[Industry Partners has signed co-working concept ROC at ROW DTLA]
DTLA’s co-working craze has claimed another office space.
Shared workspace provider Real Office Centers has inked a 15-year lease for 27,000 square feet at ROW DTLA, located at 777 South Alameda Street in the Arts District, The Real Dealhas learned.
The location will be ROC’s first in Downtown Los Angeles. The company has several others in Santa Monica, San Diego, Orange County, and Honolulu.
ROC was represented by Jim Travers and Chris O’Connor of Cresa, while the ownership was represented by Andrew Jennison, Jim Jacobsen, Carl Pierose and Scott Rigsby of Industry Partners.
ROW, developed by Atlas Capital Group and Square Mile Capital Management in partnership with USAA Real Estate Company, is currently the largest adaptive re-use project in Los Angeles and comprises the transformation of six structures originally built by the Southern Pacific Railroad in the 1920s into loft-style workspaces. Asking rents at the complex were not immediately available.
The project also includes a massive retail component. Furnishings store A+R is slated to open there in the fall. Brooklyn-based Smorgasburg opened a weekly Sunday mega-market for food last month, to much fanfare.
“ROC’s decision to open at ROW DTLA underscores the continued expansion of L.A.’s creative workforce to Downtown L.A. and the Eastside,” Jennison said.
Increased demand for office space from creative and co-working tenants such as WeWork, Industrious and ROC has been driving down office vacancy in DTLA, TRD previously reported.
“Though many market observers and participants tend to hold overly bullish or overly bearish opinions about the concept of co-working, the one undeniable truth is that co-working companies are accounting for an ever-increasing chunk of net absorption and nowhere is this more true than in Downtown Los Angeles,” said an April report by CBRE.
[Brooklyn-born Smorgasburg Market has officially launched its LA market at ROW DTLA. On its first day this past Sunday, the market saw over 10,000 visitors. Here's a look at some the market's highlights.]
The Los Angeles outpost of outdoor food market Smorgasburg unlocked the gates for its grand opening just a little past 10 a.m. on Sunday. By that time, there were already more than 100 people—Snapchatting millennials and families with strollers and gray-haired, tattooed food scenesters and camera-strap-toting tourists and everyone in between—in an orderly, mostly single-file line. We were there, too, ready to eat as much as we could before the day’s crazy heat wave, which hit 95 degrees by noon and felt even worse on the concrete, melted everyone into a raindrop-cake puddle. (Alternate headline: Smorgasburg Is Scorching!) Despite the ridiculous weather, close to 10,000 visitors came by Sunday’s opening. Anyway, here are five, uh, hot takes from Day One of Smorgasburg, which will be open from 10 a.m. to 6 p.m. every Sunday.
1) Smorgasburg in Los Angeles is better than Smorgasburg in New York. That’s because the street food and the ethnic cuisine that L.A. does so well far surpasses what’s in New York. This isn’t even that much of a hot take. New York wins for white tablecloths and tasting menus and wine pairings and silly culinary awards, but Los Angeles has Carnitas El Momo, Burritos La Palma and Guerrilla Tacos, all of which were slinging their spectacular Mexican food at the new Smorgasburg. That means, respectively, tacos resplendent with pork belly and skin; stewed beef inside perfect flour tortillas; and former fine-dining chef Wes Avila’s market-driven dishes like beef-and-foie-gras tacos, crab tacos, ahi tuna tostadas and mushroom quesadillas on an always evolving menu
2) The manna for the Instagramming masses is here, too. We’re big fans of the Smorgasburg experience in Brooklyn, but beyond being able to eat Dough donuts and Solber pupusas on the water, what we remember about many visits to those markets is the long lines for gimmicky bullshit. Good news for L.A. people in search of social-media engagement: That kind of nonsense is at this new Smorgasburg, too, in the form of Ramen Burger and Raindrop Cake, the latter of which will no doubt scan in L.A. more as something that looks like a breast implant than something that resembles cake. Neither Ramen Burger nor Raindrop Cake is actually terrible, but their appeal is much less about food and more about the hipster horde mentality. Which is fine. When the gates opened at Smorgasburg, dozens of people ran straight to Raindrop Cake, which meant there was nobody in line ahead of us for former Gjusta and current CoFax pastry chef Nicole Rucker’s new Rucker’s Pie. So if you feel like paying $8 for a blob of sugar water instead of $6 for a fantastic slice of chocolate chess pie or $7 for strawberry or apricot hand pies that gloriously celebrate the best of local produce, we won’t stop you.
3) More Asian food, please. Given that the Mexican food is on lock here, it would be nice to see some vendors that represent the diversity of L.A.’s Asian food in the San Gabriel Valley, Koreatown or even Sawtelle Japantown. We have a feeling that some of this might be coming soon, given that market manager Zach Brooks (the blogger/podcaster behind Midtown Lunch and Food Is the New Rock) frequentlyInstagrams from those kinds of places. In fact, Brooks tells me that he is actively working to bring in SGV vendors. He also stresses that anyone is welcome to apply. “Eventually, this market will be the perfect slice of L.A.,” Brooks says. For now, there’s mango sticky rice from Grand Central Market’s Sticky Rice; We Have Noodle’s riffs on Vietnamese/Korean/Thai/Japanese dishes (the pho mazemen with beef tendon chicharrones we tried was a genius idea but could have benefited from fattier meat and heat from jalapenos or Sriracha); the resurrection of Porridges and Puffs; and the Filipino rice bowls at Kalan among the Asian flavors at Smorgasburg. But we’d love to see something from a Monterey Park or Western Avenue strip mall too.
4) The best ideas are often the simplest ideas. Prediction: The fresh mozzarella sticks at Big Mozz are going to be a big hit. This is small-batch, hand-stretched mozzarella for the food-trend-chasers, but it’s also mozzarella sticks with red sauce for everybody else who probably didn’t even realize they wanted a better version of this childhood snack/drunk food. Also, Big Mozz was born at Smorgasburg in Brooklyn, so we guess this qualifies as New York red sauce coming to L.A., which is something to cheer. Other things we expect to eat again and again at Smorgasburg include the lobster rolls from Brooklyn’s Red Hook Lobster Pound and the raw oysters from The Jolly Oyster.
5) This isn’t part of a real neighborhood yet. Like it’s done in New York, Smorgasburg has partnered with a real estate development (in this case, Row DTLA) who hopes the food market can help turn an emerging area into a destination. But unlike Williamsburg, there’s probably not going to be much foot traffic for the L.A. Smorgasburg—and not just because almost nobody walks in Los Angeles. There is, however, a two-hours-free parking garage with room for more than 5,000 cars. (Bikes and dogs, meanwhile, are not allowed in the market.) Also unlike Williamsburg, there’s no waterfront, no nearby music venues, no overpriced thrift stores, no gentrifying bodegas, no indie-rock-T-shirt-wearing trust-fund-kids living in luxury rentals or new-construction condos who can quickly stroll over for an iced coffee. What there is here is the promise of a shopping/dining/office district for creative professionals. But for now, this isn’t industrial chic as much as it’s just industrial. (Actually, that part isn’t so different from what DUMBO used to be, so there’s no doubt potential here.) Of course, this is now industrial with game-changing tacos and $6 slices of pie. “We’re building a destination for all of L.A.,” says Brooks, who’s proud that this Smorgasburg isn’t a rehash of what’s in New York, that this new market is a place you have to make an effort to visit. “We want people to get in their cars and come here for Smorgasburg.” So crank up the AC, show up hungry and curious, and know that, unlike so many of L.A.’s hot spots, parking won’t be a problem. Even when nearly 10,000 people show up on a single day.
[Industry Partners is proud and excited to be leading leasing efforts at ROW DTLA. The 30-acre adaptive reuse project features 1.3 million square feet along with retail and cultural space. Here's a recent feature in the development blog Urbanize.la. See more information at www.ROWDTLA.com]
A new set of architectural renderings depict the mixed-use makeover now underway at the Arts District's landmark Alameda Square.
The 30-acre industrial complex, highlighted by its trio of hulking 98-year-old warehouses, is being rebranded by owner Atlas Capital Group as ROW DTLA, a two-million-square-foot campus consisting of creative offices, green spaces, shops and restaurants.
According to a marketing brochure from the Runyon Group, a Los Angeles-based real estate firm that is partnering with Atlas Capital on the project, plans call for approximately 1.3-million square feet of office space capable of housing as many as 20,000 employees. Each building offers 70,000-square-foot floor plates, featuring high ceilings, sandblasted walls and restored windows.
Current occupants include the retailers Splendid, Ella Moss and GoJane.
Industry Partners, a Santa Monica-based commercial real estate brokerage, is working to lease the office space.
For ROW DTLA's 200,000 square feet of ground-floor commercial space the developers are targeting an eclectic mixture of restaurant options, as well as "over 100 of the most progressive luxury brands, avant-garde fashion designs and unique merchants."
Additional features include more than 20,000 square feet of event space, over 30,000 square feet of art display space, and approximately five acres of landscaped open space.
Future tenants will be served by a 10-story, 5,000-car parking garage which was recently completed on the southern edge of the property.
According to the Runyon Group website, ROW DTLA is expected to open in Summer 2016.
The sprawling mixed-use development - which is being designed by Rios Clementi Hale Studios - is one of numerous adaptive reuse projects underway in the Arts District, including similar industrial-to-office conversions of former factories for the Ford Motor Company and Coca Cola.
[Sweetgreen is moving its headquarters to LA—specifically, Culver City's PLATFORM project. Industry Partners has been working alongside the Runyon Group to curate a group of standout creative tenants. Sweetgreen will be joining Technicolor in this exciting new transit oriented retail and office development.]
Sweetgreen, the salad chain founded in Georgetown nine years ago, is moving its headquarters to Los Angeles as it prepares to expand along the West Coast.
The company plans to keep its office in Northwest Washington and said it will not be laying off employees as a result of the move.
“We know that our success in California is the key to our growth nationally, just like being in D.C. all these years helped us unlock the East Coast,” Jammet said.
“We’re taking the company to the next level, from a regional company to a national one,” said co-founder Nicolas Jammet, 30. “California is the key to our future growth.”
The Los Angeles office is slated to open in February with 30 employees. The District office is set to shrink to 15 employees from the current 45.
The move comes less than a year after Sweetgreen opened its first West Coast eatery in Los Angeles. Since then, it has opened two more outposts in California, and has plans to use its new headquarters as a jumping off point to open more restaurants in the region.
“We are not going to be a company with one mega-spaceship headquarters,” Jammet said. “The goal is to spread our leadership so we can be as close to the community and our customers as possible.”
The company, which has become a darling among investors, has raised $95 million in venture capital funding to date. Its most recent round of funding brought in $35 million from T. Rowe Price in July. Earlier investors include Revolution Growth, the D.C. venture capital fund, and financial backers such as Gary Hirshberg, the founder and chairman of Stonyfield Farm; Scott Belsky, co-founder of online portfolio company Behance; and restaurateurs Danny Meyer and Daniel Boulud.
Jammet said he and his co-founders will continue to travel between Los Angeles, New York and the District on a weekly basis.
“The idea is to spread leadership around,” he said. “Our decision-making doesn’t necessarily happen nationally. We make decisions community by community.”
Jammet and his co-founders, Jonathan Neman and Nathaniel Ru, opened the first Sweetgreen in August 2007, three months after graduating from Georgetown University. They were armed with $300,000 in funding from investors and used recipes they perfected in their dorm rooms.
The company has grown to 39 locations, including 20 in the Washington area. It also has a corporate office in New York with 10 employees, who will be unaffected by the move.
The city of Santa Monica won’t have to wait much longer for Sidecar Doughnuts to pull up, as the Orange County sweets shop plots a November 17 opening. That’s good news for anyone who’s been following along since last year when the expansion was first announced, and it immediately makes the Westside a hub (along with Blue Star Donuts in Venice) for the city’s best doughnut shop options.
The sure-to-be-packed Sidecar location sits next to both a Juice Served Here and an inbound Mendocino Farms, but will certainly draw the longest lines of the three. Thankfully interior architects Otto Design Group were prepared, crafting a long space that keeps order to flow while still letting the product shine. Funky tile flooring reflects off of one lone, mirrored wall, giving the place a feel of airiness, while out front some small seating is available from a simple patio.
Otherwise it’s all doughnuts all the time, with the usual assortment of market-driven flavors and offbeat options. Much like their Costa Mesa original, expect seasonal tastes like pumpkin spice cake doughnuts, plus constants like their iconic huckleberry option, maple bacon, and vanilla bean twist. What really separates Sidecar is their policy of making fresh doughnuts throughout the day.
Sidecar Doughnuts opens at the 631 Wilshire complex on November 17, and will keep daily all-day hours thereafter.
631 Wilshire Blvd.
Santa Monica, CA
[The adpative and thoughtful reuse of historic buildings is what is driving some of LA's best creative office spaces. In this article from Contract architectural magazine, Industry Partners' Emmanuel Soriano explains what gives some creative spaces their authenticity and the we can expect from some of LA's existing traditional office buildings.]
“Historic” is a relative term when it comes to architecture in Southern California. In Los Angeles—a city celebrated for its sense of newness and of-the-moment culture and design—history often seems fleeting as what’s old is often discarded to make way for the contemporary. But that perception is not entirely true today, especially in commercial real estate. A significant number of once utilitarian, inelegant structures—former warehouses, film production buildings, or manufacturing facilities—are being renovated and reused as vibrant workplaces for innovative companies in the technology and entertainment industries. What’s old is being adapted, not discarded.
An evolving economy marrying tech and entertainment, a renewed appreciation for recent history and existing structures, and a greater desire for a sense of informal architectural character are driving the adaptive reuse of once-forlorn buildings in Los Angeles. The impact is evident in the region’s real estate market, and the work of area architects and designers.
Establishing a precedent
Creative offices are proliferating in many neighborhoods, including the Westside, where the economic engine was once primarily based in the film industry and further bolstered by the post-war industrial boom—notably the aircraft industry led by Howard Hughes. But as manufacturing largely left, many of these warehouses and similar structures were abandoned. Beginning in the mid-1980s, interest in adaptive reuse led to notable projects such as the transformation of the Hayden Tract, a 60-acre former industrial park in Culver City, by architect Eric Owen Moss into a mixed-use neighborhood including varied workplaces.
In the decades that have followed, other significant projects of this type included Frank Israel’s warehouse conversions for the headquarters of the Hollywood film production companies Propaganda Films and Limelight Productions, and Clive Wilkinson Architects’s headquarters for global advertising agency TBWA\Chiat\Day within a 120,000-square-foot former pharmaceutical manufacturing plant in Playa del Rey. Firms that have recently completed similar conversion projects—or are working on them—include SOM, Rios Clementi Hale Studios, Shubin + Donaldson Architects, Rapt Studio, RAC Design Build, Wolcott Architecture | Interiors, and Felderman Keatinge & Associates.
Culture based on reuse
The influx of companies in Los Angeles focused on content-generation, such as app development, video production, and social media engagement, has pushed renovation and adaptive reuse projects in the city into overdrive. But why reuse an outmoded building when new construction allows companies to tailor buildings to their needs? In most cases, it’s simply more affordable to renovate an existing building and achieve the aesthetics—such as exposed brick walls, metal or wood structure, and polished concrete floors—that have come to be associated with creative office spaces.
“Reuse is part of the culture of what it means to have a cool office in L.A.,” says Emmanuel Soriano, market and development partner at Industry Partners, a real estate services firm specializing in the representation of landlords, tenants, and developers. The company’s portfolio includes the transformation of a former Santa Monica carpet cleaning company into the headquarters for J.J. Abrams’s Bad Robot Productions byJoey Shimoda, Contract’s 2013 Designer of the Year. Also in Industry Partners’s portfolio: the Beats by Dre office (Contract, September 2014) in former warehouses in Culver City and Nasty Gal’s Downtown headquarters in what was an outdated office space in the PacMutual building, both designed by Bestor Architecture. “More often than not, tenants in L.A. are looking for space in an older building that has been able to retain its character—whether that be the bland and utilitarian architecture of the 1930s or the more beautiful Beaux Arts buildings like PacMutual,” Soriano says.
Some companies that are redefining this century’s new economy have also redefined vast stretches of Westside real estate in Playa Vista, where the Hughes Aircraft Company had built the Spruce Goose. Shimoda designed a 50,000-square-foot headquarters in an old warehouse here for TOMS Shoes, and Lean Arch created ad agency 72andSunny’s workplace within World War II-era structures (Contract, May 2015). With tech giants like Google and Facebook making a home in Playa Vista, the area has become known as Silicon Beach.
Building as branding opportunity
Former warehouses and similar large buildings offer abundant, uninterrupted spaces that inventive companies desire. And, with nondescript exteriors, they are not so far removed from Los Angeles’s storied movie studios. “The interiors of creative office spaces are often self-contained enclaves designed to be fantasy worlds,” explains Li Wen, principal and designer director at Gensler’s Los Angeles office, which has completed several conversions such as Playa Jefferson that transformed a Citibank ATM manufacturing facility into an office campus with tenants including Omnicom. “Many creative office spaces feature a ubiquitous exterior that gives way to a powerful moment on the interior, which is a very L.A. thing,” he says.
“‘Authenticity’ is a word that comes up a lot with clients,” says Sejal Sonani, director of architecture at HLW’s Los Angeles office, which recently completed the conversion of a former U.S postal distribution center into The Reserve in Playa Vista. When buildings lack original character, “we treat the building as a background canvas and add new layers of design through architectural details, lighting, landscape, and graphics,” Sonani says.
Another way to reflect company culture is to create onsite amenities—such as outdoor lounge and meeting areas, cafes, fitness centers, bike repair shops, dog parks, and even car washes. “It’s casual in L.A.,” Wen says. “There’s a casualness already with this typology that allows it to be translated in a multitude of creative ways as opposed to a monofunctional office tower, which immediately insinuates some level of formality. Southern California is not about formality.”
The office tower often does not have the informal, ‘cool’ factor that is innate in these others structures and that, in part, is resulting in higher vacancy rates in Downtown. According to the Downtown Center Business Improvement District’s second quarter 2015 market report, the area’s vacancy rate is nearly 20 percent. In consistently desirable areas, such as Santa Monica, vacancy rates are below 10 percent.
With this real estate data and the push for less workplace formality in mind, Soriano foresees a need to redefine the look and perhaps even the use of purpose-built office towers. “I’m curious to see what’s going to happen to all the traditional Class A, B, and C buildings in Downtown,” Soriano says. “How will owners adapt and how will those buildings be reused?”
[The Westside has progressively become an incredible place for the co-location of tech, e-commerce and media firms. Silicon Beach, as it has come to be known, is real and many are starting to think it can surpass Silicon Valley as the world's center of tech innovation. In this article from Market Watch, author Shawn Langois discusses Silicon Beach's growing prominence with help from Industry Partners' own Trevor Belden.]
A hipster sips a flat white and leers at the techie at the next table. A 20-something with hairy legs and a flower in her hair grouses about rent. Lofts are being built where a family shop stood for generations and an old-timer laments the neighborhood that was.
Welcome to Silicon Beach. This isn’t San Francisco, but it’s sure starting to feel like it.
The divide between northern and southern California cuts deep, a rivalry that bangs on about sports teams, colleges, traffic, weather, jobs, women in bikinis, men in chaps. You name it, the two sides bicker about it. One particular battle front — the tech scene — has long been dominated by the Bay Area, but the Westside of Los Angeles County over the past few years has emerged as a contender.
“I’ve never seen anything like this in my 25 years,” said Trevor Belden, a commercial real-estate agent who played a role at brokerage Industry Partners in placing the likes of Uber and Snapchat in various locations across the Westside, which loosely comprises western neighborhoods of Los Angeles plus the cities of Santa Monica, West Hollywood and Venice. “There is absolutely no doubt in my mind that eventually Silicon Beach will be mentioned in the same breath as Silicon Valley as the world’s leading technology hub. It’s already happening.”
Of course, there’s still a long, long way to go. To get a sense of the dominance the neighbors to the north have on fostering startups, just check out these numbers: In 2014, the Los Angeles area struck 171 venture capital deals for a total of $2.05 billion, according to the National Venture Capital Association. That’s enough to put it in the top five for the first time ever.
The city of San Francisco, in the top spot, posted 876 deals for a record total of $17.74 billion — and that number doesn’t even include the San Jose area (#2), which would tack on another $6.88 billion.
It was a huge year all around, with megadeals like Uber and Tango securing Silicon Valley’s position as the unassailable leader in launching future tech leaders. But many are starting to believe that Los Angeles has what it takes to continue to draw some of the hefty tech players to its sunny coast.
Google GOOG, +0.59% one of the companies that makes up the heart and soul of Silicon Valley, is going all out to establish a big So Cal presence. The Venice office is already a staple in the explosive Westside scene, and now, with the purchase of 12 acres in nearby Playa Vista, Google is joining a herd of tech notables in expanding L.A.’s tech boundaries.
Google’s Los Angeles jobs page asks the question: “Who needs Silicon Valley when you can have Silicon Beach?” More and more seem to be asking the very same thing.
LinkedIn LNKD, -1.96% is rumored to be in the market for a huge space, according to real-estate-industry sources. A spokesman for LinkedIn, however, flatly denied the claim. Twitter TWTR, -2.03% which opened a Santa Monica office last year, is said to be looking to expand, as well. The company declined to comment.
Apple AAPL, -1.39% is also sniffing around, the sources said, though a spokesman gave only a “no comment.” Last year, Apple was reportedly looking at “several hundred thousand square feet” in downtown Los Angeles. Apple already has corporate space in L.A. with its Beats acquisition.
Tablet maker Fuhu, named Inc. magazine’s fastest-growing private company two years running, set up shop six years ago in El Segundo, a town best known for its Chevron refinery and a history as an aerospace hotbed. The runner up on the 2014 list, Quest Nutrition, is also based there. The rate of growth at these two companies — in Fuhu’s case, an incredible 158,957% sales surge over the previous three years to almost $200 million — is a reflection of the area’s transformation.
Fuhu co-founder and CEO Jim Mitchell, a South Bay, Calif. resident since the early 1990s, spent 19 years at consulting firm Accenture, where he worked with the likes of Google, Qualcomm QCOM, +0.55% Toshiba and Intel INTC, +1.03% But Mitchell, noting a dearth of opportunity in the area, had to commute up north for his business when he started.
“Before the dot-com bubble, there was nothing outside of Silicon Valley,” he said. “Now there are a lot of tech firms and startups in the South Bay. It works well for us since we cater to kids. Having premier entertainment companies like DisneyDIS, -0.56% and DreamWorks DWA, -1.30% here is a huge benefit.”
Indeed, the marriage of tech and media has proved a successful one in the age of everything social. To get a broader sense of the burgeoning scene, here’s this interactive crowdsourced map of more than 1,000 startups spanning the entire region, courtesy of Represent LA.
El Segundo and Playa Vista, home to Facebook FB, -2.87%YouTube, Microsoft MSFT, -1.28% and soon Yahoo YHOO,-2.61% and the aforementioned Google campus, are key to Silicon Beach’s next phase of growth. The area just south of Venice has it all. It is more affordable than Santa Monica and the Bay Area, has space to grow and is right next to the airport. Throw in its traffic-skirting proximity to some of the more attractive areas to live, like Manhattan Beach and Hermosa Beach, and it is not hard to foresee a continued boom.
“These sleepier coastal towns are seeing investment pour in from huge institutional players who previously focused solely on San Francisco and Manhattan,” Belden said. “They watched the growth, and they know the amount of seed capital that is funding these companies.”
