Oceanwide Plaza: A Massive Real Estate Art Project
Oceanwide Plaza . . . first known as an ambitious mega-project across the street from Crypto.com Arena, L.A. Live and the Los Angeles Convention Center; then as an abandoned construction project that provided a blank canvas for taggers who created graffiti on a grand scale.
The site encompasses a 4.6 acre city block in the South Park district of Downtown Los Angeles, a vacant parking lot purchased for nearly $175 million in December 2013 by Oceanwide Plaza, LLC, an investment company associated at the time with China Oceanwide Group Ltd., an entity of Chinese publicly-traded conglomerate Oceanwide Holdings Company. Plans were to develop a massive mixed-use project to include two residential towers with luxury condominiums, a 5-star Park Hyatt hotel with branded residences (504 condominiums total), and 2+ stories of ground floor retail/food and beverage space with giant LED video displays (think Times Square).
Construction commenced sometime thereafter, but stopped in 2019 when the project ran out of money; it has been reported that over $1 billion had been invested when the project shut down, estimated to have been about 60% complete at the time. Review of public records shows numerous mechanics liens, lis pendens and foreclosure filings against the property over a time period from 2019-23, with creditors filing an involuntary bankruptcy petition in early 2024.
This was about the time that taggers discovered the project and proceeded to paint floor after floor of the skyscrapers with colorful stylized letters. The effect is nothing short of striking, described by one local real estate veteran as "horrifying and thrilling" at the same time. It is hard to imagine that this isn't a huge embarrassment for the city, a dystopian scene directly across the street from some of its most iconic downtown venues.
The bankruptcy court approved a joint listing agreement with Colliers and Hilco Real Estate in May 2024, in an attempt to sell the property before it goes to auction, currently scheduled for September 17. After being awarded the contract, one of the Colliers agents spun the listing as an extraordinary opportunity to complete one of the largest Downtown mixed-use developments, encompassing best-in-class residential, hotel, dining and entertainment in the heart of Downtown Los Angeles.
The reality isn't quite so rosy, however, based on public comments by several notable real estate folks. The original design for the residential units contemplated very large floor plans that were originally expected to sell to Chinese investors as a place to park their money overseas, a plan that went awry when the Chinese government restricted the flow of capital out of the country in 2017. The use of post-tension structural slabs makes reconfiguring the floors to accommodate smaller units problematical, not to mention whether critical infrastructure (like elevators) would be adequate to serve more units. It is also unlikely that the units could ever be sold as condominiums, given realistic fears of construction defect litigation in a project that will have been exposed to the elements for well over five years. The roughly 160,000 square feet of commercial space would also be a challenge; pre-pandemic there were thoughts of possibly converting some or all of the planned retail to office space, which is clearly not a viable alternative given current market conditions.
Colliers appraised the property for $434 million in connection with the bankruptcy case, estimating a completion cost of $865 million, although China Oceanwide estimated in 2022 financial filings that they would have to spend $1.2 billion to finish the project, roughly half of what has already been invested to date. Oceanwide reportedly owes about $400 million to creditors.
Some experienced developers who have looked at Oceanwide Plaza have concluded that completing the abandoned project would likely not be feasible given the construction and market risks for a project of this scale, with demolition costs that could approach $100 million.
Whatever ultimately happens to Oceanwide Plaza, it has certainly been an interesting, if unintended, art installation.
