F
inesse, an artificial intelligence-based fashion firm, has significantly expanded its presence in Downtown L.A. by leasing over 23,000 square feet at The Bloc. This move marks a major shift from the Fashion District to the Financial District and solidifies Finesse's commitment through January 2028. Found Real Estate co-founders Matt McLaughlin and Doug Fillmore represented Finesse in the deal, while Edtech firm InStride, which holds the master lease, was represented by Savills.

    The Bloc, a mixed-use property at 700 South Flower Street, offers a unique blend of office space, restaurants, and amenities that attracted Finesse. McLaughlin sees this as a "glimmer of hope" for Downtown's office market, which is currently facing a vacancy rate of over 30%. He notes that strong mixed-use properties like The Bloc can attract fast-growing tenants.

    Fillmore emphasizes the importance of landlords providing modern amenities to entice employees back into offices. He believes that adding pulse and buzz to workspace campuses will be key in sparking creativity and driving employee engagement. This sentiment is echoed by the recent largest office deal of the year, where Southern California Gas Company leased nearly 200,000 square feet at City National 2Cal.

    While Fillmore and McLaughlin view Finesse's sublease as a positive sign for Downtown, they are realistic about the recovery timeline, estimating it will take five to seven years. The neighborhoods comprising the central business district fared better in the second quarter than their eastern counterparts, but overall, the market is expected to continue struggling in the near term due to commercial real estate's slow pace and inelastic nature.

    Found Real Estate works with companies that require turnkey worksites for quick move-in, which can be challenging for landlords struggling to cover debt obligations amid rising expenses and insurance costs. With many leases coming to term, there are significant question marks about the future of the market.