The cost to rent commercial space has also risen at a breakneck pace. Santa Monica has been hot for years now, with the average asking price for space reaching its highest ever at $4.33 a square foot a month, according to Industry Partners data. Top-end rentals are fetching upward of $6.00 a square foot, having doubled from just four years ago.
Snapchat is one of the engines driving the change in Venice. The messaging app company’s latest move is to snap up 40,000 square feet of prime real estate, displacing dozens of other renters, according to the Los Angeles Times. Hence some of the inevitable bitterness
The upside of the heightened buzz and increased jobs brought by such an emergence is, no surprise, accompanied by the downside that the Bay Area knows all too well. Atop that list is the brutal cost of living. While companies shell out unthinkable sums for office space and enrich their employees, locals have had to deal with skyrocketing rents.
“Has it changed? Are you kidding me? It’s a completely different scene,” said Brad Agens, a digital advertising consultant and resident of two decades. “Venice went from a grubby place to live for those who couldn’t afford Santa Monica, to the hippest part of town. But in the past few years, all the tech and money is drastically altering the place, and I’m not sure for the better.”
He added that the small apartment he rented back in 1997 for $800 is probably going for more than $4,000 now. “Google really seemed to change everything when it moved in,” Agens added. He may not be sure if the area is better off now, but, as the landlord of a house in Venice, his financial situation has directly benefited from the transformation.
It isn’t just Venice, of course. Rents are on fire up and down L.A.’s coast. The median rental in Manhattan Beach, for instance, jumped 21% in June from a year earlier to $6,173 a month, according to the Zillow Rent Index. Venice, by comparison, shot up 17% over the same time frame to $4,857. San Francisco, meanwhile, has seen a 16% increase to $4,252.
Detractors may complain, or in some cases, even put up a fight, but they won’t halt “progress.” That’s true for both cross-state rivals.
Silicon Valley may never be caught, at least in perception. From Steve Jobs to Bill Hewlett and on to the latest crop of young guns, there is just too much history and lore there. The reality, however, is that L.A.’s tech scene is taking off faster than anyone could have imagined a decade ago, and it continues to close the gap, one Snapchat and one Fuhu at a time.
“This certainly has the potential to be the tech/entertainment hub. But a pure tech hub? I don’t think people down here necessarily even strive for that,” Fuhu’s Mitchell said.
The parting shot: “Here, it’s more about building great companies than cashing in and searching for the next big thing. It’s much more collaborative than it is in the Valley, where people jump from company to company. Their options vest, and they’re out.”
And the rivalry lives on.
[Industry Partners worked on the leasing of retail space at one of Downtown Santa Monica's most beautiful buildings—631 Wilshire Blvd. The building will soon be home to Sidecar Donuts, Mendocino Farms and Juice Served Here. See the excitement behind the openings in Eater LA's brief article below.]
Local developer Pacshore Partners renovated the old Art Deco building on the corner of 7th and Wilshire, transforming it into a lively, airy space that reflects its "everything local" theme. In rejecting corporate tenants, the developers have offered independent local eateries the opportunity to keep Santa Monica full of unique, appealing storefronts. As an extra attraction, local artist Bumblebeelovesyou recently completed a new and colorful mural on the side of the building.
Mendocino Farms will have an outdoor patio and is slated to open sometime in the fall. Sidecar Donuts is projected to open in August and while the aesthetics will be different than their Costa Mesa location, it will still have the same community feel as their flagship shop. Juice Served Here hopes to open in early September with custom furniture and a beautiful inset patio, which reflect their other location's décor. Here is a rendering shot of what their interior will look like.
Santa Monica will continue to thrive with these delicious new additions and will be a one-stop shop for breakfast, lunch, and dinner for both locals and visitors alike.
[Industry Partners worked on the leasing of retail space at one of Downtown Santa Monica's most beautiful buildings—631 Wilshire Blvd. The building will soon be home to Sidecar Donuts, Mendocino Farms and Juice Served Here. See the excitement behind the openings in Eater LA's brief article below.]
Local developer Pacshore Partners renovated the old Art Deco building on the corner of 7th and Wilshire, transforming it into a lively, airy space that reflects its "everything local" theme. In rejecting corporate tenants, the developers have offered independent local eateries the opportunity to keep Santa Monica full of unique, appealing storefronts. As an extra attraction, local artist Bumblebeelovesyou recently completed a new and colorful mural on the side of the building.
Mendocino Farms will have an outdoor patio and is slated to open sometime in the fall. Sidecar Donuts is projected to open in August and while the aesthetics will be different than their Costa Mesa location, it will still have the same community feel as their flagship shop. Juice Served Here hopes to open in early September with custom furniture and a beautiful inset patio, which reflect their other location's décor. Here is a rendering shot of what their interior will look like.
Santa Monica will continue to thrive with these delicious new additions and will be a one-stop shop for breakfast, lunch, and dinner for both locals and visitors alike.
[In this article from the LA Business Journal, Frogtown is at the fore of a wave of interest stemming from the City's commitment to revitalizing the LA River. Industry Partners is proud to be working on two listings in this eclectic neighborhood.]
From the hiking trail along the rim of Elysian Park, a couple of miles north of Dodger Stadium, you can see the whole Elysian Valley neighborhood. It doesn't’t look like much: less than a square mile of small-scale industrial buildings and single-family homes pushed up against the concrete gut of the Los Angeles River, with barely any activity to be seen.
The neighborhood, colloquially known as “Frogtown,” looks like silence.
But real estate interests envision Frogtown – hemmed in by the 5 and 2 freeways and the river – as the next extension of the city’s hip core.
The tiny pocket, home to about 8,000 people, has nine projects under construction and more than 30 developments and reuse projects in the pipeline. Many believe that the neighborhood, propelled by the promise of a $1 billion river makeover, will soon follow in the hipster footsteps of Echo Park, Silver Lake, Los Feliz, Highland Park and downtown L.A.’s Arts District.
This notion has some community members concerned their neighborhood will get too dense, too fast. Tensions mounted at a Department of City Planning hearing June 9 regarding proposed zoning changes to commercial riverfront lots that include dropping the maximum building height to 30 feet from 45.
“Frogtown has legs, pun intended,” said Greg Tuszynski, a vice president at real estate firm Colliers International who represented Silver Lake gym Klub Gymnastics in a $5 million, 10-year expansion lease into a vacant 40,000-square-foot 1940s airplane hangar that backs onto the river at 1683 Blake Ave. The deal, which closed in April, will change the space from industrial to retail use.
“Prices are half of what they are (on the Westside) and in the Playa Vista market. Frogtown is still kind of off the radar, but it’s hitting a tipping point now where there is a limited window of time before the prices go up dramatically,” said Tuszynski.
After some nudging from Mayor Eric Garcetti, the Army Corps of Engineers, which manages the Los Angeles River because it is a flood-control conduit, last year recommended a $1 billion river facelift proposal. If approved by the Army Corps’ Civil Works Review Board in July, it will go to Congress, where federal funds can be allocated. The makeover would create wetlands and bike trails, among other improvements, along an 11-mile stretch north of downtown through Elysian Park.
“I look at the river through the lens of investing in the river itself, but obviously that has an impact on the adjacent communities,” said Omar Brownson, executive director of LA River Revitalization Corp., a nonprofit that aims to build a greenway along the full 51-mile stretch of the river from the Simi Hills to Long Beach, in addition to other river-focused projects.
In an April report for Century City business advocacy group Los Angeles Business Council, Paul Habibi, a lecturer at the Ziman Center for Real Estate at UCLA, recommended residential development along the river as part of the solution to L.A.’s housing shortage.
Traditionally working class, Frogtown contains light industrial buildings along the river and homes on small lots closer to the freeways.
Despite the interest and activity, signs are not glaring that the neighborhood is changing. Good Eggs, a San Francisco online food delivery startup, opened a distribution center in the old Hostess factory at 2760 Clearwater St. last year, followed by luxury furniture maker Modernica, which moved its headquarters into the building.
Nonprofit Friends of the Los Angeles River recently opened the weekends-only Frog Spot, a meeting place for river tours and trips, performance venue and spot to get a cup of coffee, at 2825 Benedict St. on the Los Angeles River bike path.
It’s hard to get a cup of joe in Frogtown. It also has no supermarket or liquor store, no pharmacy or vintage clothing boutique.
“Commerce hasn’t existed here since the 5 went up,” said Kevin Mulcahy, managing partner at RAC Design Build, an architecture firm in Frogtown that has been a vocal opponent of overdevelopment in the area. RAC recently offered a “smart growth” initiative, suggesting that the density allowed along the river is too high and should be decreased.
“When the 5 came through, it literally bisected the residential community from what had been its amenities and it has never recovered,” said Mulcahy.
Some adaptive reuse projects are starting to change that. Ron Rohrer, a real estate agent and property manager at Glendale firm Pacific West Business Properties Inc., said he drew up a lease agreement with a coffee and sandwich shop tenant for 2902 Knox Ave. that would be a first for the neighborhood. A retail conversion of the 8,256-square-foot former industrial building should be completed next month.
Carle Pierose, a partner at Santa Monica commercial real estate firm Industry Partners, used to only visit Frogtown to meet with architects, including those at RAC. Now, he is leasing two reuse projects that are under construction in the area.
Churchside, a 38,000-square-foot retail and creative office project at 2427-33 Birkdale St., spans two blocks and is being developed by Beverly Hills real estate firm Bolour Associates. Another mixed-use project, by downtown developer Redcar Properties, will convert a 23,000-square-foot industrial space at 2820 Newell St. for similar uses.
Both projects, Pierose said, will likely be completed by the end of the year, but he expects to sign tenants before then.
The residential projects proposed for Frogtown envision greater density on former light industrial properties. Three proposed developments alone would bring 206 housing units to an area that has only 1,300 residential lots, according to Mulcahy. A report by sustainable design nonprofit LA-MAS in Frogtown said that between October 2011 and December 2014, 39 industrial properties were sold there, 10 of them on the river.
A partnership of local developers Ron Gonen of Hidden Hills’ EGC Luxury Homes and Robert De Forest of L.A. real estate investment company Pinyon Group has proposed a roughly 52,000-square-foot mixed-use project at 2960-90 Allesandro St. The project, Elysian Valley Riverfront Creative Campus, would contain 40 housing units and roughly 16,000 square feet of retail.
Mid-Wilshire firm Harridge Development Group is planning 100 small-lot homes, 17 condominiums and 29,000 square feet of commercial space. Its Blake Avenue Riverfront Project would occupy two properties with a total lot area of 170,000 square feet at 1771 W. Blake Ave. and 2645 N. Blimp St.
“Commercial use along the river doesn’t make sense and industrial in an area that’s changing doesn’t make sense,” said Jerry Neuman, a representative of the project. “Community-serving retail and housing does.”
LA River Lofts, a 56-unit condominium project at 2943 Gleneden St. was completed earlier this year.
The changes, however, are not being universally embraced.
“In with the new (residential development) comes people complaining about welding at 2 a.m., and this is a community that has been allowed to do those things as this is a design-build area,” said Dana Sayles, a land-use consultant on a proposed four-story, 49-unit multifamily complex at 1901 Blake. “The concern is that if people come and live there in close proximity, they won’t be able to do those things anymore.”
Zoning in Frogtown allows for 45-foot-tall residential buildings with a density bonus that can bring them up to 58 feet so long as 10 percent of the units are affordable. Before the pocket neighborhood caught developers’ attention, that wasn’t much of an issue.
But with proposals coming more quickly, some residents fear Frogtown is vulnerable to overdevelopment.
“We support change in development, but we support it where it’s appropriately scaled,” said RAC’s Mulcahy, adding that properties against the river should be treated differently than projects farther inland, though no distinctions are currently made. “Best use is being seen as high-end residential and we can’t think of anything more inappropriate to happen along the river.”
The public hearing earlier this month discussed proposed zoning changes, including dropping the maximum building height to 30 feet from 45 and mandating that new buildings take up no more than half of a lot area.
Mulcahy argues that the rules, even the proposed ones discussed at the hearing, promote more density than Frogtown’s infrastructure can handle.
Consultant Sayles said this is a common concern in the community.
“Frogtown has undersized sewer lines and undersized storm drain lines,” Sayles said. “People feel that when the 5 was built, they were cut off, with one way in at south and one at north, like an island. Frogtown functions like an island.”
Behind the arguments about zoning are residents’ concerns that they will be priced out of the neighborhood.
Home prices have started to rise. A 770-square-foot, 1920s-era cottage at 2335 Cabot St. that sold in January for $344,000 was just flipped – for $567,000.
[Located at 1314 7th Street, the Telephone Building (an Industry Partners listing) is a 1930s building recently converted to creative office use with retail. This past weekend highly anticipated restaurant Cassia opened on the ground floor. The Southeast Asian brasserie is a collaboration between Brian and Kim Ng of storied Spice Table, and Zoe Nathan and Josh Loeb of the Westsides Rustic Canyon Family of Restaurants.
After lots of waiting in the dark, then lots more white-hot anticipation, Santa Monica’s Cassiaquietly opened its doors over the weekend. Instagram has been flooded with friends and family meals for the past couple of weeks, but none other than Toddrickallen hit the scene over the weekend to show off the interior and talk about the soft public opening.
Of course, there are lots of reasons you should be excited to get out to Santa Monica to experience this new project from magnificent chef Bryant Ng and his wife Kim Ng, alongside serial Westside restaurateurs Zoe Nathan and Josh Loeb. The beautiful new bistro space, with a variety of different seating options and a sampling of outdoor patio tables, is one. The “Asian meets French” menu, full of Southeast Asian flavors pulled directly from the former Spice Table playbook, is another.
One of the most anticipated openings of the year, Cassia is (for now) accepting walk-ins only, but Toddrickallen says they’ll begin allowing reservations via OpenTable on June 21. Hours on the website for Cassia indicate that they’re closed on Mondays, but will keep late night hours most of the week (5:30 p.m. to 11 p.m. Tuesday to Thursday and Sunday, with an extension to midnight on Friday and Saturday nights).
1314 7th Street
Santa Monica, CA
[Venice has long been known for its ecclectic beachside culture. This article from the LA Times discusses the potential impacts to Venice's deep rooted 'funk' as it becomes a popular location for tech companies in LA's 'Silicon Beach.' A focal point is Snapchat and their recent expansion to the Thornton Lofts on Ocean Front Walk—a lease deal which Industry Partners brokered.]
Snapchat first set up in Los Angeles in a funky old bungalow on Venice Beach, a little start-up with only 14 employees. Two years later, the messaging app is rich, famous and expanding fast.
The company is still in Venice, but with 200 employees it has far outgrown its cozy house on the beach. It's about to nearly double its footprint in Venice with a lease for 40,000 square feet in several buildings at Venice and Abbot Kinney boulevards, according to real estate experts and property records.
Some residents say the tech company's rapid expansion will alter the character of Venice, a longtime enclave for poets, artists, musicians, roller skaters, beach freaks and unclassifiable eccentrics. They gripe about a continuing influx of well-heeled techies who've made Venice a more expensive place to live and do business.
As "Silicon Beach" expands, it's bound to transform the laid-back environment that has attracted dozens of start-ups. Snapchat, the most famous — and highest-valued — start-up in Los Angeles, serves as a lightning rod for foes of gentrification.
"The clock can't be turned back after Venice is built out to support large corporations and not small businesses," said James Briggs, chief executive of Briabe Mobile Inc., a mobile marketing company and tenant at the Abbot Kinney complex since 2007.
The frictions caused by tech industry gentrification are not new. Similar dramas are playing out in San Francisco and other old-line communities disrupted by Silicon Valley companies. Luxurious private buses filled with tech workers have become a vivid metaphor for the widening wealth gap in San Francisco.
Snapchat Chief Executive Evan Spiegel, who grew up in Los Angeles and attended Stanford University, said he chose Southern California to escape both corporate and Silicon Valley culture. Walks on the beach helped Spiegel and his business partner Bobby Murphy dream up new features for the app.
If it continues to expand in Venice, though, it will have to grow horizontally. And growth for Snapchat, with a reputed value of $15 billion, a growing list of features, and millions of users around the world, appears inevitable.
With its low-slung structures, bad traffic and lack of parking, Venice isn't a natural spot for companies with hundreds of employees. In fact, Google recently announced that it would expand its Southern California operations beyond Venice to a massive new office park in Playa Vista with nine times more space.
napchat's latest expansion will displace about three dozen tenants, most on month-to-month leases, who could receive an eviction notice from Snapchat as soon as June 1. Near its Market Street headquarters, the company has displaced a youth shelter, an art studio and, by next year, probably a tavern.
Several tenants at the Abbot Kinney complex said they've sensed for a while that their days there are numbered. Office lease prices in Venice have doubled to an average of $5.82 a square foot per month since 2011 while the vacancy rate has dropped by more than half, to 10%, according to data from real estate firm CBRE. In the broader West L.A. market, lease rates rose 27% and vacancy fell by a fifth.
The median rent for housing in Venice has surged more than 50% over the last two years to $3,100 a month in the first quarter of this year, matching Santa Monica's median, which has risen 6%, according to real estate website Trulia.
"It's basically a landlord market there," said David Thind, an agent at Coldwell Banker Commercial. "There's retail tenants and tech firms from around the world that want a Venice address."
"For us, the tenants, it's not a good situation," said Jim Higgins, chief executive at the IT consulting firm EWireless 1, another Abbot Kinney tenant. "My eyes are open, but it's very expensive." Alternatives in Venice would cost at least 30% to 50% more than he's paying now, and he's not sure he can afford that, he said.
Kim Gordon, who moved her interior design studio to the complex in June, thinks politicians should step in.
"It would have been fantastic for the mayor or the city to come up with something truly terrific for the community here instead of just having one big hog that might not be around in five years," she said.
One person's big hog is another person's economic development engine, however. A spokeswoman for Los Angeles Mayor Eric Garcetti declined to comment. A spokesman for city councilman Mike Bonin, who represents Venice, did not respond. Property owner Eric Swepston declined to comment, citing ongoing negotiations.
Venice has always been a bit odd. It was created as a real estate development in 1905 by Abbot Kinney, who called it Venice-in-America. Kinney dug out canals to suit the theme; most were filled in a few years later. In the 1950s and 1960s, beatniks and hippies made it their home. Real estate values have risen over the decades but the area has maintained a hip image. In 2012, GQ magazine named Abbot Kinney Boulevard "the Coolest Block in America."
Spiegel apparently thinks the place is cool too. Even after outgrowing its beachfront bungalow in 2013, he kept Snapchat in Venice. The company now leases a handful of buildings on nearby Market Street, and the few other businesses that remain fear they could be squeezed out in coming years.
In January, the company quietly expanded slightly north, signing a three-year lease at Thornton Lofts for a 25,000-square-foot live-and-work space along the people-watcher's paradise known as Ocean Front Walk.
Some residents think Spiegel's love for Venice is misguided. "Snapchat wants to be associated with the Venice lifestyle, but it's overburdening the community and destroying its diversity," said Levi Brooks, chief executive of digital strategy firm Use All Five. "It doesn't make sense."
Others welcome Snapchat's expansion. Jack Hoffmann, who lives across from Snapchat's headquarters, said the company's presence has kept the street clean and reduced violence.
"If Venice is about anything, it's about dynamic change and we're seeing it," Hoffmann said.
Jim Murez, manager of the Venice Farmers Market, said the changing economy has naturally priced out "starving artists" in favor of companies pursuing "new art forms in the digital world."
"Is having a Snapchat better or worse than a mom-and-pop production company?" Murez said. "It's neither. It's just different."
Snapchat declined to discuss real estate matters on the record. A spokesperson said by email, "We love being in Venice and we strive to be great neighbors within the community where we live and work."
[In a story from Globe Street, Industry Partners' own Travis Landrum gives some insight into El Segundo's changing office market, and Divco West's repositioning of the 350,000 SF GATEWAY campus]
EL SEGUNDO, CA—Industry Partners has taken on the marketing and leasing of El Segundo Gateway, a 350,000-square-foot creative office redevelopment project from Divco West. In an earlier story, GlobeSt.com reported that Divco West purchased the property for approximately $75 million and planned to reposition the traditional property as a creative office campus. Now that the renovations are well underway, the investor has retained Industry Partners to begin marketing the property.
[In this article fomr online real estate publication GlobeSt.com, Industry Partners' Emmanuel Soriano provides some insight into why Playa Vista is on its way to becoming the heart of 'Silicon Beach' and some of the challenges that may come up.]
PLAYA VISTA, CA—The Playa Vista creative office market is fast becoming “the heart” of the Westside office market, according to the creative office specialists the Industry Partners, thanks to several recent lease transactions with mid- to large-sized tenants and the presence of institutional investors. The migration of media and tech companies is driving the surge in the market, boosting a total net absorption for the year of 295,281 square feet, according to the latest Westside office report from Industry Partners.
[In 2014, Industry Partners collaborated with LeBasse Projects to bring mural art to several of their listings. The belief is that a building has the ability to enrich the cultural life of it users and the surrounding community through public art. German duo Herakut worked on a piece called 'Striving for Truth' at 5340 Alla Rd in Playa Vista. Industry Partners is proud to have the piece counted as one of LA Week's 10 Best LA Street Art Murals of 2014. Click here to see the video of the art come alive at 5340 Alla Rd.]
This year should have been a pinnacle for street art in Los Angeles. A 10-year ban on public murals was lifted at the end of last year, and our city, with unlimited walls and unmeasurable creative energy, was expected to become saturated with public color. But, as is often the case in LA, bureaucracy got in the way.
"Instead of the mural boom everybody expected, the city's confounding rules have led to the destruction of more murals than they've helped create," says Fredrik Lidskog, one of the city's premier cataloguers of street art. Murals by greats like Shepard Fairey, Ron English and David Choe have all been recently whitewashed because of bureaucratic nonsense.
The new freedom did, however, draw some fresh local artists and prominent international artists to try their skills on L.A. walls. While the old guard of former graffiti-heads such as Retna and Madsteez have been phoning in their new work, seeming more interested in connecting with wealthy collectors and brands than average folks on the street, a crop of new geniuses has flooded in to take their place.
Striking, colorful, insightful new murals have popped up all over the city. The diversity of the neighborhoods in which they appear is matched only by the diversity of artists themselves. We have a Brazilian in Little Tokyo. A German in Playa del Rey. An Englishman in Culver City.
Below is a list of best works of 2014. We enlisted the help of four experts in the field, all respected researchers and photographers of L.A. street art:
- Erin Mitchell of Lost Angeles Street Art
- BJ DeHut of Gremlinhouse
- Frederik Lidskog of Impermanent Art
- Mitchel Dumlao of L.A. Street Art Gallery
The factors they considered were beauty, originality, political message and the diversity of the artists' backgrounds and locations of their paintings.
Here is our final list:
[Industry Partners is proud to be working on the leasing of new creative office space at Fourth & Traction in the LA Arts District. This exciting rehabilitation and repositioning of the 1915 Coca Cola Building is the focus of this article by the Los Angeles Times.]
A century-old Coca-Cola manufacturing plant in a formerly run-down section of downtown Los Angeles is about to pop as a plush new office and retail complex.
The elaborate makeover of the three-story brick-clad building most recently used as a toy business warehouse underscores the rising demand for nonconventional office space and the emergence of the Arts District as a desirable neighborhood for residents and white-collar businesses.
Rents at the complex called Fourth & Traction are expected to easily surpass those charged by landlords of many of downtown's most prominent skyscrapers as growing firms in such fields as technology, entertainment and fashion continue to seek out offices that aren't meant to cater to staid corporate tastes.
In a show of confidence in the so-called creative office market, the developers paid $19 million for the old soft-drink facility and plan to spend at least an additional $15 million in an effort to make it into a well-appointed showplace with a historic vibe.
