(Bloomberg)—Ares Management Corp. is moving to a new Los Angeles headquarters down the street from its current offices, cementing its commitment to California’s largest city at a time other companies are departing the state.

Ares signed a 12-year lease at 1800 Avenue of the Stars in the Century City district, a deal that includes naming rights to the building, according to a statement Wednesday. The investment manager, which plans to relocate in June 2024 to the new offices, will take space in a 1960s-era tower that’s one of a pair of buildings undergoing $100 million in renovations by landlord Anderson Holdings, a family-owned business.

The move comes as the Los Angeles office market faces rising vacancies, with that rate, including space for subleasing, climbing to a record high of 23% in the fourth quarter from 20% a year earlier, according to Jones Lang LaSalle Inc. Tenants are increasingly seeking higher-quality offices to woo workers.

“It’s easy to be negative about office,” William Anderson, chief executive officer of Anderson Holdings, said in an interview. “But this is a perfect example that if you’ve got the right location and make the right upgrades, you can be a success.”

Ares currently has offices at 2000 Avenue of the Stars. A spokesperson for Ares, the alternative investment manager with about $341 billion of assets as of Sept. 30, declined to comment.

Los Angeles has long been a hub for finance, home to giants such as Oaktree Capital Management and Capital Group. Yet the city and California have faced criticism for high costs and issues like homelessness, with investors such as Doubleline Capital’s Jeffrey Gundlach repeatedly threatening to leave. Canyon Partners, a hedge fund firm that also has offices at 2000 Avenue of the Stars, relocated its headquarters to Dallas during the pandemic. Companies including Charles Schwab Corp., Tesla Inc., Oracle Corp. and CBRE Group Inc. have also moved from California to Texas in recent years.

The Ares lease for 206,000 square feet (19,100 square meters) is the second-largest in 20 years in Century City, smaller than a 400,000-square-foot lease signed by Creative Artists Agency to move into a new building under construction at 1950 Avenue of the Stars, said Matt Lavin, president of Anderson Real Estate, the company’s property unit.

To contact the author of this story: John Gittelsohn in Los Angeles at [email protected]

© 2023 Bloomberg L.P.

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