LOS ANGELES -- The Port of Long Beach has continued to plant roots downtown with the acquisition of an office tower.

The port spent $36 million to buy the property at 100 Oceangate, a 13-story building across the street from the port's headquarters and less than a 10-minute drive from the port.

The purchase comes as the office vacancy rate in downtown Long Beach reaches an all-time high of 35%, according to data from the Downtown Long Beach Alliance.

"It's a good time to buy," Port of Long Beach chief executive Noel Hacegaba said in an interview. "This acquisition is a strategic investment to drive economic development for Long Beach and an opportunity to create a maritime business hub. It reflects our confidence in the port's future."

The building has an occupancy rate of around 70% — leases that the port will inherit and make money from. The port will fill the available space with international shipping and logistics companies, manufacturers and other trade-related firms.

"Their cargo already crosses our docks, and this is a way for us to offer them a home," Hacegaba said.

The building also will be home to Port U, the port's internal training and career development program.

The acquisition has been a months-long process, with the port entering into a sale and purchase agreement on July 27. Hacegaba said the move supports Long Beach Mayor Rex Richardson's economic development strategy dubbed AnchorLB, which the mayor announced in January.

AnchorLB is designed to attract international companies, including shippers and manufacturers, to downtown office spaces.

"I called on the port to partner with me," Richardson said in an interview. "AnchorLB is the next step to move our economy from being a place where goods move through to being a place where decisions are made."

The tower was built in 1972 and sold in 2016 to the real estate firm Faring for $46.5 million, according to CoStar. Totaling 225,486 square feet, the building was valued at $54.3 million last year, but the Los Angeles County assessor wrote down the value by 47% to $24.9 million this year.

Office vacancies have been soaring across Southern California, reaching around 20% overall in the greater Los Angeles area in the second quarter this year, according to real estate firm Avison Young. The fall in office occupancy has been spurred by permanent shifts to remote work, interest rate spikes and a trend of companies moving into smaller, more high-end buildings.

"The advent of e-commerce and work from home takes the demand away from office space, so one of the strategies we're exploring is to leverage our proximity to the port to create more demand," Richardson said.

Occupant businesses are seizing the opportunity to become owners, especially in downtown Los Angeles, where glittering high-rises have plummeted in value since occupancy dropped during the pandemic.

Office users from the public sector are among the buyers. The city of Los Angeles plans to buy a 35-story tower downtown for use by the Department of Water and Power.

Manulife U.S. Real Estate Investment Trust said in April that it would sell its high-rise at 865 S. Figueroa St. for $92.5 million pending approval from Los Angeles officials. It has an assessed value of $248 million.

Another major public buyer of a downtown office building was Los Angeles County, which in 2024 bought Gas Co. Tower for $200 million, a steep drop from its $632-million valuation in 2020. County officials said at the time that the foreclosure sale was too good to pass up.

Hacegaba said the port's building purchase is the first of its kind.

"It's the first time any port authority that I'm aware of has done something like this," he said. "There's a business case for why we needed to invest in the building, and when you combine that with the current state of the commercial real estate sector, it just makes sense for us to make this strategic investment happen."

Some of the building's occupants work in the maritime industry, including engineering and law firms, Hacegaba said. It's also home to City National Bank, and an urgent care center and a Crunch Fitness.

"Our plan with the vacant floors is to prioritize office space for the port's partners, and another portion of it will be used for our own purposes to train our workforce," Hacegaba said. "It's an opportunity for us to ensure that we are investing in tomorrow's workforce in this facility that's literally right next door to the port."

The port's new tower also could prepare the city to help host the Olympic Games in 2028. The Long Beach Convention Center is hosting handball, water polo and other events, while beach volleyball will be held at Alamitos Beach, and open water swimming and sailing will be at Belmont Shore.

"Long Beach as a city is going to be on the world stage, and that's going to generate a lot of foot traffic from some of our international partners," Hacegaba said. "Having space available that could be activated during the Olympic Games could attract some of the countries whose teams are participating."

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