"People like a sense of nostalgia," said developer Drew Planting of GPI Cos., a Los Angeles real estate firm that owns the building with New York investors Atlas Capital Group and Square Mile Capital Management.
Many tenants also like structures originally used for manufacturing because they often have high ceilings, more natural lighting and different windows than are found in typical modern offices, he said.
"It has to have soul, history and architectural vernacular," Planting said of the ideal historic building. "You can't replicate that."
The location at 4th and Merrick streets certainly comes with a past. Merrick is a brief extension of Traction Avenue, a former street car route connecting downtown's old industrial district to the city. The former Coca-Cola building is a stone's throw from an enormous former Santa Fe railroad dock that is now an elite architecture school.
Its neighbors include several other old industrial buildings that have been turned into housing, shops, bars and restaurants. The sinuous-looking, 438-unit One Santa Fe apartment complex is being completed nearby.
In 1915 The Times reported that Coca-Cola Co. was constructing a "commodious" new home for its operations, replacing an older facility on San Pedro Street.
"This is to be the headquarters for the company's Pacific Coast business and for its export trade in the Hawaiian Islands and Old Mexico," The Times said.
yrup made using Coca-Cola's secret recipe was produced at the plant and shipped out for bottling or fountain use. The plant was expanded in the 1930s and again in the 1960s. Coca-Cola sold the building in the 1990s.
The plans by architecture firm HLW International call for adding a 300-space garage to the property. The basement and first floor are to be retail space for rent to such users as a gym, shops and an upmarket restaurant.
A new entryway will be created for the restaurant on the east end of the building, said Robert Cohen of RKF, the brokerage searching for retail tenants.
The two upper floors will be converted to office space, and a glass-enclosed penthouse will be added to the roof. The penthouse will be surrounded by a landscaped rooftop deck with seating, a fire pit and an outdoor kitchen.
"It's going to be an indoor-outdoor office experience," Planting said.
The fact that the 150,000-square-foot project is being built on "spec" — no tenants have been signed — demonstrates the upward momentum of growth in the Arts District, said real estate broker Carle Pierose of Industry Partners, the firm searching for office tenants for the building.
"We used to have to bring the tenants first," before office construction would begin, he said.
Most of the development in the Arts District in recent years has been housing for the well-heeled, Pierose said. The average annual income for neighborhood residents is $120,000.
Interest in the former Coca-Cola building has so far come mostly from technology and fashion firms, he said. When completed next year, the property will join several others that are bringing street life to the Arts District.
"First it was one lily pad, then another," Pierose said. "Now you are seeing it fill in and it will become a lot more walkable."
[The creative office type has come to represent LA's robust creative economy and the increased desire to be in an inspiring place and space. This article by Globest.com explores the way the creative office is expanding in Los Angeles, particularly in Hollywood with the development of Kilroy's Colulmbia Square project. The article features Industry Partners' founding partner Jim Jacobsen, articulating what makes the creative office so appealing to people across sectors. ]
With construction well under way, Kilroy Realty's Columbia Square project shows that creative office officially has a new face.
Creative office was once simply renovated warehouse spaces with polished concrete floors and high, open ceilings, meant to target technology and creative companies. Most popular in San Francisco and New York City, technology mainstays came in and gave creative office a boost of flash and sparkel with gaming rooms and onsite amenities like fitness centers and restaurants. The open floor plansand unique comfortable environments encourage productivity and employee collaboration while helpingt to attract top-tier talent, making the extra investment in these types of spaces well worth it.
To read more, download the article in PDF.
[Industry Partners worked with Beats by Dr. Dre to secure a building and space in Culver City that would ultimately reflect the company's brand and vision. Fast Company highlights Beats' Barbara Bestor-designed new office.]
SOUTHERN CALIFORNIA HISTORY MEETS DAYTIME DISCO IN BEATS' CULVER CITY HEADQUARTERS.
Apple may have acquired Beats Music and Beats Electronics in May, but the new Beats by Dre headquarters in Culver City couldn’t be farther from the all-white aesthetic favored by Jonathan Ive and Steve Jobs or Norman Foster’s spaceship-in-the-garden landing soon in Cupertino. “We come from hip-hop, hardcore punk, and indie rock. Hype Williams to Paul Williams, Robert Mapplethorpe to Robert Kelly. How do you design for that without being cliché?” asks Luke Wood, cofounder of the company with Dr. Dre and Jimmy Iovine.
Los Angeles-based architect Barbara Bestor tackled the question over and over again across the Beats campus. In renovating two existing industrial buildings, she meets Wood’s musical breadth with a series of architectural gestures that go from pop to cinematic to downright arty. The interior combines spaces saturated in deep blue and red paint with custom op-art wallpapers, and blond wood plucked from a primer on Scandinavian design. There’s even brass-lined staircase reminiscent of 1970s minimalist art.
At 105,000 square feet, the Beats by Dre workplace is one of the larger projects her firm has taken on. Bestor Architecture worked with workplace consultant Loescher + Meachem Architects to develop a scheme that could accommodate working environments for three CEOs, four executives, and 650 employees across more than a dozen departments that span software (Beats Music) to hardware (Beats Electronics). The design was completed this spring before Apple acquired Beats. Wood says the acquisition will not alter how Beats plans to use the space.
The main building, a former dental equipment manufacturer, is the public face of the company and houses the reception areas, conference rooms, offices, and acres of open desks. Across the parking lot, a second existing building accommodates a cafeteria, small gym, and grand, double-height workshop dedicated to research and development.
Bestor is known for her use of color and patterning--graphic signatures oft used in her retail and residential projects--and deft ability to make spaces that are generous and casual, while remaining sophisticated pieces of architecture. “Daytime disco is not a bad model for an office, ” says Bestor, recalling her 2011 installation Silent Disco at SCI-Arc, a provocatively glam construction tucked into an architecture school gallery. “With Beats we created a variety of calculated environments within the larger workspace: peaceful, activated, or super-classy spaces and simple spaces or art school spaces.”
Three elements organize the office layout: a long, two-story lobby that cuts across the building’s short axis and two courtyards, one all-white and dedicated to marketing and a deep blue courtyard for operations. A bit of an oversized thoroughfare during the day, Bestor designed the lobby to function as a place for Wood’s legendarily inspiring all-hands meetings where the whole company gathers in the space. Each courtyard has an urban, almost Rear Window, appeal as second story meeting rooms gaze into the more communal atrium below. Beats may be all about what goes in your ears, but this workplace feeds the visual. “The references are cinematic and the idea is about view: hidden view, open view,” Bestor says. “I think it is very romantic, like when you are walking on the ramps of the Guggenheim and getting views across the atrium.”
Wood touts the design’s long sightlines and ample visibility. “I spent 20 years in record companies--it was a bunch of little nests. You’d go all day and not see anyone. Now, you see people working away, you understand what everyone is doing.”
Beats is a Southern Californian company and Bestor’s design underscores that connection to L.A.’s history, landscape, and culture with a series of photo murals by photographer Iwan Baan in 10 of the conference and break-out rooms. The aerial images depict the founder’s neighborhoods--Silver Lake, Holmby Hills, Hollywood Hills--as well as the abstractions of freeway interchanges and the oilpumpjacks still bobbing away in Baldwin Hills.
For Wood, the Culver City location is especially important. It’s not just that the area was RKO Forty Acres, where the studio filmed King Kongand Gone With the Wind, or that the Culver City’s Hayden Industrial Track is architecturally known for wildly expressionistic buildings by Eric Owen Moss, or even that L.A.’s Silicon Beach is rapidly filling the renovated buildings of the former Howard Hughes Airport to the west. It’s all of them. "We’re located at the crossroads between technology and culture--aerospace and the backlot,” he explains. “It’s a tremendous ideological foundation from which to build our new space."
Industry Partners has worked with a range of innovators to define their space in a way that reflects their brand and ethos. Featured here in an NBC special report with Maria Shriver, Industry Partners worked with Sophia Amoruso of Nasty Gal to expand their operations to the Carriage House of DTLA's PacMutual campus. Built in 1926, the Carriage House was designed in the Beaux Arts architectural style and it house PacMutual's garage, dining room and ball room. The Carriage House is now an inspiring interwining of modern design details with the building's unique interior structure featuring exposed brick, the building's original trussses, and incredible windows.
Sophia Amoruso is the 30 year-old CEO of Nasty Gal, a $100 million plus online retailer that began as an eBay store and is now a fashion empire. Click here to watch Part I of the report filmed at the PacMutual's Carriage House. Part II can be also viewed here. And be sure to check out Sophia's new book #GirlBoss, available now.
In a sign that the definition of prime office space is undergoing a dramatic shift, an old downtown Los Angeles office complex — once considered second rate — is now outperforming many of its newer, glitzier competitors.
PacMutual Plaza, which dates to 1908, was one of the best addresses in Southern California until an unprecedented office building boom in the late 1980s and early 1990s brought a stately new crop of skyscrapers to town.
For decades to follow, PacMutual — in the same block as the Biltmore hotel in Pershing Square — was a lower-cost alternative to such elite enclaves of corporate America as U.S. Bank Tower, Two California Plaza and the Gas Company Tower.
As a young real estate professional in the late 1990s, Christopher Rising was informed that "PacMutual was for people who wanted to think they were in Class A space when they really weren't," he said.
The definition of what is first-class office space in downtown Los Angeles is in flux, however, as a growing number of tenants shun conventionally formal, discreet offices in favor of wide-open rooms. Exposed brick and polished concrete are preferred by many over carpet, drywall and dropped ceilings.
With that trend in mind, Rising went after historic PacMutual. His Rising Realty Partners bought the complex at 6th and Olive streets for $60 million in 2012 and set out to make its advanced age an asset instead of a liability.
Rising Realty ripped out false ceilings and scraped plaster off the brick walls. It lifted carpet to find marble floors laid by the original owner, Pacific Mutual Life Insurance Co. On some floors it tore down walls to make small offices into big ones, increasing the overall rentable square footage from 425,000 to 460,000.
"You can have higher density of employees in a big floor plan," said Nelson Rising, Christopher's business partner and father.
Occupancy in the building fell to nearly 50% as the Risings' renovation got underway and the landlords let go of tenants who had secured low-cost leases under previous owners. As they worked on refilling the building, the Risings hoped to appeal to both professional firms and companies in creative fields such as tech and entertainment.
Their strategy was to offer tenants the choice of conventional office space or hipper alternatives where concrete ceilings still bear the impressions of the boards that craftsmen used while casting them a century ago.
It turned out that the raw look associated with dot-com cool appealed to all kinds of companies, suggesting that the cloistered elegance associated with corporate offices of the late 20th century is growing passe.
Professionals such as attorneys want the new look too, said real estate broker Carle Pierose of Industry Partners, who lines up new tenants for the building.
"Just because I went to law school, it doesn't mean my office space has to suck," Pierose said of tenants' attitude. "I want it to reflect my lifestyle."
Rising Realty has signed 56 leases in the last year and a half, Pierose said. Among the new tenants are professional firms, online retailers, fashion companies and video game makers.
The biggest new tenant is Nasty Gal, an online fashion retailer that took 60,000 square feet.
Entertainment companies have historically avoided the downtown financial district, but Oscar-winning visual effects firm Magnopus left Santa Monica and agreed to a five-year lease for space at PacMutual with views of its gray beaux-arts-style exterior.
So far, the suits and the creative types who bring their dogs to work have managed to coexist, Christopher Rising said. The complex is more than 90% leased at rents that match or surpass typical downtown rates.
As part of its $25 million worth of improvements to PacMutual, Rising Realty has opened a courtyard off 6th Street that was closed off in the 1930s. Two restaurants will face the courtyard including Tender Greens and bakery Le Pain Quotidian, which will open next week.
French restaurant Tartine will open its first U.S. outpost on the Olive Street side of the complex under an 80-foot-tall wall of live greenery this summer.
Part of PacMutual's lure is its history. The three-building complex on 6th Street between Olive and Grand Avenue is among the oldest functioning office structures in the city.
Pacific Mutual Life Insurance Co. completed its first building at 6th and Olive streets in 1908. For decades the structure sported a big clock on the roof and a sign saying, "Time to insure."
The insurance company expanded its headquarters during a post-World War I building boom in Los Angeles. In 1921 an addition with two 12-story towers was attached on the west side of the original building. The builders said they required the largest single order for terra cotta ever placed on the Pacific coast to finish the exterior.
The lobbies and hallways were swathed in marble from Italy and Alabama — more marble than in any other building of its kind in the country, according to the builder. Tiffany Studios, the famous New York design firm, supervised decoration of the public spaces, including a recreation room for 1,000 people. A three-story cafeteria and underground garage were added in the 1920s.
Tenants have included comedians Laurel & Hardy, Sen. Samuel Hayakawa and the law office of future President Richard Nixon.
Pacific Mutual stayed in Los Angeles until 1972, when it became one of the first major white-collar companies to set up headquarters in Orange County.
Rising Realty Partners owns and manages 12 properties including a tech complex in Old Pasadena. Next up for renovation is the former Lockheed headquarters in Calabasas that was later occupied by lenders Countrywide and Bank of America.
Christopher Rising says he now avoids describing the offices his company makes as "creative" and instead refers to them as "lifestyle" space because workers spend so many hours on the job that they want to be someplace comfortable.
"People," he said, "don't want to live in an office silo anymore."
LOS ANGELES — It was a Monday night, but Bar Marmont was packed. Women milled about in high heels and cropped fur coats (it was 50 degrees outside, this city’s version of a polar vortex). Hair had been meticulously coaxed into face-flattering waves, makeup freshly applied. “I’m going to get a massage on my lunch break tomorrow,” a woman at the bar told her friend, as she fiddled with a large gold necklace.
Nearby, Mark Salling, an actor from “Glee,” mingled with pals, and — wait, was that the guy who plays the British doctor on “The Mindy Project”? (Yes.) Beyoncé’s “Drunk in Love” was blaring. A model-like brunette wearing a rhinestone headband twerked gently in front of a GIF machine, the latest iteration of a photo booth, and made a halfhearted attempt at a duck face.
The party was not celebrating a movie premier or a new perfume, but a collaboration between Tinder, the social network based West Hollywood, Calif., and Glamour magazine, which now offers celebrity dating advise on Tinder's smartphone app. Cupcakes decorated with the companies' logos had been made for the occasion. "There are a lot of synergy between the two brands," said Justin Mateen, a founder of Tinder. "It's something that's organic."
Synergy and organic are not words unfamiliar to Los Angeles, of course, but over the last few years, they are increasingly being applied not to entertainment deals and juicing regimens but Internet start-ups. So many of these now populate the boardwalk and beachfront real estate of Venice and Santa Monica that the area has become known as Silicon Beach, a three-mile strip where you’re as likely to find Warby Parkers and MacBooks as surf and skateboards.
The culture, the denizens of this area say, is quite distinct from its namesake to the North.
“It doesn’t feel as casual, it doesn’t feel as much about being a geeky start-up person, it feels more marketing-P.R.-y,” said Tara Brown, 39, nicknamed Tiger, a founder of a Santa Monica-based education technology business who moved from the Bay Area a few years ago and helped create Represent LA, a map of the local technology scene. “It’s more about, ‘What are you wearing?’ than ‘I’m doing a tech start-up.’ It’s more about rubbing shoulders.”
Indeed, according to Kevin Winston, founder of the networking group Digital LA, which helped organize a 500-person pool party at the Viceroy hotel last June for a festival celebrating Silicon Beach, hobnobbing here is as integral to building a company as is raising money and having an idea in the first place. “People tend to be very outgoing and realize that you need to meet other people to get your start-up going,” he said. “In other cities, you go out because you have to. Here, you go out because you want to.”
That said, there are many reasons companies set up shop in Silicon Beach beyond the potential for parties rife with free alcohol and beautiful people.
“We give bikes instead of parking spots,” said Wade Eyerly, 34, a founder ofSurf Air, an all-you-can-fly private-membership airline based in Santa Monica, six blocks from the beach. “The surfboards on the wall, I call them usable wall art.”
When the Surf Air team moved into its offices two years ago, they installed Ikea lockers in what used to be the printer room. “They’ve got deadbolts on them: You can change into a wet suit and go,” said Mr. Eyerly, who resigned from the company last month, though he remains in Los Angeles. “The culture is, get your work done and go.” Even the “go” part is up for innovation.
“For a little while, I actually thought about paddleboarding to work,” said Todd Emaus, 33, a founder of Twenty20, an online marketplace for art created on smartphones. At the time, Mr. Emaus lived a mile and a half down the shore from Twenty20’s office. But reality intervened. “I just couldn’t figure out how to get my computer safe there every day,” he said. “I rode my beach cruiser instead.”
Then there’s the star factor. With Hollywood a freeway away, many Silicon Beach companies have been able to lure celebrity users and investors. When the actor Jared Leto expressed interest in investing in Surf Air, Mr. Eyerly’s team was able to drive to Mr. Leto’s Hollywood Hills home and sell him on the company there (though Mr. Eyerly noted he didn’t immediately know who Mr. Leto was). In the early days of Tinder, Mr. Mateen, 27, tested the dating app on some of his model friends. “They were like, ‘Ugh, I don’t need that,’ but now, some of them are our most active users,” he said.
Instead of going to set every morning, the actress Jessica Alba now shows up at the Santa Monica headquarters of her start-up, the Honest Company, which sells natural baby and home products. Her desk sits among the rest (though it’s differentiated by its hot-pink color) and she put her personal stamp on the sprawling warehouselike space, picking out furniture and hanging art in the conference rooms, which have names like “Smile,” “Play” and “Love.”
“We were thinking of using our children’s names but some people have more children than others, and it was too difficult to choose,” she said. “So we just took words from our manifesto.”
Ms. Alba can talk confidently about customer acquisition and growth opportunities and says things like, “You obviously have to pivot based off of results.” “I went to Brian Lee school,” she explained, referring to a founder of the Honest Company who also helped found LegalZoom and schooled her on the ways of the start-up world.
“She told me that if she wasn’t an actress, she would have gone to school and gotten an M.B.A. and started a business,” Mr. Lee said. He turned to Ms. Alba: “It happened. You’re basically getting your M.B.A. now.”
Ms. Alba laughed and said, “I try not to make too many mistakes,” before going steely-eyed. “This allows me to apply that very brass-tacks, results-oriented, business mind-set that I just naturally have,” she said. “Going on a talk show is the easy part.
Most in Silicon Beach do not have the instant networking power of celebrity, and therein some have seen opportunity. Last year, Jeremy Umland, a former investment banker, opened 41 Ocean, a private social club on Santa Monica’s picturesque Ocean Avenue. It now has about 600 members who come for fund-raising parties, private dinners and a quiet place to work during the day on vintage couches. “It’s the watering hole of the tech community, more than any other place,” said Paul Bricault, a member who is managing partner at Amplify LA, a “start-up accelerator” in Venice. “I remember being at a board meeting and a guy from San Francisco told me he was heading down there for an event and he was a member.”
Inevitably, a conversation about Silicon Beach turns into a discussion of its merits compared to Silicon Valley. (Michael Heyward, a founder of the Santa Monica-based social network Whisper, said of San Francisco: “It’s not so friendly. It’s the fog.”) Arvind Murthy, the founder of Bear State Coffee, an artisanal-coffee subscription service, praised L.A.’s “new optimism” and “Williamsburg rooftop summer energy” in contrast to San Francisco, where “you really are a small fish in a huge pond,” he said.
“That’s the great thing about L.A., it’s not as snooty,” Mr. Murthy further mused between sips of rosé at Flores, an airy bar and restaurant off Olympic Boulevard, where start-up offices have taken root in former studio lots. “And I can’t believe I’m saying that about L.A., but in San Francisco, it’s like, ‘Who’s funding you, where’s your money?’ Same thing in New York. It’s ‘Where’s your office?’ We’re so under the radar here, which is nice.”
That environment can come with its own problems. “It’s hard to find people with the mentality that you want in a start-up, where someone’s really going to hustle and move fast,” said Mr. Emaus of Twenty20.
Still, he and many others settled in Silicon Beach agree there are too many things working in its favor to consider relocating: low rents, gorgeous weather, the potential to engage in water sports on the way to work and the occasional party. After all, for Silicon Beach to gain the fame and cultural recognition of Silicon Valley (not to mention Silicon Alley), it may need to call in some favors from that old fogey, Hollywood.
“There’s this guarded optimism, at least that I feel, that everyone thinks L.A. could be the next big thing,” Mr. Emaus said.
Industry Partners and LeBasse Projects are collaborating to present ‘Contrast,’ an ongoing series of murals and art installations across Los Angeles. The ‘Contrast’ series will include an international roster of artists who will be invited to paint murals across some of the most desirable property locations and creative work spaces in the city.
Industry Partners, a Santa Monica based real estate services firm, and LeBasse Projects, a gallery focused on experiential programming, developed the idea of ‘Contrast’ in order to build cultural value into the fabric of neighborhood and community properties. Over the next year, artists from the international ranks will be invited, hosted and given access to paint some of the most unique properties in Los Angeles.
While cities like Los Angeles generally encourage new real estate projects to include artwork, many times developers and property owners simply opt out, preferring not to commit the resources. Industry Partners feel that the integration of contemporary art into their projects is a necessary amenity to create a true sense of community - backing up their beliefs by making the voluntary integration of art a significant part of each building’s retrofit. Partnering with LeBasse Projects on the Series was timely as the gallery transitioned to focus on large scale public works in Asia and the US.
The ‘Contrast’ series launched this February at The Annex in Playa Vista with a mural by David Flores. Flores, already well represented in Westside murals, chose an homage to Beethoven as this new mural stands directly on Beethoven Blvd.
‘Contrast’ continues with upcoming installations by Yoskay Yamamoto, a series from German duo Herakut, and murals from Cyrcle and Tristan Eaton. For press inquiries or more information on the project contact LeBasse Projects.
In recent months, we’ve heard a lot of talk about tech startups, incubators and venture capital firms setting up shop in Santa Monica and surrounding beach communities. With this influx of techies, there’s also been a noticeable upswing in the housing markets, resulting in higher prices and an even more competitive rental market.
Imax will move all 120 employees now housed in Santa Monica to the new building when it is completed in about a year.
Renowned big-screen cinema purveyor Imax Corp. is set to break ground Thursday on a new West Coast headquarters that will house two large screening rooms, offices and production facilities for moviemakers. The $45-million complex is being built in the commercial district of Playa Vista, a planned community south of Marina del Rey.
Imax's property will rise at the corner of Westlawn Avenue and Millennium Drive, next to the massive hangar where aerospace mogul Howard Hughes built his infamous wooden transport plane known as the Spruce Goose. Developer Lincoln Property Co. is building the 66,000-square-foot facility that Imax will own. Lincoln also built more than 800,000 square feet of offices at Playa Vista and is developing the $260-million Runway office, retail and housing project that will serve as Playa Vista's downtown.
Imax will move all 120 employees now housed in Santa Monica to the new building when it is completed in about a year. The new three-story building will have room for the staff to grow.
Imax executives said the new Los Angeles headquarters will provide a more efficient use of space and accommodate the big-screen technology company's rapid global expansion.
"It's definitely in keeping with the growth of our company," said Imax Corp. Chief Executive Richard Gelfond. "We just had the biggest box-office quarter in our history. Our network grew by 20% year-over-year and we're now in 57 countries."
The new facility will provide a more modern, open space compared with the company's current offices in Santa Monica as Imax phases out film and becomes a fully digital operation. The location is ideal because of its proximity to major studios and Silicon Beach, Gelfond said, noting that Electronic Arts and YouTube also have facilities in the same Playa Vista development.
