliminary design for the building that Maguire said would cost more than $300 million. Keating also designed Gas Co. Tower, a Bunker Hill high-rise Maguire completed in 1990.
Keating said he was striving to create "a dignified, elegant building" that would "stand in contrast to the cacophony of our everyday lives. We'd like to establish a new image for downtown L.A."
The proposed building would be one of the largest in the area, with almost 1 million square feet of space. Maguire said he intended to get tenants to sign leases for at least 40% of the space before starting construction and hoped to have it ready to be occupied within three years.
Maguire said he would not recruit tenants from his existing buildings.
The site, currently an empty lot, is owned by Maguire Properties Inc., a real estate investment trust Maguire heads as chief executive. It is four blocks north of Staples Center, and has long been zoned for a high-rise office building.
Complicating development plans are widespread reports that Maguire Properties may be sold because the hot market for investment-grade office buildings has made its properties worth more than the company as a whole.
The planned tower would need city approvals. Word of it was first reported in the Los Angeles Downtown News.
Large investors have been drawn to office properties in recent years as the improving economy has filled buildings with tenants paying rising rents and growing land prices and construction costs have limited competing developments. Southern California is among the U.S.' top commercial real estate investment markets.
By creating a viable development plan for the site, Maguire would increase the value of his portfolio, said a real estate executive who asked not to be identified because he didn't want to jeopardize future business dealings with Maguire.
"If there is no development concept, there is no way to monetize" the potential of the site, the executive said. "They're not anywhere near building."
High construction costs present a substantial hurdle to profitable office development. Downtown rents would have to reach unprecedented highs by the time the building hit the market in order to justify the expense of new construction, the executive said.
That office market is tightening, however, said Cooper of Cushman & Wakefield. He predicted that the vacancy rate, now about 15%, would fall into single digits in the next two or three years -- about as long as it would take to build a new skyscraper. Developers generally consider a market with a vacancy rate below 10% as ripe for new construction.
Maguire's timing is daring but should be rewarded, said real estate broker John Cushman, chairman of Cushman & Wakefield.