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Six months after announcing bold plans to renovate the derelict Broadway Trade Center building, it appears metaverse startup Emcee won’t turn the aging 1.1 million square-foot property into a “tech hub” any time soon.
The building is now headed towards foreclosure after the owner defaulted on a $221 million loan to retrofit it. This means we likely won’t see the “Emcee Studio,” a proposed multi-use space including a hotel, members-only rooftop pool, restaurant and coworking offices in the near future. The space will be boarded up and sold at a bankruptcy auction.
Emcee founder and CEO John Aghayan didn’t respond to dot.LA’s requests for comment.
“The owner was listening to ideas like [a] metaverse gaming hub but we all knew there [was] zero chance they were going to raise enough money to make the building habitable let alone be profitable,” said one local real estate manager familiar with the deal who wished to remain anonymous for fear of damaging their business. “Nobody in their right mind would invest in that building in DTLA,” the source added.
A brief history of the hulking, scaffolded building you’ve likely seen many times while traversing Downtown Los Angeles: The Beaux-Arts style property at 8th and Broadway was built in 1906 as Hamburger’s Department Store, and later became the May Co. headquarters after it changed ownership in 1925. The May family vacated their department store in the mid-1980s, and since then it’s become known as the Broadway Trade Center, existing in a state of limbo and increasing disrepair after being gutted two years ago. In 2014, New York-based real estate investment trust Waterbridge Capital bought the building for an estimated $130 million.
Waterbridge Capital is run by Joel Schreiber, one of the first investors in WeWork. He’s running the building under a joint venture LLC called Broadbridge. In 2016 he secured a nearly $165 million loan on the property, and another loan worth $213 million in 2018. Still, after all these refinanced loans, no one was able to move in.
Waterbridge Capital is also reportedly in talks to buy the Union Bank Plaza office building Downtown for $155 million. The company didn’t immediately reply to a request for comment.
A longtime L.A. broker who’s been following developments on Broadway for decades and requested anonymity to avoid business conflicts speculated the Emcee announcement some months back could have been an ill-fated tactic to stave off the inevitable foreclosure when refinancing the loans was no longer an option.
“I hate to say it, but it sounded like some kind of cockamamie sham put together to find more time with the lender,” the source said. They added that the foreclosure process could take up to 18 months, during which time the building will fall into even more disrepair and added they believed it’s not even worth half of the total loan amount.
Now the question is, what to do with this behemoth of an empty building?
The same sources told me the city government could buy it back for pennies on the dollar now, but then it’d be on the hook for making it habitable – both brokers told dot.LA the elevators aren’t even up to code, much less anything else. Also, it's got no parking lot, and parking’s a critical need for any large-use building Downtown, those sources said.
“Housing is our critical need right now,” the broker said. “But it’s just too big of a challenge. There’s no government agencies to do it [and] it’s a monster floor plan.”