"Fifteen years ago, we were a film-only company," said Greg Foster, chief executive of Imax Entertainment. "We've evolved so gigantically since then, not only in volume but in the technology that we use. This building is more reflective of who we are and where we are today, and what industry is today." The heart of the new Imax building designed by architecture firm Gensler is an interior amphitheater under a large skylight. The area will serve as the hub of the facility, where employees can interact with clients and one another. The building will house two large screening rooms and a formal prefunction area for private screenings, Imax said. The production space and screening rooms will accommodate evolving technology in the filmmaking industry. A grand lobby will connect two workplace floors by an interior atrium with enclosed glass conference rooms above. An elliptical outdoor courtyard will have movable seating to accommodate impromptu gatherings, activities and special events.
Once known for its nature documentaries, Imax has evolved into a major player in the exhibition industry, showing as many as 40 big-screen films a year, mainly fan-boy and action movies such as "The Dark Knight Rises" and "Star Trek Into Darkness."
The company, which has offices in New York and Toronto (where it is based), has more than doubled the size of its theater circuit in the last four years, expanding rapidly in overseas markets such as Russia, India and China, where it has relationships with most major exhibitors.
The company elevated its profile last September when it opened its largest Imax venue (in terms of seating capacity) at the former Grauman's Chinese Theatre, now called the TCL Chinese Theatre, in Hollywood.
A week after 150 locals swamped a Santa Monica City Council meeting on the massive multi-use Bergamot Transit Village, forcing a delay on any approval or denial for the project, the council on Tuesday fianlly approved the transformative mixed-use development planned for the Bergamot Arts District and near a forthcoming Expo Line station.
The company, founded by Oscar-winning visual effects artists Ben Grossman and Alex Henning, is the first entertainment tenant in the PacMutual building.
Magnopus, a newly created company founded by Oscar-winning visual effects artists Ben Grossman and Alex Henning (Hugo), along with Rodrigo Teixeira, has just signed a five-year lease for creative offices in downtown L.A.'s PacMutual building.
"We looked in Santa Monica, Venice and Culver City, but downtown L.A. offers us the ability to connect with other companies and clients around the globe," says Teixeira, who describes the company as a "visual research firm that does work in the entertainment industry and beyond."
Grossman, nominated this year for Star Trek Into Darkness, and his fellow founders along with 20-plus employees, will occupy a 5,000-square-foot space on the penthouse level. Other tenants in the Beaux Art structure, where Showtime's House of Lies is filmed, include women's clothing retailer Nasty Gal, which has 60,000-square-foot offices.
"We've done 51 leases in here and Magnopus is the first entertainment tenant," says Industry Partners agent Carle Pierose, who handles all brokerage and marketing of the building for owner Realty Rising. Pierose says the Magnopus move is indicative of downtown L.A.'s growing appeal for creative office tenants.
"A lot of knowledge workers are living in Silver Lake and Los Feliz, and downtown's amenity base has finally caught up to what the entertainment industry expects for doing business. Right now you can get leases for $3 a square foot here, while Santa Monica is more like $6. But that could change as downtown catches up."
Commercial real estate experts forecast the city's next wave of entertainment office deals. Three commercial real estate experts share with The Hollywood Reporter about how they would cast their votes for Los Angeles' next wave of entertainment office deals:
George Garfield, President, West Region, Transwestern:
Perhaps the hottest entertainment real estate story of 2013 came from L.A.’s non-traditional entertainment firms; as we look at the Internet’s influence on entertainment, this is the most interesting: Online distribution platforms for YouTube, Netflix and Amazon Studios shook up the scene with plans to produce branded content separate from that of TV, cable and movie studios. They require their own kinds of studios and are among the largest new space users in the city. YouTube Space LA in Playa Vista is a prototype of creative studios set within formerly obsolete buildings. And there is new office demand from digital media firms and advertising agencies looking to capitalize on the growth of these non-traditional studios. Santa Monica and the Lower Westside are still hot markets. But 2014 might be the year that the Hollywood submarket takes off, with increased development on Sunset Blvd near Sunset Gower Studios, as well as Hollywood and Downtown.
Additionally, large studios will continue consolidation into real estate footprints they own and control. For example, as Comcast completes its acquisition of NBC Universal, it too may consolidate Los Angeles operations. Following Comcast’s recent purchase of 10 Universal City Plaza – the 35-story tower adjacent to Universal Studios – additional NBC Universal personnel moved into the building. Such moves may serve as an example of how consolidation could proceed in 2014 and the years to come.
Andrew Jennison, Partner, Industry Partners:
When vacancy rates for true creative and soft creative space in Santa Monica hover around 6 percent, then the natural migration is for tenants to look east and west at options that are potentially more abundant and less expensive. A typical tenant evaluating the marketplace will strongly consider relocating out of their desired geographic if there is a $0.30-$0.50/square foot savings in rent. Right now, I envision in 2014 more creative tenants will consider tertiary markets for creative space given the lack of availability on the Westside. The submarket I see attracting creative tenants this year are El Segundo and DTLA. Both offer unique creative options at a very competitive price point. DTLA for so many years was never considered an option unless you were in the service business. With all of the real estate activity taking place there -- residential, hospitality like the ACE Hotel and the influx of restaurants -- it is becoming a lively epicenter. Businesses see the transformation and know about it and will respond to it by moving their offices there.
Eric Sussman, UCLA School, senior lecturer, Ziman Center of Real Estate, UCLA Anderson School of Management:
There is no question that that downtown L.A. is going to be super hot and a magnet for entertainment tenants. It’s got a coolness factor -- these are the kind of tenants who don’t just want vanilla shell, yawner office space. It has to have polished concrete floors, open space and exposed vents -- that kind of thing. Downtown L.A. is getting that cool factor, and you combine that with a 15 percent vacancy rate, reasonably affordable high-density housing, and it makes sense they you’re going to see creative office deals there this year.
Playa Vista is also hits a lot of those factors. It’s the whole package, with that cool factor and office space that isn’t your dropped-ceiling, traditional tower thing. That’s another area where we’re likely to see more deals this year.
Pictures, the moving kind, are what Framestore is all about. From headquarters in London, the studio has provided animation, visual effects, and postproduction for such blockbusters as the Harry Potter franchise. David Howell designed the New York satellite a decade ago. Now, in the interiors version of a sequel, his firm, DHD Architecture & Design, has collaborated on a Los Angeles location.
Before Framestore entered the picture, real-estate developer Industry Partners had already hired RAC Design Build for tenant-improvement work on the building, a 1938 tilt-up warehouse with a tower addition. “We started with doors for the main entry, glazing and cladding for the tower, and the conference areas,” RAC’s Rick A. Cortez says. When Framestore signed on for the 12,000 square feet and brought Howell along, Cortez continued as a partner.
“We carried over elements from the other Framestores,” Howell begins. Those include a faceted enclosure for the restrooms, subway straps sprinkled about, bold stripes, and sunny yellow accents. New to the color palette, a teal feature wall references ’70’s uniforms from Air New Zealand. (He’s a Kiwi.)
“The space allowed for a diversity of zones,” Howell continues. “To cater to the big-name directors, we broke it up into smaller rooms with a nonlinear plan.” So when, say, Avatar’s James Cameron comes by, he could bypass reception and go right to the client lounge, where—from the comfort of a vintage airplane seat—he might just be impressed and amused enough to seal the deal.
Edit bays and production offices surround the kitchen and the sunken lounge for the 50 employees. It’s in looking up from the lounge that you fully appreciate the drama of the two-story tower directly overhead. That’s because Howell and Cortez eschewed solid flooring in favor of catwalk-style steel.
The tower houses a break-out area on the lower level and a conference room on the upper level. Above that, the roof terrace offers a perfect view stretching all the way to the Hollywood sign. No computer-generated imagery required.
How far inland can Silicon Beach reach?
Software developer Daqri will move this week to its permanent home at LA Center Studios, a sprawling 20-acre complex just west of the 110 freeway across from downtown Los Angeles.
The company, which had been in Santa Monica, joins a handful of pioneering media and technology companies that have already settled in a downtown market more accustomed to white-shoe lawyers and staid bankers.
Other notable additions to the fledgling roster of media and tech companies in downtown’s Financial District include e-commerce fashion company Nasty Gal, which moved into 50,000 square feet at the PacMutual building at 523 W. Sixth St. building in February, and Michael Bay’s Institute for the Development of Enhanced Perceptual Awareness, an Emmy Award-winning media company that moved from Venice about two years ago. Startup Scoutfit, an online shopping company that launched just last week, made its home in a small office at the 12-story Spring Arts Tower at 453 S. Spring St.
“Downtown is now being perceived as a cool place to work and a cool place to live,” said Chris Penrose, a leasing agent at CBRE Group Inc. who represents the 12-story Roaring Twenties building at 617 W. Seventh St.
“We’re seeing some of these younger, hipper companies evaluate downtown,” he said. “They don’t always move here, unfortunately. But downtown is definitely on the radar now and that’s a lot more than where it was just five years ago.”
Carle Pierose, a partner at Santa Monica real estate services firm Industry Partners who handles leases for the PacMutual building, said he has given downtown L.A. office tours to more media, technology and entertainment companies in the last year than in any previous year.
“I’ve done more than 40 leases here in the last year and most of those have been with creative firms,” he said of the building that was recently renovated to appeal to creative tenants. “We’re getting lots and lots of architects and a fair number of furniture- and construction-related companies. But something I’m really pleased about is we’re starting to see some entertainment and technology come here.”
Brian Mullins, chief executive of Daqri, an augmented reality software firm, was traveling and could not be reached. But Dan Gallup, a senior vice president for tenant brokerage Cresa Los Angeles in Brentwood who represented Daqri in lease negotiations for the company’s 18,000 square feet, said for it and many other tenants he takes on tours through downtown, the attraction was both geographic and economic.
“It’s easier to get in and out of downtown from different parts of Los Angeles and the space in the building itself was very attractive to them,” he said. “So, too, were the economics.”
The creative space these tenants are drawn to on the Westside is more expensive than creative space downtown. There are no surveys of creative space rates, but they generally reflect the Class A distinction. The average monthly asking rent for Class A Santa Monica office space in the third quarter was $4.64 a foot; in downtown, it was $3.22.
Industry Partners’ Pierose said rental value is one of the biggest drivers of traffic through the building. Since Rising Realty Partners purchased the property for $60 million two years ago, rents have jumped to nearly $3 a square foot a month from about $2. Upper levels with panoramic views demand rents closer to $4 a foot.
“I’ve raised the rent probably six or seven times since I’ve been working on the building, but the rent there is still a deal compared to other parts of town,” he said. “If PacMutual was in Santa Monica, it would lease for approximately $6 a square foot.”
The allure of downtown has been such that it made the short list of a few firms that, though they chose to settle elsewhere, might not have even looked at the submarket a year ago.
In recent months, media and technology companies including Riot Games, SpinMedia and Fox Animation Studios have all toured property downtown. While none of them ultimately signed a lease in the area – Riot Games went to West Los Angeles, Fox Animation to Hollywood and SpinMedia opted to stay in Hollywood – their interest marks a shift in attitude toward the city’s urban core.
Yet even as interest in creative office space downtown grows, readily available supply is limited.
CBRE’s Penrose said that only a couple buildings – including PacMutual and 617 W. Seventh – are widely considered appropriate for companies looking for true creative office space, and space in those buildings is getting tight.
“There’s a lack of supply, especially in the central business district,” he said. “You can look in the Arts District or go further east for older historical buildings, but a lot of those buildings need to be retrofitted and a lot of money needs to go into them to get them ready for occupancy.”
So until more creative office space comes on line in the area, Gallup said it’ll continue to be a challenge to convince media and technology companies he represents to call downtown home.
“For a lot of these tenants, when they can’t see the final project and see the other tenants in there, it makes it a little harder for them to imagine that the building is going to become something different,” he said.
Up-and-coming video game publisher Riot Games Inc. will move to a new campus in West Los Angeles after signing what may be the biggest new office lease in Southern California in the last five years.
The maker of international online gaming hit “League of Legends” has agreed to rent all 284,000 square feet in the Element LA creative office campus being built on Olympic Boulevard between Bundy Drive and Centinela Avenue.
Riot Games makes only the one game, but it operates around the clock. Each month more than 32 million people in nearly 150 countries play “League of Legends,” making it one of the most-played computer games in the world. Teams of players gather in virtual arenas to battle over turf.
Riot Games staffers are now scattered among multiple locations in a Santa Monica office complex. The company expects to move 1,000 employees to Element LA when it opens in 2015 and plans to keep growing to 1,500 workers at that location.
Element LA is a $150-million development by Los Angeles landlord Hudson Pacific Properties Inc. Terms of its 15-year lease agreement with Riot Games were not disclosed, but Hudson Pacific was asking for monthly rent of $3.75 a square foot, according to property experts familiar with the Westside.
Hudson Pacific is making Element LA into a five-building complex on 12 acres. The centerpiece for the campus is a 1950s-era, 167,000-square-foot building with high wood bow truss ceilings, saw-toothed skylights and industrial windows.
“Element LA is a one-of-a-kind property that generated significant interest from prospective tenants,” said Victor Coleman, chief executive of Hudson Pacific.
Among the would-be occupants were white-collar firms not engaged in creative businesses such as entertainment or technology, which usually gravitate to conventional high-rise office space, Coleman said.
Riot Games wanted the whole campus, which gave them a leg up in the deal.
“We really loved the idea of having one tenant in the whole campus, and Riot Games liked the idea of a dedicated campus exclusively theirs,” said real estate broker Jeff Pion of CBRE Group Inc., who helped represent Hudson in the transaction.
Element LA will have a five-story parking garage and is across the street from a planned stop on the Expo Line light rail line, which is under construction and will connect Santa Monica and downtown Los Angeles.
Deluxe Entertainment (Deluxe) has signed a 12-year lease with Hudson Pacific Properties to occupy the newly renovated, 64,000 square-foot production facility at 3401 Exposition Boulevard in Santa Monica, announced landlord representatives Industry Partners.
Located at the northwest intersection of Exposition and Centinela in Santa Monica, the property was initially built in 1961 as the headquarters and manufacturing facility for the American Shower Door Company, which owned and operated the property for more than 20 years.
Since the mid 90’s, the property has been used as a sound stage for television and motion picture productions including “7th Heaven,” “Buffy the Vampire Slayer,” and “The Doors.”
Hudson Pacific Properties, which acquired the property in May 2013 from Watt Investment Partners for $24.7 million, is completing a full base-building renovation and redevelopment, which includes the addition of 15,000 square feet of creative office and post-production space.
Deluxe will consolidate their Santa Monica-area offices into the new facility with occupancy expected in the first quarter of 2014.
“For years, Deluxe and its group of companies have been spread across different floors and different buildings in and around Santa Monica, and a consolidation under one roof in a state-of-the-art world class facility has been a goal of the company,” said Industry Partner’s Andrew Jennison who along with partners Travis Landrum and Jim Jacobsen represented Hudson Pacific in the lease transaction.
Through its closely-knit group of creative services brands that includes Beast, Company 3®, and Method Studios, Deluxe provides a broad range of entertainment industry services and technology solutions for production, post-production, major studio and independent theatrical release, broadcast, home entertainment, archiving and asset management.
Deluxe is a wholly owned by Deluxe Entertainment Services Group, Inc., a wholly owned subsidiary of MacAndrews & Forbes Holdings, Inc.
Deluxe’s new facility is located within the heart of Santa Monica’s media district and is part of the Bergamot Transit Village.
Home to IMAX, Dick Clark Productions, Demand Media, Red Bull and other prominent entertainment and technology companies, Bergamot Transit Village comprises 70 percent of Santa Monica’s inventory of 8.85 million square feet of creative office space and boasts a vacancy rate of less than 10 percent at the end of the third quarter, according to Industry Partner’s Creative Westside Market Report.
Sophia Amoruso likes to do things big. Her Nasty Gal parties are consistently colossal, her brand's fulfillment center in Kentucky is gargantuan and her list of achievements is forever expanding.
Hell, even her favorite children's book is called The Big Friendly Giant. Amoruso's latest large-scale project is the opening of a 50,300-square-foot HQ in the heart of Downtown LA.
Advertising agency Kastner & Partners will relocate from Santa Monica to Playa Vista, where a former industrial neighborhood north of Jefferson Boulevard has become home to several ad firms.
Kastner & Partners will join other prominent agencies such as Deutsch, TBWA Chiat Day, OMD Worldwide, KDA Group, 72 and Sunny and TVGla that have relocated to what is being referred to as “ad agency row,” said real estate broker Travis Landrum of Industry Partners.
“Ad agencies require space that is collaborative, organic and flexible, which is difficult to find in traditional office buildings,” Landrum said.
“Since advertising can be an ebb-and-flow business, the space must be able to easily accommodate changes in staffing that occur as projects come and go.”
A collection of such space can be found in post-World War II industrial buildings in a two-mile stretch north of Jefferson between Lincoln Boulevard and the 405 Freeway, he said.
Kastner & Partners signed a 10-year lease for about 15,000 square feet at 5340 Alla Road in a transaction estimated to be valued at $6.5 million. The property is one of two converted 1970s-era industrial buildings that comprise the Annex, a six-acre campus with 120,000 square feet of creative office space.
The Annex, which is controlled by landlord PacShore Partners, is now 80% leased, Industry Partners said. Other tenants include Ignition Creative, Visionaire Group, VEVO, and DTrain.
Kastner & Partners was founded in 1985 and made a name for itself by launching the Red Bull energy drink. Kastner, which also has offices in Frankfurt, Germany; London; Madrid; Milan, Italy; and St. Louis, is expected to move to Playa Vista early next year.
Two chic new office spaces are in the works, including the first West Coast eatery from three-Michelin-star New York chef Michael White.
Culver City is adding two chic new office spaces. In May, Beats by Dre will move its headquarters from Santa Monica to WorkScapes at the Hayden Tract, a recently completed campus developed by Hackman Capital Partners. Architect Barbara Bestor will design the interiors of the loftlike 107,000-square-foot, two-story space for Beats, which received a reported $500 million investment from The Carlyle Group in late September. The "campus" will house new digital music service Beats Music, its electronic products division, as well as more than 300 U.S. staff.
In addition, construction begins this month on Platform, a four-acre Runyon Group development that includes 40,000 square feet for restaurants and retail. Nevena Borissova already has signed on a 7,000-square-foot space for a new Curve boutique, and three-Michelin-starred New York chef Michael White is on board for a rooftop restaurant, his first West Coast eatery. Industry Partners will oversee leasing for the project's additional space. Platform is slated for completion in spring 2015.
The 4-acre property, which includes the agency's headquarters and the Century Plaza Towers, could fetch $2 billion or more.
Creative Artists Agency's Century City office building is being put up for sale.
Century Park, which includes CAA's 12-story, Gensler-designed headquarters, as well as the iconic 44-story Minoru Yamasaki-designed Century Plaza Towers, has come on to the market, according to J.P. Morgan Asset Management. Totaling 3.2 million square feet of "Class A" office space, insiders are predicting that the sprawling Century City site will be sold for between $2 billion and $2.5 billion. Eastdil Secured will manage the disposition process.
Known as Century City's "super block," the property is currently owned by a consortium of investors advised by J.P. Morgan Asset Management and also includes a 4-acre park, the Annenberg Space for Photography, several cafes, Tom Colicchio's Craft restaurant and parking for more than 5,000.
In 2007, CAA famously migrated from its I.M. Pei-designed Beverly Hills headquarters to its new 12-story, glass-and-steel home base, located on the previous site of the ABC Entertainment Center. The building was nicknamed The Death Star by some because its open-air central feature recalls the Star Wars icon.
CAA is midway through a 15-year-lease on the building, with 180,000 square feet of office space, so the sale is unlikely to affect the agency's presence in Century City.
For the first time since the recession, there are almost no vacancies among the roughly 100 storefronts along the three-block retail row.
Sitting at the intersection of Hollywood and high fashion, it's no wonder Rodeo Drive is one of the most fabled shopping streets in the world.
It's been immortalized in movies, books, song lyrics and on reality TV.
The thoroughfare played a supporting role in the 1990 film "Pretty Woman," when Julia Robertswent on a Cinderella-like shopping spree. Eddie Murphy flirted with a blond in a Mercedes on the same street in 1984's "Beverly Hills Cop."
Late last month, Rodeo Drive was shut down for the elegant global pop-up dinner party "Diner en Blanc," where 1,200 partygoers, fashionably dressed in white, mingled among the store fronts, further cementing the street's reputation as L.A.'s luxury living room.
"Beverly Hills has gone from an exclusive enclave to a world icon," says J.F. Lawton, who wrote the screenplay for "Pretty Woman." "The film business has become more international, and that has contributed to the glamorous image of Rodeo Drive as a place where the rich and famous shop."
"The stories of Steve McQueen and Grace Kelly going to Giorgio Beverly Hills in the '60s and '70s or Katharine Hepburn and Humphrey Bogart having dinner at Romanoff's in the '50s — Rodeo Drive is the epitome of glamour," says designer Tory Burch, who is slated to open a $7-million Rodeo Drive flagship in November.
"It's seen as the ultimate in celebrity lifestyle," says Philip Ferentinos, director of Starline Tours, which offers tours of the area in nine languages. "Internationally, people are interested in movie stars, but Americans and Australians are just as interested in reality TV stars."
And today the street is in the midst of a renaissance that could very well ensure its supporting role in pop culture for years to come.
For the first time since the recession, there are almost no vacancies among the roughly 100 storefronts along the three-block retail row. On a recent afternoon, the crowds were thick, albeit with cameras outnumbering shopping bags and flip-flops outnumbering stilettos. Cadillac Escalades with blacked-out windows jockeyed for parking spots, as open-air Starline Tours vans with the tops cut off hugged the curbs. "Look, it's Jennifer Aniston!" a tour operator joked, pointing to an unsuspecting woman in front of the Michael Kors boutique who was most definitely not Jennifer Aniston.
The opening of a new Hermes flagship after an eight-month, $20-million renovation is just the latest in a flurry of development (see related story). From British shoe designer Charlotte Olympia's first L.A. store, which opened in June at the top of Rodeo, to the new $5-million Celine boutique due south that's selling $3,000 trapeze bags as fast as if they were $3 lattes, the luxury business appears to be booming.
"We went through this period after the financial crisis when everything stopped. There was this shock, people were afraid to be seen with shopping bags, and a lot of the luxury brands put the brakes on development," says Chuck Dembo, a real estate broker at Dembo Realty who handles a lot of luxury retail properties in the L.A. area. "Now they have started to invest in new infrastructure, because luxury stores always have to update their look and keep it fresh. Their image is everything."
It's hard to say who was first. In October, Dior reopened its 5,000-square-foot store with a design concept borrowed from the brand's worldwide flagship in Paris on Avenue Montaigne. The atmosphere has a residential feel, with 18th century-inspired furnishings and fixtures mixed with contemporary art commissioned by the house, bringing a new level of luxury experience to the area. In November, Van Cleef & Arpels reopened its historic boutique by treating guests to a garden party and world premiere dance choreography by Benjamin Millepied. And this spring, Prada ditched its Rem Koolhaas-designed retail-as-cultural-epicenter concept in favor of a new, more inviting store.
Recent newcomers to the street include Patek Philippe, Pomellato, Stefano Ricci, Moncler, Vacheron Constantin, Barbara Bui and Frey Wille. Coming soon will be Vera Wang and Burberry. Meanwhile, Louis Vuitton and Saint Laurent are both embarking on multimillion-dollar renovations of their stores.
