KPMG signs one of largest deals for downtown Los Angeles this year

KPMG has delivered a win for an iconic downtown Los Angeles office tower by inking one of the region’s largest office leases this year as part of a broader relocation strategy.

The accounting and professional services firm signed a nearly 70,000-square-foot deal spanning three floors at the U.S. Bank Tower at 633 W. 5th St., the company confirmed to CoStar News. The firm has also signed a separate lease spanning nearly 50,000 square feet at the Plaza at Continental Park in El Segundo.

KPMG plans to relocate from the 28-story KPMG Center at 550 S. Hope St. downtown, where it leases around 88,000 square feet from landlord Morgan Stanley, into the two new spaces by next summer.

A company spokesperson said the expansion “will better accommodate its employees in the area.”

“Both offices are centrally located and feature a modern and attractive open-office layout, top-tier amenities, enhanced technology and more collaboration space,” the spokesperson added.

The deal comes as tenants are increasingly prioritizing space in the newest and nicest U.S. office buildings in the wake of the pandemic. The U.S. Bank Tower was renovated in 2023 and has a roster of high-quality tenants drawn to its location and reputation as a landmark office, real estate professionals tell CoStar News. KPMG Center, built in 1991, was upgraded in 2022 with lobby and meeting room improvements.

The KPMG lease adds to an active two months of leasing for downtown Los Angeles, with seven of the year’s biggest office deals taking place since June, representing nearly 215,000 square feet in lease volume. Still, tenants have given back 1.4 million more square feet of space than they occupied downtown in the past year, sending vacancy to a record high of 21%, according to CoStar data.

KPMG’s lease is the largest to occur downtown since April, when Oaktree Capital Management signed a deal to fill about 220,000 square feet in the City National Plaza complex at 515 S. Flower St.

Brokerage JLL had the listing for the U.S. Bank property.

While some companies are decamping to other Los Angeles office markets with better reputations, major tenants like law firms, public agencies and consulting firms are leading a return to downtown Los Angeles, said Nick Griffin, executive vice president of the DTLA Alliance, a business improvement district.

West Monroe has doubled its footprint at The Bloc, citing transit and dining access. Amanecer Community Counseling Service renewed and expanded at 1200 Wilshire Blvd., keeping the Wilshire & Lucas building nearly full. Other recent commitments include DTLA Law Group’s $20 million headquarters move to 540 S. Santa Fe Ave. in the Arts District, formerly home to Lucky Brand, according to CoStar research.

And new firms are moving in. Manulife US REIT reported a 40,000-square-foot lease in the works at 865 S. Figueroa St. with a financial institution that aims to occupy the space in time to get building signage for the Summer Olympics in 2028.

The Consulate of India’s lease at the Aon Center tower marks one of the rare examples of a new tenant taking on space in downtown instead of a downsizing or moving to another office, leaving a vacancy to fill.

With the KPMG lease, the U.S. Bank Tower has a 32% availability rate, reflecting the ongoing headwinds against office leasing downtown.

KPMG operates in about 142 countries worldwide and runs more than 90 offices in the United States with a workforce of roughly 36,000 people. In California, the firm has a major footprint, with offices in at least Los Angeles, San Francisco, San Diego, Sacramento, Irvine, Seal Beach and Walnut Creek

The U.S. Bank Tower remains one of the city’s defining tall landmarks.

When it opened in 1989, the property — originally named Library Tower — was more than just a skyscraper. It was a symbol of ambition, rising 1,018 feet above downtown Los Angeles to become the tallest building west of the Mississippi.

Designed by architect Henry N. Cobb, the tower was part of a larger effort to revitalize the city’s central business district and reclaim it as a modern commercial hub.

Its construction helped shift the skyline — and perception — of downtown LA, long overshadowed by the sprawl of Hollywood and the west side. The building’s developers made a bold move by erecting it near the Central Library, betting on urban density at a time when suburban flight still defined Southern California.

Over the years, the tower became a pop culture fixture, featured in movies from “Independence Day” to “The Dark Knight Rises.”

It also became a barometer of downtown’s fortunes — weathering boom-and-bust cycles, the pandemic-era office exodus and recent repositioning efforts to lure tenants with amenities and observation decks.