"With the Internet and social media and how important celebrity is to brands, being here is a must," says Jay Luchs, executive vice president of real estate agency Newmark Grubb Knight Frank, who has handled many properties on Rodeo Drive. "Celebrities are luxury customers, too. And brands want them to have easy access. Because the minute someone famous wears something here, it goes around the world. Stylists can walk into the stores on Rodeo Drive and pull 10 handbags to take to their clients. Or retailers can impress celebs by having them come into the VIP rooms and penthouses in their stores. They all have spaces in the back alleys where cars can pull up and park. By being on Rodeo Drive, they're getting celebrities, locals and tourists."
Another indicator of the value of a Rodeo Drive address is that luxury brands are starting to buy their stores instead of just leasing them. In May, Chanel bought 408 N. Rodeo in one of the highest per-square-foot sales in Los Angeles County, reportedly paying $117 million for the 13,317-square-foot property. LVMH Moet Hennessy Louis Vuitton bought 319 Rodeo for $85 million, and Hermes bought its building for a reported $75 million.
"Those deals happened because those brands are looking at Rodeo as a long-term investment, beyond a 10-year lease with a five-year option to renew," says Luchs, who worked on the Chanel and LVMH deals. He also noted that competition for open leases has been heating up. When he leased 319 N. Rodeo to Celine earlier this year, it was the first time in five years that he'd had multiple offers on a single property.
And while it may appear on a Saturday afternoon that there are more looky-loos on the street than high-end shoppers, the stores on Rodeo Drive are not just billboards for brands, Luchs says."They want to do well, and if they don't, they will leave."
Pam Danziger, a luxury market researcher and founder of Unity Marketing, agrees.
"Where they used to sell mostly through Saks, Neiman Marcus and other department stores, many luxury brands are now establishing more of their own solo branded stores," she says. "There's more profitabilty, and they've discovered they are the best equipped to sell their stuff."
Rodeo Drive is also being bolstered by (and helping to bolster) development on surrounding streets. Beverly Drive has become a hot spot for contemporary brands. All Saints, Theory, Alice & Olivia, Intermix and Scoop all recently opened there, and Maje, Sandro and IRO are coming soon. With the Wallis Annenberg Center for Performing Arts set to open in Beverly Hills in October, there are plenty of attractions to lure shoppers into making a day of it in Beverly Hills. (Between 300,000 and 500,000 people visit Beverly Hills each day, according to the city's Conference and Visitors Bureau.)
"It's back to basics," Luchs says. "Beverly Hills lost its cool factor in 2006-2007, when Marc Jacobs,Marni and Diane von Furstenberg moved to Melrose. And that created buzz." Chanel, Ralph Laurenand other luxury brands also opened stores on Robertson Boulevard, which are still there.
But the sales figures in stores on those shopping streets didn't support the inflated rents, says Luchs.
"Brands came to the realization that instead of trying to be different, and going to a location where you don't even put your name on the door because it's cool, they should go to a location where everyone is going to find them. Beverly Hills is back because it's a place you're going to get eyeballs."
Critic's Notebook: As architect Peter Zumthor's LACMA plan is debated, look at what spaces have made for first-rate art museum buildings.
The $650-million plan to remake the jumbled campus of the Los Angeles County Museum of Art on Wilshire Boulevard is the fourth such effort in the last three decades.
Challenging in concept and architecturally ambitious, the design by Swiss architect Peter Zumthor, 70, unveiled in a summer exhibition closing next Sunday, also can't help but make one wonder about the apparent difficulty in building good museum galleries.
Is it really so hard?
Here's a quick, relatively inexpensive and aesthetically surefire way to construct a first-rate museum building for art. It turns out to be as simple as one, two, three.
1. Hire a capable engineering firm to build a big, sturdy factory or warehouse.
2. Engage a talented architect to retrofit the big, sturdy factory or warehouse to accommodate the specific demands of an art museum program.
3. Open the retrofitted building to critical acclaim and public enthusiasm.
That's roughly what happened in 1983, when the newly organizing Museum of Contemporary Art opened what was planned to be a temporary exhibition space in Little Tokyo. The 1947 Union Hardware buildings were minimally refurbished by architect Frank O. Gehry.
Soon after, it happened again in Europe. This time the Hallen für Neue Kunst — Halls for New Art — had its debut as a museum for a private collection in an old textile factory on the banks of the Rhine in the Swiss city of Schaffhausen.
MOCA's cleaned-up warehouse was such a hit that temporary became permanent. The art public wouldn't hear of closing the space, just because a brand spanking new — and aesthetically iffy — MOCA building opened on Grand Avenue.
It wasn't the first such adaptive reuse of an existing industrial building, but it did become the template for similar triumphs elsewhere. MASS MoCA (1999) opened in a run-down complex of former textile mills and electronics factory buildings in New England. London's Tate Modern (2000) became one of the world's most-visited art museums after moving into the defunct Bankside Power Station on the Thames. Dia:Beacon (2003) is housed in a 1929 box-printing facility along the Hudson River in Upstate New York.
Lots of people have raised lots of questions about the host of brand-new museum buildings constructed in the last 30 years. Are they functional? Economically viable? Congenial viewing spaces for art? Some are, some aren't; but museums housed in refurbished factories and warehouses tend not to be among those deemed flops.
What can we learn from this? I used to think that old industrial spaces made for good art museum galleries because artists today often work in exactly those sorts of buildings. So why shouldn't art produced in an industrial environment look best when shown in the same sort of place?
MOCA, after all, like Schaffhausen, MASS MoCA, Tate Modern and Dia:Beacon, is dedicated to Modern and contemporary art, not to Old Master paintings, South Asian sculptures or Safavid dynasty carpets. Yet, think about it: Would Old Master paintings, South Asian sculptures or Safavid dynasty carpets really look so bad in the rooms in Little Tokyo or at Tate Modern?
My guess is that they'd look pretty smashing. Great art would look great regardless of the type of architectural space where it was shown. (Texas' San Antonio Museum of Art, which has diverse collections that include ancient Greek and Colonial Latin American art, even got the jump on MOCA when it began renovating an old brewery in 1981.) When I'm absorbed in an exceptional artistic experience, the surroundings tend to fall away anyhow. Give me adequate light and a place to sit down once in a while, and that's about enough.
Frankly, we spend too much time fretting about art museum buildings. In the end, museum architecture just doesn't matter much to me — except insofar as I enjoy architecture of any kind.
The adaptive reuse of existing buildings, including schools and offices, as art museums has been around for a long time, in locales as diverse as Long Island City, N.Y., and Sydney, Australia. Of them, industrial space has proved to be the most flexible and functional kind. I now think the nearly universal success of refurbished industrial buildings as art museums has less to do with any similarity between those buildings and the works of art inside than it does with a fundamental difference.
Factories and warehouses speak the vernacular architectural language of ordinary people and everyday life. Art, by contrast, does not.
Art thrives on originality and uniqueness. Install the extraordinary inside a vernacular building, and everyday experience is galvanized and transformed. That's the aesthetic value of complexity and contradiction, as architect Robert Venturi once famously put it.
And speaking of vernacular architecture: Is it any wonder that hands-down the most brilliant new building of the last half-century — the Guggenheim Bilbao — is an art museum designed from scratch by Gehry? He's an architect whose achievement derives from his acute sensitivity to vernacular building materials and motifs.
None of this is to suggest that Zumthor's eccentric design for LACMA, which is still in its preliminary stages, doesn't have potential. It most certainly does.
Yes, the undulating, organic footprint of the plan, which evokes (and encroaches on) the primordial ooze of the adjacent La Brea Tar Pits, is a bit corny. But its elevated, single-story emphasis on an uninterrupted, horizontal expanse of galleries is commendable. So is the savvy plan for viewable open-storage of museum collections.
And no, its gallery walls don't curve, thus avoiding problems like those at New York's spiral Guggenheim or in the doughnut-shaped Hirshhorn Museum in Washington, D.C. Orthogonal rooms are inserted inside the building's undulating perimeter, which functions as a glass-walled promenade with views out to the surrounding park and cityscape. If an aerial view of the galleries looks like a street map of L.A., the promenade is its Mulholland Drive.
Zumthor's design smartly builds on much of what came before — especially the thrilling, unrealized, 2001 Rem Koolhaas scheme to tear down most of the existing, barely mediocre museum complex and erect a single new pavilion lifted off the ground.
Like Koolhaas, Zumthor recognizes that, save for empty nostalgia, there's no reason to retain buildings that function poorly, have been radically altered over decades and now require hugely expensive renovation. That's the case with the original 1965 William Pereira design, never mind the grandiose, flatly awful "Hollywood Egyptian" expansion from 1986 by Norman Pfeiffer of Hardy Holzman Pfeiffer Associates.
Better to start over.
For Zumthor, that includes designing lots of different kinds of interior gallery spaces. He has limited experience building them — Austria's 1997 Kunsthaus Bregenz and the 2007 Kolumba Art Museum in Cologne, Germany, are the only two — modest display spaces that I've only seen in photographs. But the 10 study-models of possible galleries at LACMA are ample evidence of the care he takes with his designs.
Clearly they are a work in progress. Take the vast room with what appears to be concrete walls and a floating, translucent ceiling to diffuse the bright California light. Judging from the size of cut-out figures of visitors in the model, the gallery approaches a whopping 40 feet in height. Paintings are little rectangles lined up around the base of a nearly four-story room.
As I say, absorption in exceptional art tends to make the surroundings fall away, so maybe the gallery's epic scale won't be crushing. Maybe it will even heighten the experience by giving a visitor an emotional sense of poetic sobriety, one that flows from the prehistoric context of the tar pits out the window.
Oddly, the project's most hopeful element might be its unexpected color — or lack thereof, as implied in the architect's nickname for the new LACMA building: the Black Flower. A soft and layered black was also Zumthor's choice for his temporary, widely admired 2011 Serpentine Pavilion in London's Kensington Gardens. In contrast to more usual beige travertine, granite and marble or light gray concrete, black is nothing if not counterintuitive.
Zumthor has said that powerful architecture is finally about atmosphere, not form. But then, so are retrofitted factories or warehouses as civilized museum spaces to house extraordinary works of art. What we do know for certain is how very well those have turned out.
It's getting so hard to park in L.A.'s Arts District that giant American Apparel has hired a valet service to help workers find spots.
[Industry Partners recognizes the great strides that the Los Angeles Arts District has made in recent years, but we also believe that continued growth is limited due to a critical lack of parking and limited transit access. In an internal report from June 2013 for our clients, we discussed these issues amidst the enthusiasm for the district's future. The report also illustrates our commitment to our clients in providing incisive, on-the-ground knowledge. We invite you to read our report as a contextual supplement to the LA Times' article.]
In a sunbaked parking lot near downtown Los Angeles, a young man in a red polo shirt hopped out of a Honda sedan and jogged to the nearby valet stand, eyeing a long line of customers.
"It can get pretty hectic here," valet Elmer Nolasco said, grabbing a stack of parking stubs. "The factory workers, they come and go at the same time."
After complaints that workers were late for their shifts because there was not enough parking,American Apparel — the largest sewing facility in North America — has hired a valet company to wrangle thousands of cars at the company's vast Alameda Street headquarters.
"Logistically, this is beyond impossible," American Apparel chief of staff Tina Pellegrino said, surveying the sea of cars outside the multistory building. "The lot was full even when we were the only ones here."
American Apparel, which straddles the Industrial district and the Arts district, was once surrounded by produce marts and cold-storage facilities. But the area between downtown and the Los Angeles River has seen an influx of businesses and residents in the last five years, straining scant parking and transit options.
American Apparel's issues at Alameda Square are one dramatic example of a larger accessibility problem in the Arts District, advocates say, where little parking or infrastructure has been added to support about 2,600 people living in a traditionally industrial area.
Trucks cause traffic jams and put wear on the roads. The area has been a popular filming spot since the 1980s, and the vehicle caravan that accompanies a shoot can block a street and its parking spaces for an entire day.
The population is small enough that the Arts district's coffee shops and restaurants depend on business from outside the neighborhood. With few direct transit options, visitors drive. Once they arrive, there's not much parking.
"It's not quite close enough to anything," said real estate entrepreneur Tyler Stonebreaker. "It just isn't very accessible."
The area has a DASH stop and several Metro lines, and 1.5 miles to the north is Union Station. But no lines connect directly to the Arts district. Getting there requires a half-hour trip and a transfer in downtown Los Angeles.
A bus line once ran down Alameda, the area's backbone, to Union Station. But Metro cut the route about a decade ago because ridership was low.
Metro's downtown regional connector, due to open in 2020, will have a stop at 1st Street and Central Avenue. Residents say the neighborhood needs something closer, and sooner. Some have suggested a bus line along a north-south backbone, such as Santa Fe Avenue or Alameda.
Under a policy that encourages growth in less-developed areas, many Arts district businesses aren’t required to provide parking. “It contradicts the point of the program, which is to encourage business,” Stonebreaker said. “Business won’t do well if no one can get here.”
The tipping point could be Zinc Cafe, which will open at Willow and Mateo streets later this fall. The restaurant will provide free valet parking, but no parking lot. Baristas and customers at Handsome Coffee Roasters have anxiously watched the construction.
“I bike here now because I can’t find a place to park,” said Danielle Langley, who lives in Koreatown but comes for lattes on weekends. “It will get 10 times worse when other things open.”
Residents say a parking garage would be practical but wouldn't match the scale of the area's low-slung buildings. So far, they said, investors haven't seemed willing to build an underground parking structure.
Fred Muir, a spokesman for Alameda Square parent company Evoq Properties, said they are considering a parking garage to serve American Apparel and its other factories. In the interim, Muir said, American Apparel could pay for more parking spaces. American Apparel said it still wouldn't be enough.
Some businesses are proposing alternative solutions, including an Arts district tram that would circulate through Little Tokyo and downtown. In addition to valets, American Apparel provides discounted Metro cards for employees and historically has given bicycles to some if they want to ride from Union Station.
The company's distinct salmon-colored factory is often used as a symbol of American manufacturing. But it's hard to keep jobs in Los Angeles, Pellegrino said, when workers can't get there.
Atlanta-based real estate investment and management firm Jamestown purchased Lantana, a sprawling four-building office, studio and production campus in Santa Monica's media district. The Lionstone Group of Houston sold the 484,840-square-foot complex for an undisclosed price that was reportedly more than $300 million, according to local reports.
The 12-acre Lantana complex, which includes 2900 and 3000 West Olympic Boulevard and 3003 and 3301 Exposition Boulevard, was 94% leased at the time of sale. The flexible-use buildings accommodate a wide variety of tenants and currently house office or production facilities for IMAX, Todd-AO, BeachBody LLC and Dick Clark Productions.
The property is also three blocks from the Bergamot Station art center, where a new light rail station is under construction for the Expo Line, slated to open in 2015.
Eastdil Secured marketed the property on behalf of Lionstone, along with Jim Jacobsen and Scott Rigsby of Industry Partners. Jake Nawrocki, Jamestown's senior vice president for West Coast acquisitions, represented the buyer in the property purchase.
This acquisition represents Jamestown’s first purchase in Southern California. The investment firm has made a number of recent acquisitions in California, most recently a retail and office portfolio in downtown San Luis Obispo. It also owns properties in the San Francisco Bay area.
Founded in 1983 with headquarters in Atlanta and Cologne, Germany, where it raises funds for investment, Jamestown has focused on buying property that appeals to technology, media and creative tenants.
Other "creative economy" properties owned by Jamestown include:
- Chelsea Market and 325 Hudson Street in New York City, tenants include Google, the Food Network, MLB Digital Media, NBC Universal and EMI Entertainment
- 799 Market Street in San Francisco, tenants include Monster.com, and the neighboring 22 Fourth Street located near the SoMa technology corridor and the Union Square shopping district.
- The Bronstein Industrial Center, a block-long, 800,000-square-foot warehouse spacethat contains the Boston Design Center.
For more information on the Lantana sale, please refer to CoStar COMP # 2804101.
It just doesn’t stop: Yet another tech giant is moving into Santa Monica.
Seattle online retailer Amazon Inc. is negotiating a lease of at least 75,000 square feet in the beachside city for its online entertainment production division and other corporate uses, according to sources familiar with the size requirement.
It would be the latest in a long roster of tech industry behemoths to take a significant amount of space in the Westside’s growing Silicon Beach area, now bursting with startups and established firms such as Google Inc., Facebook Inc. and Microsoft Corp.
“Amazon is trying to grow their entertainment production business,” said Andrew Jennison, partner at Santa Monica real estate brokerage Industry Partners who is familiar with Amazon and creative space on the Westside. “They are growing that piece of the business fairly rapidly so they need to accommodate that growth and they want to be on this side of town because of the talent and resources.”
Amazon is close to inking the deal at the Water Garden, a 1.2 million-square-foot office complex at Colorado Avenue and 26th Street, with landlord JP Morgan Chase & Co. Terms of the deal could not be determined, but real estate data provider CoStar Group Inc. reported asking rates at the complex of $3.85 a square foot. That would value the deal at about $3.5 million a year.
IA Interior Architects, which has designed Amazon’s offices nationwide, was said to be designing the Water Garden space.
Representatives of Amazon and JP Morgan did not return requests for comment.
The lure of the Westside, from Santa Monica south to Playa Vista, has been in large part due to the flood of development of original online content as tech firms build off the existing Hollywood infrastructure and talent in Los Angeles.
Microsoft, Netflix Inc. and YouTube LLC have all opened Westside offices as they aggressively pursue the production of original content. Netflix’s quarterly revenue eclipsed $1 billion for the first time in the period ended March 31, a milestone attributed at least in part to the success of its original online drama “House of Cards,” starring Kevin Spacey. The critically acclaimed series has been credited with bringing more subscribers to the service.
Earlier this year, Amazon Studios Inc., the entertainment unit of the online retailer run by former Walt Disney Co. executive Roy Price, began streaming 14 original comedy and children’s pilots through its website. It is turning five of those programs into series starring familiar actors such as John Goodman and Ed Begley Jr. Several of the shows, including comedy “Betas,” were filmed locally.
Amazon and Amazon Studios have been operating out of small Sherman Oaks offices at the Sherman Oaks Galleria and 7404 Fulton Ave. Those offices would likely be consolidated into the Westside space.
The Water Garden lease is the latest move by Amazon to dig into Los Angeles. Last month, the company made Los Angeles the second location, after its home base of Seattle, for its Amazon Fresh grocery delivery service. That unit has been leasing industrial space in Los Angeles and in the Inland Empire for storage and garaging its green delivery trucks.
The Water Garden complex, an eight-building, Class A office campus, isn’t considered the typical creative space coveted by tech and entertainment firms. Such space is usually found in a former industrial building that has been brought up to date with polished concrete floors, exposed ceilings and wide windows.
The Water Garden instead offers a more traditional but upscale environment. Its design and amenities include vast lobby atriums with granite and marble flooring as well as restaurants and cafes, a fitness center, hair salon and a dry cleaner. The 17-acre campus has a large landscaped courtyard with a small manmade lake and fountains.
Amazon executives did look at creative space around the Westside but decided to go the more corporate, high-quality office route, brokers said.
Jeff Pion, vice chairman in CBRE Group Inc.’s Miracle Mile office, was not involved in the deal but has represented tech tenants such as Google. He said the decision makes sense for a company like Amazon, which might be looking for the kind of flexibility available in more traditional and institutionally owned office space. Santa Monica’s tight office market, with a second quarter vacancy rate of just 11.5 percent, offers few spaces large enough for the company.
“The market is changing,” Pion said. “The pendulum has swung from a tenant’s market. It is heating up and we are seeing a lot of activity. We are not seeing a lot of big spaces on the market and it’s limiting these companies on where they can locate.”
What’s more, a large complex like the Water Garden provides Amazon the ability to grow and contract as it needs, according to Industry Partners’ Jennison.
“The challenge of a stand-alone true creative space is sometimes you can’t grow,” he said. “The Water Garden has vacancy and has parking. So they can sign for 75,000 square feet and if they need to take 40,000 right away and grow into the remaining 35,000 over time, they can. That’s where the Water Garden has the advantage.”
That flexibility could come in handy as Amazon smoothes out its new entertainment division.
The company has begun its venture with TV-length pilots, but plans to ramp up to full-length feature films. According to its website, the company plans to make money through movie development and has established a production deal with Warner Bros.
Amazon airs the shows through its streaming Prime Instant Video service. The service is free to Amazon Prime account holders, a membership that costs $79 annually and provides access to videos, free two-day shipping and other perks. Viewers provide feedback about which pilots they would like to see move forward, which executives feel will help ensure the shows’ success.
“Amazon Studios is working on a new way to greenlight TV shows,” Jeff Bezos, Amazon’s founder and chief executive, said in a statement after announcing earnings in April. “The pilots are out in the open where everyone can have a say. I have my personal picks and so do members of the Amazon Studios team, but the exciting thing about our approach is that our opinions don’t matter. Our customers will determine what goes into full-season production.”
In addition to projects already in production, Amazon Studios is seeking original scripts for series and movies. It has an online submission forum for anyone from established writers to newcomers to submit scripts.
While it’s not yet clear just how many people Amazon plans to bring into its consolidated office space, it has been hiring for its Amazon Studios locally with at least nine job vacancies posted last week.
Arty Maharajh, vice president of research at Cassidy Turley Inc. who tracks tech companies’ activity in Los Angeles, said he expected Amazon to continue to expand on the Westside as its entertainment arm develops. Google, Facebook and Microsoft began with small offices in Los Angeles and have been expanding rapidly across the Westside in the last two years.
“Amazon has 6 million square feet in Seattle,” he said. “Amazon has a big stake in Los Angeles. Content curation is still in its infancy and it hasn’t reached its boiling point yet. Amazon will mature with this particular move and expand. It will require more down the road.”
The SeaRise Office Tower at 233 Wilshire Boulevard in Santa Monica will continue to be home for commercial real estate finance company Berkeley Point Capital LLC after it signed a five-year lease renewal.
Meanwhile, Santa Rosa, CA-based portfolio lender Luther Burbank Savings will open its seventh California branch after it signed a long-term lease for 11,586 square feet at SeaRise Office Tower.
Industry Partners represented landlord Equity Office in the transactions that total more than 16,000 square feet in the tower.
Berkeley Point, a SeaRise tenant since 2002, will continue to occupy 4,523 square feet on the building’s fifth floor.
Berkeley Point is the second largest originator of Fannie Mae loans, and services a $29 billion multifamily loan portfolio. The firm also has offices in Bethesda, MD; Boston, MA, Columbus, OH; Dallas, TX; Irvine, CA; Nashville, TN; and Seattle, WA.
The SeaRise Office Tower is a nine-story, 124,000-square-foot building distinguished by its black glass curtain wall.
Built in 1975, a multimillion-dollar renovation of the lobby and common areas were completed in 2009. SeaRise Tower is now 94 percent leased.
Industry Partners’ Jim Jacobsen and Scott Rigsby along with Tim Dornan of Avison Young represented the landlord in both transactions.
Ryan Harding of Newmark Grubb Knight represented Luther Burbank Savings and Clay Hammerstein and Danny Rees of CBRE represented Berkeley Point.
For Robert Cohen and Rachel Rosenberg, the Third Street Promenade is undergoing a resurgence with some retail rents now passing the $300 a square foot benchmark – an amount that far surpasses many high-end streets in Beverly Hills.
The pair head the Southern California office of RKF, a leading urban retail real estate services firm in the country, with more than $20 billion of combined retail leasing and sales transactions.
Both Rosenberg and Cohen are based in Santa Monica and are responsible for not only major retail deal activity on the Promenade and elsewhere, but are involved in the business community of the city.
Cohen is principally known for his knowledge and deal activity in high-street fashion and retail whereas Rosenberg’s expertise is in restaurant strategic development and roll-outs.
Cohen said the Third Street Promenade continues to be a standout location for retailers in Los Angeles.
“It’s one of our best urban markets,” Cohen said. “The Bayside district is filling out, which is great. It’s a trend we are seeing across LA where the peripheral markets are starting to come back. People are reinvesting capital.”
Cohen said there’s a great story to be told for the Promenade where the lion’s share of foot traffic and sales take place.
However, he said redevelopment projects in downtown Santa Monica translate to a lot more potential retail activity near and around the Promenade on 2nd Street, 4th Street, Arizona, Broadway, and Santa Monica Boulevard.
“It’s a very exciting time,” he said. “As the Promenade is only three blocks, most retailers will only look at two blocks – the 1300 block and 1400 block, which creates a lot of upward price pressure. This being said, there are some very good values on the 1200 block.”
Rosenberg said the Promenade has seen a resurgence, particularly in the past 12 months.
“Landlords are aware that the ball is back in their court,” Rosenberg said. “Rent on the 1400 block has surpassed the $300 mark. This is a first for this district. These rents surpass some of the high streets in Beverly Hills.”
Rosenberg said Ocean Avenue has also made a major comeback.
“Ocean Avenue was kind of left for dead for a couple of years,” she said. “Now there are several projects planned which include adding more restaurants, residential units and hotel product, all of which will round out the district.”
RKF has signed leases on the Promenade on behalf of Apple, Chipotle Mexican Grill, Steak n’ Shake, H&M, MAC Cosmetics, Club Monaco, Athleta, Madewell, and ShopHouse Southeast Asian Kitchen.
The company has also acted as consultants to landlords for renewals.
Cohen helped with the relocation of the Apple store from the 1200 block to the 1400 block of the Promenade.
Cohen said the 1400 block was always a strong block, but Apple’s relocation was a validation of that fact.
An Atlanta real estate investment firm is breaking into the L.A. market with the high-profile purchase of Santa Monica’s entertainment-focused Lantana Media Entertainment Campus, home to Imax Corp. and Dick Clark Productions.
An Atlanta real estate investment firm is breaking into the L.A. market with the high-profile purchase of Santa Monica’s entertainment-focused Lantana Media Entertainment Campus, home to Imax Corp. and Dick Clark Productions.
Jamestown Properties, which has a 25 million-square-foot portfolio stretching from Boston to San Francisco, is in negotiations to purchase four of the five office buildings in the office complex, at Exposition and Olympic boulevards, from Lionstone Group of Houston in a deal that could be worth $278 million or more, sources told the Business Journal.
Lionstone bought the buildings, which comprise 463,000 square feet on the 12-acre property, in 2009 from developer Maguire Properties Inc., now MPG Office Trust Inc., for only half as much – about $139 million – according to CoStar Group Inc. An affiliate of the Recording Academy owns and occupies the fifth building on the property.
Today, the campus is nearly fully occupied. Other tenants include content network Adconian Media Group and fitness product maker Beachbody LLC.
Matthew Brainard, senior managing director at real estate brokerage Studley’s Westside office, said the site is among the most attractive to creative tenants seeking space in Santa Monica, which is already among the hottest submarkets in occupancy and rental rates in Los Angeles County. He is not a party to the transaction.
“It is a very dynamic, high-end little market in and of itself,” he said. “It’s got that low-rise suburban creative feel, which is more in demand among Silicon Beach-type tenants. It provides an alternative for a company that wants creative space but also wants the services of an institutional campus landlord.”
Representatives of Lionstone and Jamestown did not return requests for comment.
The price at which Jamestown is buying the complex could not be determined, but Lionstone has been quietly shopping the property around for an asking price of more than $600 a square foot, or at least $278 million, about twice what it paid four years ago. If that price is met, the gross dollar value of the sale would be the second highest in the county this year, following only the sale of the U.S. Bank Tower in downtown Los Angeles for $368 million. On a square-foot basis, it would be among the top 10 sales in the county this year.
When completed, the deal would mark Jamestown’s first purchase in Southern California.
It is among a number of national investors that have entered the active beachside market recently. Last year, New York’s Vornado Realty Trust bought the 112,000-square-foot office building at 520 Broadway in Santa Monica for $61 million.
For the last two years, Santa Monica has been one of the strongest submarkets in the county as it benefits from the booming tech and entertainment industries. At 12.4 percent, it had the second-lowest first quarter vacancy rate in the county, according to Jones Lang LaSalle Inc. The average monthly asking rate in the quarter was easily the highest, at $4.72 a square foot.
Patrick Inglis, vice president in the downtown office of Jones Lang LaSalle, said investors consider the Westside the best market in Los Angeles. “It has the best exposure to growth industries – media, tech and entertainment – and it’s an established market and is viewed as reasonably safe investment with reasonable upside. People are looking at L.A. as a good value.”
Jamestown has 27 syndicated funds for quality properties and five opportunity funds for properties that need repositioning, according to its website. Among its 80-building portfolio are New York’s 1 Times Square, a 100,000-square-foot office and retail building; 1250 Broadway in New York, a 770,000-square-foot office tower; and San Francisco’s 799 Market St., a 143,000-square-foot office-retail building occupied by tech tenants such as Monster.com.
Its plans for the Santa Monica property are not clear.
Lionstone completed a lengthy capital improvement program after it acquired the campus, adding a café, tenant locker and shower facility, and landscaped outdoor space. It was planning to build a 1,500-foot-long wall along the Exposition perimeter to reduce the impacts of a coming Metro light-rail line.
Lionstone might have been motivated to sell the property if it achieved the return it sought. The Westside market – which has seen rental and sales rates rise over the last two years – is prime for the sale.
Earlier this year, Lionstone sold a 38,000-square-foot mixed-use building at 631 Wilshire Blvd. for $20 million to PacShore Partners.
Hudson Pacific Properties, Inc. Announces New Lease with NFL at 10950 and 10900 Washington Buildings in Southern CaliforniaHudson Pacific Properties, Inc. (the “Company”) (NYSE: HPP) today announced it has signed an agreement to expand and extend their lease with the NFL at the Company’s 10900 and 10950 Washington properties in Southern California.
NFL Media is currently the major tenant at 10900 and 10950 Washington, where it occupies office space and two sound stages used exclusively to broadcast the NFL Network, NFL.com and NFL Mobile. Under the new lease terms, the NFL will increase its occupancy by an additional 22,221 square feet effective this July, completely backfilling space occupied by another tenant scheduled to expire this month, and extend through the middle of 2017.
“As the owner and operator of premier office and studio properties in California, Hudson Pacific Properties has considerable experience tailoring our property operations to meet the specific needs of media companies such as NFL Media. This extension of our lease with NFL Media exemplifies our strength in operating best-in-class office properties, with a strong media and entertainment tenancy,” said Victor J. Coleman, Chairman and Chief Executive Officer of Hudson Pacific Properties.
Located in one of West Los Angeles’ premier entertainment business districts, the 10950 and 10900 Washington properties total 168,943 square feet on 5.5 acres. 10950 Washington consists of an 86,987-square-foot, three-story office building and a 71,886 square foot building containing office space, two sound stages and a café. Located immediately adjacent to 10950 Washington, the 10900 Washington property is a two-story 9,919-square-foot office building.
About Hudson Pacific Properties
Hudson Pacific Properties, Inc. is a full-service, vertically integrated real estate company focused on owning, operating and acquiring high-quality office properties and state-of-the-art media and entertainment properties in select growth markets primarily in Northern and Southern California. The Company’s strategic investment program targets high barrier-to-entry, in-fill locations with favorable, long-term supply-demand characteristics in select target markets, including Los Angeles, Orange County, San Diego and San Francisco. The Company’s portfolio currently consists of approximately 5.5 million square feet, not including undeveloped land that the Company believes can support an additional 2.0 million square feet. The Company has elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. Hudson Pacific Properties is a component of the Russell 2000® and the Russell 3000® indices. For additional information, please visit www.hudsonpacificproperties.com.
This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control, that may cause actual results to differ significantly from those expressed in any forward-looking statement. All forward-looking statements reflect the Company’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the Company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on March 14, 2013, and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission.
The Campus at Playa Vista, a four-building class-A office complex, has been sold. An SEC filing indicates the purchase price was $218 million by Hines Global REIT, Inc., a real estate investment trust sponsored by Hines real estate and investment management.
The Campus at Playa Vista is 97% leased on a long-term basis to tenants that include four technology companies: Facebook, Inc.; Belkin International, Inc.; the University of Southern California’s Institute for Creative Technology; and the Internet Corporation for Assigned Names and Numbers (ICANN).
The complex was completed in 2009 and is LEED Core and Shell Gold certified. The complex is situated on seven acres in the 1,087-acre Playa Vista master-planned community. The four-story office buildings, located at 12015, 12025, 12035 and 12045 East Waterfront Drive, contain a total of 324,944 square feet.
Each glass and aluminum-clad, wedge-shaped building includes a green roof and patio on the fourth floor. The buildings are connected by 9,000-square-foot private landscaped terraces on the second floor. Beneath the buildings is a two-level garage that contains parking for 944 cars. A nine-acre, Michael Maltzan-designed park is adjacent to the property.
Sherri Schugart, president and CEO of Hines Global REIT, said in a statement that Hines was “attracted to this property due to its strong tenancy, recent construction, excellent access and long-term prospects for this emerging west LA submarket.”
Hines Managing Director Doug Metzler also said in a statement that the lower west L.A. submarket “is one of the most attractive office markets on the West Coast, and we are pleased to expand our LA portfolio with assets of this quality.”
Hines will manage The Campus at Playa Vista on behalf of Hines Global REIT. CBRE's Kevin Shannon, vice chairman and managing director of the western institutional group represented the seller, Tishman Speyer, in the transaction.
Hines Global REIT is a public, non-listed real estate investment trust sponsored by Hines that owns interests in 32 real estate investments located in the United States and internationally.
As reported earlier by GlobeSt.com, the mixed-use Runway at Playa Vista broke ground earlier this year.
The same folks who brought you the bland office cubicle are turning a profit these days by trying to kill it off. As the nation's economy recovers, office-furniture makers, who were hit hard by the recession, are racking up sales by persuading companies that newer office layouts can
encourage collaboration and, in some cases, shrink their space requirements and costs.
Herman Miller Inc., which helped spawn the cubicle craze more than 40 years ago, is one of the suppliers leading the
charge. Its revenue has risen by nearly a third in the past two years, thanks to customers such as Microsoft Corp.
The software giant hired Herman Miller's consultants to track how space was used at some of its locations. They found,
among other things, that conference rooms designed for 20 were often being used by just two or three people. So, Microsoft
created more "focus" rooms—smaller spaces where two to four people could huddle.
"Work is really getting done in smaller teams," says Martha Clarkson, Microsoft's global workplace strategist.
Post-cubicle offices began to crop up in earnest about a decade ago, inspired by changes in the way people worked. They
feature lower walls between desks, or even no walls, and more areas designed for conversation, to encourage impromptu
Many companies were intrigued by the idea, but the recession stalled the trend, sending the U.S. office-furniture industry's
revenue plunging 26% in 2009, according to market researcher IBISWorld. Lately, however, the surging stock market and
growing optimism about the economy have rekindled "projects that were sleeping for several years," says Franco Bianchi,
chief executive of Haworth Inc., one of the nation's biggest office-furniture makers.
That's part of the reason IBISWorld expects 2013 to be the industry's strongest year of growth in nearly a decade. The firm
predicts that office-furniture makers' revenue will hit $21.5 billion this year, up more than 4% from 2012—though still 26%
below the peak in 2006.
Mr. Bianchi has sought to counter some customers' lingering caution about spending by improving service and providing
more design advice. He says Haworth has added around 20 employees who work with clients to create effective work
environments. Closely held Haworth, which is based in Holland, Mich., says its sales have climbed 18% since 2009 to
$1.31 billion in 2012.
"Ten years ago we didn't have the resources to engage people on how they work," Mr. Bianchi says. "We were selling
furniture, and now we're selling interiors."
Herman Miller is widely credited with inventing the cubicle in the 1960s, when it introduced what it called the "Action
Office," a line of panels and desks that could be configured in a variety of ways.
At the time, private offices were a symbol of rank and privilege. But the new partitions, some of them six feet tall, could be
arranged to provide similar privacy for rank-and-file workers, who had largely labored in open areas called "bullpens," with
their desks placed in rows. In the decades that followed, cubicles became ubiquitous.
In recent years, as electronic communications supplanted paper and flat-screen monitors and laptops replaced unwieldy
desktops, businesses found that workers were left with unused space. Some of them also were feeling isolated.
Younger workers were accustomed to using wireless devices in settings like coffee shops, where they could move around and
chat, rather than being tethered to workstations.
"There are incredible changes in demographics in the workspace," says Tracy Brower, a Herman Miller executive who
advises clients on using space. Many of those clients demand hard data on the best ways to drive productivity and improve
employee morale through interior design. "Customers are demanding more quantitative data in their decision making," Ms.
To get a better handle on worker behavior, Herman Miller has its own research arm, which relies on some high-tech tools.
For example, it temporarily attaches electronic sensors to chairs in some clients' offices to determine how often they are
The research shows many cubicles are used for only a bit more than a third of the workday and individual offices can sit
empty 80% of the time.
Based in part by those findings, the company launched Avive, a line of thin, free-standing tables that can be used as personal
desks or pushed together to form for group workspaces.
Last month Herman Miller reported its profit for the fiscal third quarter ended March 2 rose nearly 11% to $16.5 million as
revenue increased 5.9% from a year earlier to $423.5 million. For the fiscal year ended in June 2012, the company's revenue
rose 4.5% to $1.7 billion, after jumping 25% the year before.
The changing office landscape is most visible in the famously futuristic buildings of Silicon Valley, which are also known for
their zany touches.
"Not everyplace looks like Google, says Jonathan Webb, head of business sales at Krueger International Inc., known as
KI, a commercial-furniture maker in Green Bay, Wis. "Not everybody has a slide in the lobby." But some tech-company
furnishings are filtering into the mainstream.
"The biggest trend we see from our clients in Silicon Valley is the trend for personal workspace flexibility—the ability to
adapt a workstation," Mr. Webb says.
Partly as a result, KI's sales of desks that can be electronically raised for standing work or lowered for sitting have more than
doubled over the past three years. Mr. Webb says the desks allow employees more choice in how they work, without being
considered too radical or costly a change.
Using furniture and advice from Herman Miller, Campbell Soup Co. CPB -0.57%has been remodeling its 55-year-old
Camden, N.J., headquarters, providing more common spaces, including "huddle rooms" for meetings of two to four people.
"People are collaborating much more" now that they aren't "bound by walls or cubes," says Beth Jolly, a Campbell
Many Campbell managers and executives still have offices, but they are being standardized at 120 square feet. That means
smaller offices for some executives, creating more open space that can be devoted to common areas. It also is easier to move
people, since rank no longer dictates space allocation.
Does that apply to the CEO?
"We're getting to that," Ms. Jolly says.
A showplace of the early automotive age in downtown Los Angeles a century ago is set to be revived by new owners who have ambitious plans to turn it into offices, a restaurant and a nightclub near L.A. Live.
Long vacant, the stocky five-story building at 11th and Hope streets was a warehouse for the now-defunct local department store chain Desmond’s. It still has the company’s name affixed to the top.
But its glory days began in 1916, when it opened as a full-service outpost of Ohio automaker Willys-Overland Motor Co., which sold luxurious Willys-Knight cars to the city’s well-to-do.
Developing the project is Lincoln Property Co., which bought the property last week for $16.25 million. It plans to spend an additional $9 million over the next 12 months in hopes of making it a showplace again, Executive Vice President David Binswanger said.
Lincoln Property is one of the lead developers at the Playa Vista planned community near Marina del Rey, where most of the offices have been built to appeal to firms in creative fields, including entertainment, technology and advertising.
Such firms have clustered around Santa Monica, Venice and Culver City in recent years, and Binswanger now hopes to tempt some of them to move downtown.
Although the property is close to several new residential high-rises, Lincoln is forgoing the chance to make it into apartments or a hotel and is opting instead for offices.
In other parts of the city, old industrial buildings converted to offices command top rents, but there is a dearth of such properties in the financial district downtown.
“We are reaching out to Westside tenants,” he said. “There isn’t another product like this.”
The property was heralded as a head-turner even in 1916, when many people assumed the unusual concrete and brick structure was a car assembly plant because it seemed too big for a mere dealership.
“The building comprises five stories, all designed exclusively for the handling of the tremendous retail business of the Willys Overland company,” The Times said.
It went on to explain that the first floor was devoted to offices and a showroom for the complete line of the company’s products “ranging from the smallest Overland to the luxurious Willys-Knight eight,” its eight-cylinder model.
The second floor was the service department and could be reached by a ramp on 11th Street. It also had facilities to charge as many as 50 car batteries at a time and a crew of electricians to work on lighting, ignition and other electrical needs.
Another shop for major overhauls — equipment included riveting machines — occupied the third floor. The fourth was for painting cars and varnishing their numerous wooden finishes. New cars were stored on the fifth floor.
A massive elevator ferried cars to every floor and the roof, where mechanics tuned the vehicles and ran their motors to break them in.
The open-top elevator capable of giving passengers the willies still works, and Binswanger envisions using it to ferry patrons to a bar he plans to build on the roof, essentially adding another floor to the structure. Visitors would have views of the downtown skyline and, three blocks to the west, Staples Center.
At street level, the old showroom with 18-foot ceilings and white octagonal-tiled floors should be used for a restaurant and perhaps a new showroom for a tenant in the tech or fashion business interested in displaying products, he said.
The last owner, Evoq Properties Inc., also had plans to fix up the building but decided to sell it instead and use the money to fund another downtown redevelopment project, Chief Executive Martin Caverly said.
“We were reluctant to sell,” Caverly said, but it made sense to redeploy the company’s financial resources to Alameda Square across downtown in the arts district. “We are getting much more traction on that.”
The vast historic industrial complex near Alameda Street and Olympic Boulevard is also being converted to offices for tenants in creative fields, including clothiers Splendid and Ella Moss.
Downtown’s residential renaissance has helped position it to attract sought-after creative businesses such as design firms, said real estate broker Marc Renard of Cushman & Wakefield, who represented Evoq in the sale of the former car dealership and furniture warehouse.
“Downtown L.A. is just at the beginning of what is going to be a major influx of this kind of office space,” Renard said. “The fact that you can get higher rent for creative offices than for high-rises is an indication of demand.”
Nasty Gal is one of a number of companies that have inked recent leases at the historic PacMutual Building in downtown Los Angeles. Nasty Gal, the hot online retailer of new and vintage apparel and accessories, boosted its existing space at the building from 10k sf to 50.3k sf.
They are joined by such notable businesses and organizations as KRD Enterprises, National Council of La Raza, Kleinfelder, Consumer Action, Industry LTD, and Caravan Book Store, who signed leases for an additional 14k sf.
Carle Pierose of Industry Partners represented RRP in these leases. With these latest deals, the building stands at roughly 80% leased.
The PacMutual Building, located at the corner of 6th and Grand in the heart of LA’s downtown, is owned by Rising Realty Partners (RRP). Since acquiring the 457k sf building, located across from Pershing Square, in April 2012, RRP has been focused on creating a dynamic office lifestyle location that meets the growing demand for community, accessibility, authenticity and open space.
RRP has also announced plans for a pocket park that will introduce Downtown to its first ever “Green Wall,” a vertical landscape feature that will scale a 6-story wall of the Clock Building on Olive Street. RRP is also refurbishing the building façades, including a restoration of the original terra cotta tile on the 12-story Beaux Arts building and a renovation of the entire façade on the Clock Building.
Inside the building, a series of restored suites in the sought after 12th floor penthouse recently became available, offering exposed brick, operating windows, and marble floors. The buildings are home to one of the largest rooftop decks in all of Downtown Los Angeles and offer opportunities to create a unique campus-like atmosphere. The garage valet area is also undergoing improvements, including a new valet desk, enhanced lighting and exposed brick walls.
A 46.2k sf office building in LA’s upscale Brentwood submarket traded hands at a price of $15.5 mil, or $335/sf. The property is located at 11859 Wilshire Blvd, west of the 405 Fwy at the corner with Westgate Ave.
The transaction marks the largest office sale for both square footage and dollar value in the Brentwood submarket this year.
The buyer will utilize the building to function as the corporate headquarters of ICDC, a Southern California-based technical school. The seller occupied the building as PCS, a communications-based company which has since relocated to Texas. Following the relocation of PCS, the seller no longer had need for the office space.
Roger Beck, SIOR and Gelena Skya-Wasserman of Charles Dunn Company represented the seller, Los Angeles-based 11859 Wilshire LLC. The buyer, Culver City-based WLA Wilshire LLC, was repped by Andrew Jennison of Industry Partners.
“The buyer had been searching for its corporate headquarters location for a significant amount of time. The central Brentwood location and desirable Wilshire address, as well as the benefit of easy freeway access were an ideal fit for its corporate needs,” said Beck, senior managing director out of Dunn’s Sherman Oaks office.
Although the building was approximately 15 percent occupied by the seller, there is a variety of tenants in the remainder of the suites in the building. Beck added: “The building is very well maintained, requiring minimal upgrades, and therefore allowed the buyer to expedite its occupancy.”
The Bergamot Station Arts Center is ready to make the jump from concept to reality, as council members on Tuesday approved City staff to issue Request for Proposals (RFP) to develop what is expected to be one of Santa Monica’s newest hotspots.
Three development teams will receive the RFPs, each presented with an opportunity to develop 5.6 acres of City-owned property. Once realized, the Bergamot Station Arts Center would be home to art galleries, eateries, hotels, and museum space. The area would also have built-in infrastructure to support the planned Expo Light Rail, which is expected to have a stop there once the line is completed in 2016.
According to City Hall, the development must ultimately support the arts, deliver a transit-oriented development, and maximize revenue for the Big Blue Bus operations.
“The concept emphasizes retaining the concentration of art galleries and other art uses, providing space for a museum, creating revenue-producing and visitor-serving uses, including a hotel and restaurants/bars, and delivering infrastructure improvements to compliment the arts center and new Expo station,” City staff stated in a report.
The three development teams who received RFPs include Bergamot Station Ltd./Worthe Real Estate Group, Lionstone Group/Industry Ltd., and REthink Development/Kor Group. Each was chosen by an “evaluation panel” during a qualification review process, according to City staff.
City staff added the development teams are “expected to demonstrate experience in deploying innovative strategies involving adaptive reuse of older buildings, the creation of transit-oriented urban infill developments, and the creation of vibrant, sustainable, cultural activity centers.”
Council members also approved staff’s recommended objectives for the development, which suggested the new Bergamot Station Arts Center “must include at least 75,000 square feet of arts-related space that is affordable to non-profit and arts organizations” and provide space for the Santa Monica Museum of Art.
“The development shall include open space, infrastructure and other amenities to support public access to the light rail station as well as improving the environment and functionality of the Site (and) … shall maximize the preservation of existing buildings,” City staff stated.
Other possible elements include “evening and weekend activation” and “other creative office and cultural uses.”
“The development must exemplify exceptional architecture and sustainable design and construction as well as have a focused transit-oriented development approach,” City staff added.
Parking at the Bergamot Station Arts Center would be crafted in accordance with the Land Use and Circulation Element (LUCE), with a focus on shared parking.
City Hall also expects the ground leases at Bergamot Station Arts Center to bring in at least $610,000 “to support the operations of the Big Blue Bus.”
Once the RFP process is complete, City staff will recommend to council members a development team to enter into contract negotiations.
Bergamot Station is located at 2525 Michigan Avenue. The land there was, with the use of transit funds, purchased by City Hall in 1989 “with the goal of serving future transit needs in Santa Monica and providing a source of revenue for the Big Blue Bus.”
According to City staff, City Hall leases the 5.6-acre land to Bergamot Station for $603,797 per year; that lease is set to expire Dec. 31, 2015.
The 5.6-acre land “contains five buildings totaling 76,020 square feet and is occupied by approximately 30 small creative businesses including art galleries, product designers, a non-profit theatre company and a café,” City staff stated.
More buildings are set to rise in Playa Vista, one of the largest undeveloped areas left in Los Angeles, as developers turn their focus from the exurbs to the "infill."
Consisting of roughly 1,000 acres near Los Angeles International Airport, Playa Vista for decades was home to little more than an airplane runway and a hangar that at one point stored Howard Hughes' infamous "Spruce Goose" aircraft prototype. But over the past decade 2 million square feet of office space and more than 3,000 homes have been built.
Now a group of investors led by Brookfield Homes, BRP.T +0.38% of Fairfax, Va., has reached an agreement to pay more than $250 million for the remaining 110 acres of undeveloped land in Playa Vista, according to people familiar with the terms of the deal.
Brookfield, controlled by Canadian real-estate investment firm Brookfield Asset Management, BAM.A.T +1.02% plans to develop the site into 600 to 800 homes and 1,500 apartment units, while another real-estate firm, Lincoln Property Co., is planning a downtown-like "village" that includes a supermarket, movie theater, and office buildings. The Brookfield purchase hasn't been announced publicly because it hasn't been completed, these people said.
Brookfield is buying the land from Playa Capital, a development company owned by a partnership of pension funds and Wall Street firms including Goldman Sachs Group, GS -0.79% Morgan Stanley MS +0.06% and hedge-fund firm Oaktree Capital Management.
Developments like these—smaller home groupings, mixed with commercial uses and wedged between urban areas—are becoming more popular partly because of changing ideas about land-use planning in places like coastal California.
During the housing boom of the last decade, builders' mantra was "Drive till you qualify"—a slogan that described a business strategy of slapping up hundreds of cheap homes on inexpensive land far from city centers. If buyers went far enough into the suburbs, they could eventually qualify for a mortgage.
But developers today are looking more for "infill" locations like Playa Vista. "It's an attempt to push growth back into urban cores," says Michael Lea, a professor of real-estate finance at San Diego State University.
Developers often build apartment buildings on infill projects to maximize efficiency. According to the most recent Census figures, housing construction rose 3.6% nationwide in October, but all of that gain came from the multifamily sector.
Brookfield has tapped Irvine Co., a land company in nearby Orange County, and an affordable-housing builder to build the apartments and plans to sell several hundred single-family home lots to Los Angeles-based KB Home, KBH -1.71% according to people familiar with the deal. Brookfield declined to comment. Representatives from KB and Playa Capital didn't respond to requests for comment.
"Whenever we look at a project, what we're looking for is being able to provide housing near jobs," says Michael Lyster, a spokesman for the Irvine Co. Mr. Lyster declined to comment specifically on the Playa Vista deal.
To be sure, developers are still shopping for "green-field" sites. However, the housing bust made banks more reluctant to lend investors the money to buy and build infrastructure on far-flung pieces of raw land.
"In L.A. County, if you look at the green-field development options, they're 20 or 30 miles away at least," says Richard Gollis, co-founder of the Concord Group, a real-estate consultancy.
Builders are targeting infill projects in other parts of the country as well. PulteGroup, PHM -1.87% a Bloomfield Hills, Mich.-based builder, has recently focused on opening communities with between 30 and 100 homes in markets like Chicago and Minneapolis. The company has traditionally concentrated on large tracts in the suburbs.
"When we were in growth mode, we probably would have passed on a 45-unit project," says Patrick Beirne, Pulte's president for the region that includes the Midwest. "But before, we were targeting entry-level buyers and very young families, and a lot of that was in the outskirt locations."
Corrections & Amplifications Lincoln Property Co., is planning a downtown-like "village" at Playa Vista that includes a supermarket, movie theater, and office buildings. A previous version of this article said Brookfield Homes was overseeing that component of the development
SANTA Monica and Venice? They’re old news.With creative office space hard to come by in those tight markets, many tech companies now are flocking to the once quiet neighborhood of Playa Vista, which is quickly emerging as the next hotspot of Silicon Beach.
And the area is about to get even hotter when
developers break ground next month on what stands
to be the centerpiece of the area: the Runway at
Playa Vista, a Grove-like outdoor shopping center
that would bring acres of stores, restaurants and a
movie theater to the amenities-starved locale.
Many brokers in the area see the Runway as the
final piece necessary to tie the community together
and as a factor in many companies’ decisions to
“I’ve seen a flurry of deal activity down in Playa
Vista,” said Matthew Brainard, senior managing
director at brokerage Studley. “A lot of companies
now are looking at it as a very serious contender to
the upper Westside, like Santa Monica. People are
starting to see the vision. It’s starting to become real.”
Despite years of attempts by developers to lure
the tech industry south, Playa Vista has long played
second fiddle to markets such as Santa Monica.
But last quarter, while Santa Monica’s
vacancy rate rose, the submarket that includes
the 2-million-square-foot Playa Vista market
saw vacancy fall more than 3 percentage
points from last year to 30.8 percent, according
to Jones Lang LaSalle Inc. It remains
the only Westside market that can that can
offer companies 100,000 square feet or more
of creative space – and at rates nearly $2 less
per square foot than nearby Santa Monica,
according to Santa Monica brokerage
Industry Partners, which specializes in creative
The demand is so evident there that even
while most developers across the county still
refrain from building new speculative offices,
developers such as Vantage Property
Investors and Worthe Real Estate Group
are alreadyunder way on projects that would
add more than 400,000 square feet of office
space to Playa Vista.
The market has been on the upswing since
last year, when social networking giant
Facebook Inc. signed a lease for about
12,000 square feet to move its offices from
Venice. Since then, a number of companies
have followed suit, including creative firms
YouTube LLC, 72andSunny and Vevo,
which have signed leases totaling more than
195,000 square feet this year. Brokers say
other prospective tenants are actively searching
for at least 1 million square feet of office
space in the submarket.
“It’s like skydiving: Who is going to jump
out of the plane first? It’s the same notion
about who was going to be the first to sign (a
lease) down there,” said Andrew Jennison,
founding partner at Industry Partners. “Now
everybody is sold on it.”
Since the late 1970s, Playa Vista had been
planned as a 1,000-acre city with high-rise
offices, a shopping center, golf course and
thousands of homes. But ownership struggles
and clashes with environmentalists have
stalled development in the area, which was
limited to 460 acres. And even that is not yet
fully built out.
Though the area has office properties,
Playa Vista has lacked the sort of amenities
that allow other cities to thrive.
“I think one reason why people like Santa
Monica is because you can get to a lot of
restaurants and shops, and that’s really the
only thing (Playa Vista) has lacked,” said Lisa
St. John, partner at brokerage L.A. Realty
Dallas developer Lincoln Property Co.
hopes to fix that with the Runway, its $260
million, 14-acre outdoor shopping center
that will have 220,000-square-feet of shops,
420 apartments and 35,000 square feet of
office space. The development, scheduled
to open in 2014, would be the first of its
kind in the area, which includes about
“There (currently) isn’t a real place the
community could come together, go to a
movie, get a glass of wine or get groceries,”
said David Binswanger, executive vice president
at Lincoln. The Runway, he added, will
be “the centerpiece of Playa Vista.”
Designed by L.A. architecture firm Johnson
Fain Partners, the project aims to emulate successful
Westside shopping areas such as the
Grove or Third Street Promenade. It will include
16 outdoor fire pits, landscaped courtyards and
parks, fountains and canopied entrances.
Cinemark Holdings is opening a ninescreen
theater of its NextGen brand, a highend
concept aimed at competing with
Arclight Cinemas and the Landmark. It will
include VIP seating, self-serve concession
stands and a cocktail lounge, as well as a 72-
foot screen aimed at scoring business from
Grocer Whole Foods Market Inc. is said
to be close to finalizing a lease to open a
store. Other retailers suggested to be considering
the site include fitness clothier
Lululemon, restaurant Loteria and denim
company True Religion.
Brainard said that the project should
soothe the concerns of people anxious over
the lack of amenities and help to continue the
momentum for the community.
“I think it’s going to be a game changer,”
he said. “The flood gates will open and it will
exponentially increase the occupancy and that
will lead to more development.”
Another factor driving development in
Playa Vista is the need for space as the socalled
Silicon Beach markets fill up.
The Westside has been a popular destination
in recent years for creative companies.
The beachside location, proximity to other
like-minded companies and cool space of
converted industrial buildings make it an
attractive location. It doesn’t hurt that a number
of executives and a skilled labor pool also
live in the area.
As a result, however, vacancy in many
Westside markets, including Santa Monica
and Venice, has been near all-time lows this
year, according to the most recently available
data from Industry Partners.
That is pushing some companies south.
YouTube signed a deal for a brand new
40,000-square-foot office in Playa Vista this
year and music video website Vevo moved
into 12,000 square feet from Santa Monica.
Advertising firm 72andSunny signed a lease
for 55,000 square feet this year to move from
its 32,000-square-foot offices in Culver City.
The company’s founder, John Boiler,
opted for Playa Vista in part because it
offered the larger spaces that other local markets
just couldn’t. But he also fell in love with
the character of the buildings, including the
company’s new home, the Hercules Campus,
the former headquarters of Howard Hughes’
“From the first moment we looked at this
place, we were like, this is it,” Boiler said. “It
has 100-year-old sycamore trees and architectural
buildings that look Bauhaus with steel
and glass windows and high ceilings with no
beams. It has this sprawling wide open feel
and the story behind it was super cool.”
A number of developers are converting
buildings in the area into hip creative spaces.
Worthe Real Estate Group and
Shorenstein Properties LLC are under way
on a renovation of a former U.S. Postal
Service distribution facility that would create
a 380,000-square-foot creative office. It won’t
open until next year but already celebrity
news producer TMZ signed on for 40,000
square feet to move from Hollywood.
Nearby, Vantage Property Investors are
under way on renovations to 12777 Jefferson
Blvd. to make a former bank building an
open and airy, 203,422-square-foot creative
office campus, with a landscaped courtyard,
bike racks and space for gourmet food trucks.
Ratkovich Co., which was behind the
Hercules Campus conversion, began the $50
million renovation last year. It comprises 11
of the original buildings that are being
restored and turned into creative office space.
The campus is not even open yet and it’s
already nearly halfway leased.
“I don’t know that we’ve ever done a real
estate project that we’ve had so much interest
from tenants on before we had an opportunity to
do some basic improvements to the building,”
said Wayne Ratkovich, president of the company.
“We are surprised and delighted at the level
of success that we’ve enjoyed down there.”
The publication, recently acquired by Penske Media Corp., would move from 5900 Wilshire Blvd. when its lease is up in February 2014.
Among the changes coming to Variety in the aftermath of its sale is the potential relocation of the trade newspaper's offices.
Among the changes coming to Variety in the aftermath of its sale is the potential relocation of the trade newspaper's offices.
Variety's new owner, Penske Media Corp., wants to move the publication's Los Angeles headquarters from 5900 Wilshire Blvd., according to multiple sources who have discussed the matter with PMC principal Jay Penske.
Penske is said to have concerns that Variety's rent at the Miracle Mile building it has called home since 2008 is too high and feels that relocating the paper elsewhere makes economic sense, according to sources. Penske would move the publication once its lease expires in February 2014.
Penske Media leases space at a 15-story office tower in Inglewood; other media outlets in the company's stable are housed at this 9800 S. La Cienega Blvd. property. It's not clear where Variety would relocate, but a real estate source with knowledge of Penske's thinking believes the media entrepreneur -- the son of car-racing mogul Roger Penske -- will not move the paper to the Inglewood property.
"The team at Variety knows the facts. I assume the rest of the story won't be," Penske said in a statement to The Hollywood Reporter. His company, with financial backing from Daniel Loeb's Third Point LLC, announced its purchase of the 107-year-old publication on Oct. 9.
According to two real estate sources with knowledge of Variety's lease, the publication's deal with landlord Ratkovich Co. expires Feb. 28, 2014. The roughly five-year lease for 54,300 square feet at the Class A tower commenced in December 2008. Under Variety's agreement, which was struck by then-owner Reed Elsevier PLC, it will pay roughly $2.5 million in rent this year. That works out to about $3.84 per square foot per month, which experts say is high when compared with current asking rents but in line with 2008 rates. According to data from real estate services firm Jones Lang LaSalle Inc., the average asking rent for Class A office space in the Los Angeles metro area was $2.60 per square foot per month in the third quarter of 2012. On the Westside, the average asking rent was $3.60 per square foot per month.
Travis Landrum of entertainment office brokerage Industry Partners said comparable Miracle Mile office space can currently be leased for as little as $2.50 per square foot per month. "Variety's was a top-of-the-market deal," he said. "It's expensive for that market."
The Miracle Mile area is a popular locale for Hollywood-centric companies. Among firms housed there are E! Entertainment Television, OWN: The Oprah Winfrey Network, World Poker Tour, CBS Radio, Fox Television Animation and The Hollywood Reporter. "The Miracle Mile and Westside is the epicenter for entertainment companies," said commercial real estate broker Bob Safai, who recently represented the landlord of a Miracle Mile-adjacent office building on San Vicente Boulevard that inked a deal with talent agency Verve.
Variety moved into the 31-story tower at 5900 Wilshire Blvd. in December 2008, and the building was topped with two illuminated Variety signs. The trade publication's lease is for a portion of the tower's 27th floor and floors 29-31. These days, the 27th floor space is occupied by former Reed Elsevier unit MarketCast, which the British conglomerate sold earlier this year; and part of Variety's space on the 29th floor has been subleased to other companies over the years.
Penske Media's space at the 9800 S. La Cienega Blvd. tower, which is owned by Jamison Services Inc. and backs up to the San Diego Freeway, undoubtedly is less expensive than the Miracle Mile lease. According to data from real estate analytics company CoStar, asking rents at the property, which is 61 percent occupied, range from $1.30 to $1.50 per square foot per month -- a fraction of the Variety lease. The LAX-adjacent market in which the building is situated is known for having "the cheapest, lowest rents in the city," according to Safai, who is not involved in Penske Media's real estate dealings. The 357,817-square-foot building is recognizable by the large advertisements that wrap its exterior and are visible from the freeway. Penske Media's corporate headquarters are on the tower's 14th floor, according to its website. The property is on the western edge of Inglewood, near El Segundo.
With debt and equity financing for its Variety transaction provided by affiliates of Loeb's Third Point LLC, Penske Media is believed to have closed the deal with an offer of about $25 million. Reed Elsevier originally had been seeking at least $50 million.
It's not clear whether Variety would be able to replicate the sort of prime building-top signage it enjoys at its Wilshire headquarters once it relocates. A May 2009 story in the Los Angeles Business Journal said Variety paid Young Electric Sign Co. of Salt Lake City to create and install both LED signs for $160,000. According to the story, Variety did not pay a separate fee for the ability to hang the signage; instead the value of the signage rights was rolled into the deal. Clare De Briere, Ratkovich Co.'s chief operating officer, told the LABJ that including the signage rights in the deal was key to enticing Variety to ink the lease.
The tech industry is going south.
In growing numbers, Silicon Valley executives—long based in tech strongholds like Santa Clara and Palo Alto—are buying homes in Los Angeles, as the lines between the technology and entertainment businesses grow blurrier.
Venture capitalist and hedge-fund manager Peter Thiel—PayPal's co-founder and Facebook's FB +0.57% earliest investor—paid $11.5 million in January for a 6,000-square-foot house on a promontory above the Sunset Strip. Andrew Frame, a 30-something entrepreneur who founded Internet-telephone company Ooma, bought a contemporary four bedroom in Bel Air for $5.5 million last summer from singer/reality star Nick Lachey, who in turn had acquired the home from model Heidi Klum and singer Seal. In March of last year, Matt Jacobson, head of market development at Facebook, paid $10.9 million for a modern house on the ocean in Manhattan Beach, according to public records. He uses his former home, a just-under 900-square-foot beach bungalow two blocks away, to house Facebook employees visiting from up north.
"It's the Facebook flop house," Mr. Jacobson jokes. "We have a surf in the morning before going into the office."
The southern migration is taking place as companies like Google GOOG -1.30% and Facebook beef up their presence and more Silicon Valley investors and entrepreneurs establish footholds in the entertainment industry. Prices are soaring in the beachfront communities tech types favor, and rents in these areas are growing at a faster rate than in other parts of the city.
"There is a feeling that techies are the new celebrities," says Eric Kuhn, an agent who heads the social-media department at United Talent Agency. "When I arrived in Hollywood, everybody had written a screenplay," he says. "Now, everyone has an app."
Kurt Rappaport, a Los Angeles broker specializing in luxury real estate, says the number of his house-hunting clients from Silicon Valley has doubled over the past couple of years. Earlier this year, Mr. Rappaport sold a beach cottage in Malibu to a Facebook executive for $6.8 million. Another client, Oracle co-founder Larry Ellison, just closed on a deal to buy ex-Yahoo YHOO -0.82% CEO Terry Semel's compound in Malibu for $37 million—Mr. Ellison's 27th Malibu property purchase, says Mr. Rappaport. Mr. Ellison did not respond to requests for comment
It isn't just Silicon Valley-based techies who are buying. Last summer, Cameron and Tyler Winklevoss—twins best known for suing Mark Zuckerberg over the origins of Facebook, and who recently formed a venture-capital firm—bought an 8,000-square-foot bachelor pad in the Hollywood Hills for $18 million. Ted Waitt, co-founder of computer company Gateway, also bought in Bel-Air, paying $14 million this past June for a six-bedroom Mediterranean.
Another client of Mr. Rappaport's, Mich Mathews, formerly the head of marketing for Microsoft MSFT +1.30% and a longtime Seattle resident, paid $11.5 million for a 12,000-square-foot home in Holmby Hills in March. From her new perch in Los Angeles, she's helping to launch a company that she says lies "at the intersection of marketing and digital entertainment, philanthropy and lifetime experiences." Ms. Mathews is currently remodeling the seven-bedroom home, adding a wine cellar and a cabana for the pool.
More than 600 tech start-ups have sprung up in L.A. over the last few years, according to Represent.LA, an open-source project that tracks the growth of start-up communities, bringing with them engineers and executives looking for housing. The narrow, 3-mile strip of land that runs from Santa Monica through Venice, and is now stretching down to Playa Vista, has been dubbed "Silicon Beach" due to the heavy concentration of Internet companies and executives there.
Prices have gone up dramatically on this beachfront strip. Previously known for an edgy vibe, the area has grown increasingly upscale with the arrival of gourmet restaurants and mainstream stores. In Santa Monica, the median price of homes jumped 16% in the first eight months of 2012 compared with 2011, after a 9% decline over the same period the year before, according to Multiple Listing Service data compiled by Paul Habibi, a professor at the University of California, Los Angeles. Venice's median home price in the first eight months of 2012 broke the $1 million barrier, rising to $1,012,000 from $899,000 in the first eight months of 2011.
Median single-family home price increase, Jan.-Aug. 2012, compared with the same period in 2011.
In Los Angeles County, median home prices went up by just under 1% during the first eight months of 2012, compared with the same period in 2011, according to Mr. Habibi's MLS data. Nationwide, the median home price rose 3.3% during that time period to $186,000, according to DataQuick, and in California the median price rose 4.8% for that same time period.
A substantial portion of Venice's real-estate boom is attributable to Google. Last November, the Web-search giant opened a flashy new office in Venice to focus on engineering, sales and advertising; the company will lease close to a quarter-million square feet in the neighborhood by 2014. To create a campuslike setting for its more than 500 employees in L.A., the company took over a funky Frank Gehry complex resembling a pair of binoculars. Like Google's other locations, it offers amenities like a climbing wall and an outdoor movie theater, as well as bicycles and surfboards that can be rented during the workday.
"Want 300 days of sun a year?" Google says on its website. "Forget the Valley—pack your bags for Google L.A."
In February, Google's YouTube signed a lease for about 40,000 square feet of production space in Playa Vista. It will open later this year. And in August 2011, Facebook began leasing about 13,000 square feet in Playa Vista.
The arrival of techies has also had a profound effect on the rental market, brokers and real-estate developers say. Kevin Miller, president of Westside Rentals, which bills itself as Southern California's largest home-finding service, says he has seen rents in Santa Monica and Venice increase by about 10% over the last 18 months—compared with other desirable areas such as Beverly Hills and Culver City, where he says rents increased by about 4% to 5%. Rents have increased by just 2% across Los Angeles over the same time period, he says.
"Entrepreneurs love being around other entrepreneurs, and that's driving demand toward the beach," says Mr. Miller. "Plus, people like to live near where they work, and the tech companies are there."
Silicon Valley buyers shop differently from other wealthy L.A. clients, brokers say. While entertainment moguls often rely on the taste, advice and social connections of the city's top brokers, tech executives frequently do their own research online before they arrive in town, and know what they want before they look.
Broker Mauricio Umansky recalls a moment earlier this year when he was showing several homes in the Hollywood Hills to an entrepreneur visiting from Northern California. "I was telling him that houses in the neighborhood sell for $1,000 per [square] foot. He interrupted me and said, 'No, they sell for $936 per foot.' He was testing me. It totally caught me off guard. And by the way, he was right." Mr. Umansky, who is the CEO of real-estate firm the Agency, adds that many buyers from up north often shy away from relying on the taste of others, preferring instead to rely on themselves. "They will challenge your knowledge of the market," he says. "And only if you pass will they trust you." In the end, he sold an $8 million home in the Hollywood Hills to the entrepreneur.
The business interests of Hollywood and Silicon Valley continue to converge. Tech companies are becoming distributors of studio content; YouTube, iTunes and Netflix have all licensed content from major entertainment players. Talent agencies CAA and WME are incubating start-ups.
"There's so much more traffic between these two worlds of tech and entertainment that we're seeing the social worlds blend together, and that's luring the Northern California community to buy homes down here," says Ben Silverman, former co-chairman of NBC Entertainment. "These days, there are more Internet guys at the Vanity Fair Oscar party than traditional media players."
South African-born billionaire Elon Musk, who co-founded PayPal and Tesla Motors, TSLA -1.37% has also dabbled in the film business, serving as an executive producer on films like "Thank You for Smoking." He commutes back and forth on his Dassault Falcon between the Bay Area and Los Angeles. According to people close to the situation, Mr. Musk is in contract to buy the roughly the $20 million Bel-Air house he has been renting—a 20,000-square-foot estate on a private knoll with a home theater, library, lighted tennis court, gym, pool and 1,000-bottle wine cellar. Representatives for Mr. Musk declined to comment.
More venture capitalists also are putting down roots. "For years, I would watch people launch their start-up in L.A., raise capital and move up north as soon as they got successful. Now, they get successful and they stay," says Paul Bricault, a venture capitalist who founded one of Los Angeles's largest accelerators and lives in Venice. After years of traveling to Los Angeles once every few months, Timothy Draper, founder and a managing director of Draper Fisher Jurvetson, says he now flies down to L.A. about twice a month—often enough that he bought a house in west Los Angeles this year.
"I thought, 'Why leave all the activity here to compete with everyone else in NorCal?' " says Mark Suster, a venture capitalist who started leasing in Pacific Palisades two years ago.
Another factor: Even as prices have begun to creep up in neighborhoods like Venice, L.A.'s real-estate prices still tend to be substantially lower than those in desirable parts of Silicon Valley. In Palo Alto, the median price paid for single-family homes was $1.7 million in the first eight months of 2012, a 20.4% increase over the same period in 2011, according to DataQuick.
"We had a great time looking for a house in L.A., especially after living up north," says Sonya Merrill, an ex-Google executive who moved to L.A. with her husband, Douglas, a former Google chief information officer, in late 2008. "Silicon Valley is all 1960s and '70s tract houses or small bungalows—it's a sea of blah. Expensive blah—I once looked at a teardown in Palo Alto that smelled like urine and was made of cinder block. It was on the market for $1.5 million and there was a bidding war for it." The couple spent $2.8 million on a Hollywood Hills four-bedroom home where actor Bela Lugosi long resided. They spent another year redoing it.
Some tech moguls, including Microsoft co-founder Paul Allen, Amazon CEO Jeff Bezos, venture capitalist Ray Lane and Mr. Ellison, have owned property in Los Angeles for years. David Sacks, a corporate vice president at Microsoft, owns a Beverly Hills house where Quentin Tarantino filmed "Pulp Fiction."
But the newest wave of Silicon Valley arrivals is heavily favoring the Silicon Beach area. Viddy, a mobile-video-sharing company, has its office a block from Google in Venice. About a fifth of new employees have relocated from Silicon Valley, says Brett O'Brien, Viddy's CEO and co-founder. One of Viddy's other co-founders, Chris Ovitz, in January paid $1.6 million for a loft on Venice's main thoroughfare.
Developers are scrambling to cater to the influx. Jim Andersen, president of prolific Westside developer NMS Properties, says the firm is opening five more buildings not far from the offices of Google and Yahoo, among other tech firms. He added that NMS has begun building smaller apartments to better serve young renters who are part of the tech scene.
Jim Jacobsen, a commercial-real-estate broker, says he first built one of his projects—a warehouse in Venice converted into 30 lofts for both working and living—with entertainment-industry folks in mind. But with just a month or so until the units, which run between $500,000 and $2 million, hit the market, he is advertising them to people in the technology industry.
Mr. Umansky, who sold two homes in Los Angeles this year to Facebook executives, has another explanation for why Silicon Valley executives are heading south.
"A lot of these guys are young, they have cashed out, they are bachelors, they like to party," he says. "And let's be honest, the partying in Hollywood is way better than in Silicon Valley."
Music video website Vevo has moved into new 12,000-square-foot offices at 5340 Alla Rd. in Playa Vista.
The company's five-year lease with landlord Lionstone Group is valued at roughly $2.5 million, according to real estate sources. New York-based Vevo moved into its new offices at the Annex on Sept. 1; the lease was inked in April. Vevo is a joint venture of Sony Music Entertainment, Universal Music Group and Abu Dhabi Media. The company maintains seven offices, including one in San Francisco.
Vevo relocated from offices at 1620 Euclid St. in Santa Monica because it ran out of space, said commercial real estate broker Travis Landrum of Industry Partners, who represented the company. Initially, Vevo planned to stay in Santa Monica -- a popular locale for technology and media firms -- but did not find any properties there that could accommodate its growth.
"We looked everywhere in Santa Monica and there were no options that fit the aesthetics they were looking for, so we grew the geography," said Landrum.
The Annex is a two-building, 117,500-square-foot former industrial complex that Lionstone converted into creative offices. Landrum said the property appealed to Vevo's sensibilities. The company's new office includes a "wraparound" steel and wood staircase that can serve as seating for live music performances, he said. Other tenants at the property include video game rental service firm Gamefly and digital creative agency Visionaire Group.
According to Landrum, tech and media companies are increasingly turning to Playa Vista because the success of the Santa Monica office market means that there are few large blocks of space available for lease there.
"There are very few spaces at 10,000 square feet, and even less at 20,000 [in Santa Monica]," Landrum said, adding that because Playa Vista was once home to many light manufacturing companies, there is an abundance of warehouses that can be converted to creative office buildings.
In February, THR reported that celebrity news organization TMZ would sign a long-term lease for headquarters office space at a former post office distribution center in Playa Vista. Also in February, YouTube signed an 11-year lease for a 41,000-square-foot office building at the Hercules Campus in Playa Vista.
Lionstone was represented by Industry's Jim Jacobsen and Scott Rigsby. Vevo was also represented by Industry's Andrew Jennison.
Vevo declined to comment.
The City Council on Tuesday asked planners to take another look at a new fee intended to make it easier to get around Santa Monica after the business community showed up in force to protest the price tag.
The proposed fee would raise $60 million to pay for $134 million worth of infrastructure projects, like more bus lanes and possibly car-sharing programs, identified in the 2010 Land Use and Circulation Element, a document seven years in the making that will guide development from now to 2030.
That money will help offset the nearly 5,000 additional peak-hour trips expected to come from new development in that time.
The transportation impact fee would be assessed on new development, new construction, businesses that convert from one kind of use to another and formerly vacant properties.
Government buildings, affordable housing and religious institutions would be exempt.
The amount per square foot charged depends on the kind of business or development that takes place at the site. Retail, for instance, costs more than office space because it attracts more cars, and therefore causes more vehicle trips.
The categories are very broad, however, causing auto dealerships to fall under the same umbrella as a pharmacy.
As proposed, the fee is one of the highest in the region, falling slightly behind the Los Angeles coastal corridor to the south and a special planning area in Los Angeles called the Warner Center to the north.
Members of the business community feared that the high costs would force businesses out of Santa Monica and into the arms of less costly places.
“I think there’s some danger with the fees being too high,” said John Bohn, a local businessman. “I think it will cause low-margin businesses that may be very desirable from the standpoint of public service to locate in adjacent locations.”
There was also concern that the burden would fall disproportionately on small and local businesses which would have more difficulty fronting the cost of the fee than established companies with deep pockets.
For instance, if a property owner who was forced to pay the fee then tried to rent a location to a small business, the owner might have less money to pay for tenant improvements, forcing those costs on small businesses, said attorney Dale Goldsmith.
“Smaller, locally-based retailers and restaurants, many of which are startups, simply cannot afford these substantial upfront costs,” Goldsmith wrote in a letter to the council. “In this way the (fee) strongly favors well-capitalized national chains and big box retailers — precisely the kind of development LUCE discourages.”
Even large businesses would feel the pinch.
Mike Sullivan, the owner of several car dealerships in the area, is designing a building for his Toyota dealership at 16th Street and Santa Monica Boulevard.
The project, which would bring all of the cars indoors and dispose of a surface-level parking lot, would cost over $1 million more with the transportation impact fee.
Sullivan described it as a “deal killer.”
“Santa Monica has lost nine franchises in the last decade,” Sullivan said. “I would hope you guys would work with it.”
If approved, the transportation impact fee will join fees that support childcare, parks, housing and arts, according to the staff report. Speakers urged staff to conduct a study looking at what the added cost will do to local business, not just how to assess it.
“We are supportive of you continuing to look at this, but do another study on this and see what the fees amount to and the impact on our businesses,” said Laurel Rosen, president of the Santa Monica Chamber of Commerce.
The concerns struck a chord with City Councilmember Bob Holbrook and Mayor Pro Tem Gleam Davis.
“I think we’re high, and we’re high enough to hurt our long-term viability,” Holbrook said.
Davis focused on the potential impacts on small and local businesses, asking if it would be possible to create a separate fee for them or allow them to pay less if they caused less traffic.
Such a rule would cause chaos for planners, said Jeffrey Tumlin, a consultant with the firm Nelson/Nygaard.
“It would go beyond an administrative headache, it would result in every project becoming a debate and a long process,” Tumlin said, pointing out that each developer could hire a transportation consultant to argue either side of a case.
Not all council members opposed the fee.
Councilmember Pam O’Connor argued in favor of keeping the fee relatively high to support other modes of transportation. Such a move would give the council the flexibility to lower it later, she said.
Even if the fee went forward as proposed Tuesday, it wouldn’t be enough to cover the full cost imposed on Santa Monica by coming development.
The full cost would be an “astronomical” amount to lay on development, and staff knocked down their share from 76 percent to 55 percent of the $134 million to give them breathing room, said City Manager Rod Gould.
“Staff fairly arbitrarily suggested reducing what new development would pay to the highest strata of what our sister cities are paying,” Gould said. “Not the middle, the highest.”
According to staff estimates, Santa Monica languishes under 60,000 trips during the peak afternoon hours every day. That contributes to the stifling traffic that many community members complain about, and was a main target of the LUCE.
Over the next several months, staff will go back and revisit many of the issues raised by the business community, including the special cases of existing car dealerships and an economic study to see how much of a fee the market can bear, Rolandson said.
TAKING CREATIVE LITE TO FULL HIGH-END CREATIVE SPACE
2230 Broadway started out as a 1950’s manufacturing facility and as Hollywood moved west into Santa Monica, the conversions of red brick bow truss buildings began to take over. In the early 90’s Atari occupied the building as their west coast out post. Subsequent to this the Weinsteins Genius Products spent a couple of years in the space.
IMAX Corp. has inked a 10-year lease renewal for its West Coast headquarters at Santa Monica's Lantana Entertainment and Media Campus, a popular office property for Hollywood companies.
The deal for 65,000 square feet at the 3003 Exposition Blvd. building is valued at about $30 million, according to sources with knowledge of the Santa Monica office market. The transaction with landlord Lionstone Group, a Houston-based real estate investor, closed in early July.
The lease commences March 1. Toronto-based IMAX, the theater company that designs and makes specialty cameras and projection systems, has maintained offices at Lantana since 2000. The company occupies the entirety of the three-story building at the Lantana property.
"They fit the building really well -- it was built to suit for them in the first place," said Jim Jacobsen of commercial real estate brokerage Industry Partners, who represented Lionstone in the deal. "It's nice to keep them because they fit the campus well."
Other tenants at the 12-acre, 460,000 square-foot Lantana creative office development include Dick Clark Productions, Revolution Studios and BermanBraun. The property is about 97 percent occupied, Jacobsen said.
IMAX's Santa Monica offices house about 200 employees who work on distribution and postproduction jobs there. The facility includes a 25-seat screening room that IMAX uses to show movie footage to filmmakers and production companies with whom the firm works.
Scott Rigsby of Industry also represented the landlord.
IMAX could not immediately be reached for comment.
Light-rail passenger service returned to Culver City last month after a nearly 60-year break, speeding the evolution of the formerly insulated bedroom community into an urban hub of business and revelry.
Hundreds of millions of dollars' worth of real estate development are in the pipeline, including a project linked to the new Expo Line that would contain apartments, stores and a hotel. Restaurant operators have been so keen on opening in the gentrifying downtown that rents for retail space didn't decline during the economic downturn as they did in most markets.
"I never saw rents dip because demand always exceeded supply," real estate broker Zac Card said.
Monthly retail rents can hit $6 per square foot, putting the price of doing business there on a par with popular Main Street in Santa Monica.
The renaissance is at risk of stalling, however. City leaders are worried that because state officials dissolved local redevelopment agencies earlier this year, Culver City will be unable to support development that would capitalize on the rail line.
"We are in limbo trying to determine whether the state will require more from us or whether we can go ahead with these projects," Councilman Jim Clarke said.
Culver City's reputation as a pedestrian-friendly destination with upscale restaurants, gastropubs and a thriving art scene is less than a decade old, local observers said.
The low-key linear city evolved along railroad lines and roads connecting downtown Los Angeles with Abbot Kinney's resort city Venice, making it a self-contained outpost in the early 20th century. Its personality, however, lost luster after World War II as it was engulfed by sprawling Los Angeles.
The presence of famed movie studios including the former Metro-Goldwyn-Mayer headquarters always provided some glamour, but when car dealerships started replacing former roadhouses and speak-easies in the 1950s, Culver City took on a decidedly suburban vibe.
Through the years, Culver Boxing Stadium was replaced with a shopping center, and a Costco stands on the site of the Culver Dog Track, where greyhounds and later cars raced. The Culver City Airport, where city founder Harry Culver kept his own plane? Closed to make way for a supermarket and Earl Scheib auto painting outlet.
With the cessation of train service in the 1950s and the 1965 opening of the Santa Monica Freeway, Culver City became a bit of an island, Clarke said, with its own police force and conservative sensibility.
The commercial real estate market changed direction around 2000 with the creation of daring, sometimes outlandish office buildings designed by Eric Owen Moss in the formerly industrial Hayden Tract, on the eastern edge of town. City officials also went to work renovating downtown public spaces such as sidewalks and medians, trying to attract new businesses.
In the mid-2000s, Clarke said, "I left this sleepy bedroom community, and I came back four years later and there were three wine bars."
Others followed and a Culver City scene emerged that attracts a young crowd to its bars and restaurants. Considering that for decades few 20-somethings would have thought to head to Culver City for fun, that's a good thing, Clarke said.
"Those young visitors will say maybe this is a great place to live and work," Clarke said. "We need to regenerate neighborhoods with young people."
But Clarke and other leaders want downtown to be more than a food-and-beverage playground. It needs other retail outlets such as stores that aren't typically found in nearby malls.
"Culver City has free parking structures and restaurants, but not enough apparel and soft goods such as furniture, skate shops, surf shops and bike shops," said real estate broker Card of CBRE Group Inc.
Several real estate developments were put into planning before the state swooped in on community redevelopment funds and created doubts about whether developers would be able to get title to land they hoped to buy from the city.
One of the largest planned developments is at a triangular site at Venice, National and Washington boulevards where the Expo Line stops. Train passengers can't see much there now besides a parking lot, but Los Angeles developer Lowe Enterprises was selected by the city to build a 5-acre complex with stores, offices, apartments and a 150-room hotel.
"Culver City has had a renaissance downtown and in the arts district," said Thomas Wulf of Lowe Enterprises. "We are in the middle and want to be the bridge that links those."
The four- or five-story project valued at as much as $200 million is intended to be active about 18 hours a day, with stores and entertainment meant for commuters and nearby residents. Lowe Enterprises, which built and operates the Terranea Resort in Rancho Palos Verdes, would also run the boutique hotel.
"Right now the only true hotel is the old 40-room Culver Hotel where the Munchkins stayed" during filming of the 1939 movie"The Wizard of Oz,"Wulf said. "Most visitors have to stay in Century City or Santa Monica because they can't stay nearby."
If the process goes as expected, Lowe will complete its development plans in the fall, navigate the city's approval process and deliver the yet-to-be-named project by 2015 or 2016.
Timing is crucial, Councilman Clarke said. Culver City should strive to maintain its small-community character while trying to build itself into an attractive destination for shopping and recreation, but haste is required.
Right now Culver City is the last stop for Expo Line trains from L.A.'s financial district, but construction is underway to bring service to Santa Monica by 2015. That means Culver City has a window of time to impress riders who pass through it as their main portal to rail service.
"Once the line goes all the way to Santa Monica, we are going to be a stop on the line like any other," Clarke said. "We can attract people from downtown and the Westside, or we will just be a parking lot or another stop along the way."
Southern California's long-languishing office market finally managed to utter a convincing peep in the second quarter as stubbornly high vacancy rates dropped a smidgen.
It doesn't signal that landlords' troubles are nearly over. Most markets — with a few notable exceptions — are considered quite soft, which means tenants are in a superior bargaining position.
Still, overall vacancy in Los Angeles County slipped to 18.6% from 19.1% in last year's second quarter, according to real estate brokerage Cushman & Wakefield. It was the first year-to-year vacancy decline since the second quarter of 2007. Meanwhile, average monthly rents last quarter climbed 7 cents to $2.52 per square foot.
The improving climate for local property owners marks a change from years of rising vacancy and falling rents that began with the last economic downturn.
"My sense is that L.A. County and Orange County are kind of slowly improving, slowly inching out," said real estate analyst Jed Reagan of Green Street Advisors.
Results may vary, as the old warning goes.
Orange County's traditionally desirable John Wayne Airport area office market is reviving as tenants take advantage of depressed rents to move up from less popular markets such as Santa Ana and Anaheim.
Affection from growing tech companies has made Santa Monica and Venice so hot that they are lifting nearby areas such as Culver City and Playa Vista, where office space is more plentiful and rents are cheaper.
Vacancy in aging office buildings near Los Angeles International Airport, meanwhile, continues to rise and topped 35% in the second quarter.
Downtown Los Angeles, which has been weak since an orgy of office construction ended in 1992, finally threw off some sparks as average rents rose 5 cents to $2.91 per square foot.
Improvement will continue, some observers say, as downtown becomes known as a growing residential neighborhood with multiplying recreational options such as bars, restaurants and professional sports.
Brookfield Office Properties Inc., owner of Ernst & Young Plaza in the financial district, signed seven leases for a total of more than 200,000 square feet in the second quarter. Downtown property experts placed the combined value of the leases at more than $60 million. The largest was with law firm Caldwell Leslie & Proctor.
"It's times like this when people who have to make leasing commitments say, 'I may not find this in the next cycle,' so they take advantage," said John Barganski, Brookfield's head of leasing in Southern California. "We have achieved the bottom of the market."
Like some other downtown properties, Ernst & Young Plaza at 7th and Figueroa streets is in a better location than it was when it was completed in 1985. A subway station later opened across the street, and Staples Center and L.A. Live are bustling destinations with new condos and apartments a few blocks away.
Brookfield is upping the ante with a $40-million renovation of its mall downstairs, which is set to reopen in October with new restaurants and stores, including Target and Sport Chalet.
"There are certainly a lot of amenities downtown that didn't exist 10 years ago," Cushman & Wakefield executive Joe Vargas said.
"We're not seeing a lot of tenants moving out. There is a dynamic that is new."
Substantial growth in occupancy and rents, however, will remain hard to come by downtown and in most other markets, he said.
As has been the pattern for years now, a majority of deals are renewals of existing leases instead of moves to new quarters. Many employers are hesitant to face the cost of building out new offices and the price of the move itself.
"This economy is sluggish and flat; choppy at best," Vargas said. "We are not going to see any real change until we see significant job growth, and that doesn't appear to be on the horizon."
Demand Media, the publicly traded content and social media company, has inked a $23 million lease for new headquarters office space at 1655 26th St. in Santa Monica.
The 11-year and eight-month deal is for 52,032 square feet -- the entirety of the two-story building. Demand will move into its new offices by the second quarter of 2013; the company is currently headquartered at 1333 2nd St. in Santa Monica.
Demand's new digs are in a section of Santa Monica that is popular with entertainment and media companies. The 26th street building is adjacent to the Colorado Center (formerly Yahoo! Center) and across the street from the Water Garden office complex, where CBS Television Distribution recently inked a five-year lease.
There has been increased demand for entertainment office space in the Santa Monica area in recent months. In the 17.7 million-square-foot creative Westside market -- which includes Santa Monica, Culver City, Marina del Rey and Venice -- the vacancy rate was 12 percent in the first quarter, down from 15.5 percent a year earlier, according to Industry Partners, a commercial real estate brokerage.
"[The deal] reinforces the fact that the market is very tight," said Travis Landrum a commercial real estate broker with Industry, who represented the landlord -- an undisclosed private individual -- in the transaction. "Large tenants cannot find space anywhere in downtown or mid-Santa Monica."
Demand's new offices will undergo a significant renovation before the company moves in; the space was previously occupied by MTV, which vacated the property in December.
Demand, which uses thousands freelancers to create videos and articles for the Internet, runs websites such as eHow.com and LIVESTRONG.com. The company is headed by CEO Richard Rosenblatt.
Jim Jacobsen and Scott Rigsby of Industry also represented the landlord. Jeff Pion of CBRE Group represented Demand.
How active is L.A.'s entertainment office real estate market? Just ask CBS.
In mid-May, CBS Television Distribution inked a five-year, $15 million lease for 53,000-square-foot offices at the Water Garden in Santa Monica. And in Santa Clarita, the facility that CBS Television Studios leases to film NCIS is for sale at $18.4 million. Brokers say demand for creative space is highest on L.A.'s Westside.
"It felt like a little bit of a pause back in December, but it has picked up, and there has been a real increase in deal activity," says broker Jim Jacobsen of commercial real estate brokerage Industry Partners, adding that downtown Santa Monica is most popular.
In the 17.7 million-square-foot creative Westside market -- including Santa Monica, Culver City, Marina del Rey and Venice -- the vacancy rate was 12 percent in the first quarter, down from 15.5 percent a year earlier, according to Industry Partners.
Sources say Hulu, Miramax and Demand Media are looking for space or nearing deals in the area, yet despite the increased demand for creative space, rents essentially have remained flat.
The average asking rate in the first quarter was $3.04 per square foot a month, down from $3.11 a year earlier. Because of the recession and strict rules about development, few new high-quality office properties have been built to satiate growing demand.
That makes desirable sites attractive to investors, says Carl Muhlstein, executive vp at commercial real estate brokerage Cushman & Wakefield, who is co-representing San Francisco investor Merlone Geier Partners in its $89 million sale of an 11.5-acre property at Olympic Boulevard and Bundy Drive to Hudson Pacific Properties. The deal is expected to close in August.
West Los Angeles-based Hudson, owner of Sunset Gower Studios and Sunset Bronson Studios, plans to remodel the existing buildings on site and convert the property to a roughly 250,000-square-foot creative office campus.
The mini-boom has enticed even nontraditional landlords to get in on the act. George Schlatter, the TV producer known for Rowan & Martin's Laugh-In, is converting a 40,000-square-foot warehouse property he owns in Culver City into a creative office building.
Says Schlatter, "We haven't even advertised it yet, and everyone seems to be calling."
The purchase price is undisclosed, but an unidentified source tells GlobeSt.com that the property sold for $60 million. RRP has engaged Industry Partners to reposition the landmark building for creative office users, a major renovation. RRP plans to transform the historic property into a marquee-lifestyle commercial-office space for class-A local, regional and national tenants.
Recently formed developer Rising Realty Partners has acquired the 440,000-square-foot Pac Mutual building complex downtown at 523 W. 6th St., partly using funds controlled by its financial partner Mount Kellett Capital Management LP. The seller was a joint venture sponsored by Denver-based Alliance Commercial Partners, which had owned the property since 2007, and both sides were represented by CBRE's Kevin Shannon, Tom Bohlinger, Ken White and Michael Longo.
The purchase price is undisclosed, but an unidentified source tells GlobeSt.com that the property sold for $60 million. RRP has engaged Industry Partners to reposition the landmark building for creative office users, a major renovation. RRP plans to transform the historic property into a marquee-lifestyle commercial-office space for class-A local, regional and national tenants.
CBRE’s Shannon tells GlobeSt.com that RRP’s purchase is a “vote of confidence for downtown L.A and the revitalization that continues to go on down there. L.A. doesn’t have as many historic buildings as San Francisco, so this may be the most historic building in Southern California.”
Designed by architects John Parkinson and Edwin Bergstrom, the complex was originally built for the Pacific Mutual Life Insurance Co. as its headquarters. Current tenants include American Business Bank, architecture firm NBBJ, online retailer Nasty Gal Inc., CuySteinberg Architects and environmental consultant Camp Dresser & McKee; ground-floor retail includes the recently renovated restaurant Water Grill. The building is currently 70% leased.
RRP teamed with Mount Kellett to acquire Pac Mutual because of its strong asset value, premium location, unique historic design, street-facing retail, below-grade parking and the potential for larger floor plans. “We’re happy to be working on Pac Mutual with RRP as our management and acquisitions partner, given their strong track record and the quality of this asset,” says Andrew Axelrod of Mount Kellett.
RRP is repositioning Pac Mutual to appeal to a variety of downtown Los Angeles office users and has engaged Santa Monica-based real estate services firm Industry LTD to work with the firm on the building’s transformation. Industry Partners, an affiliate of Industry LTD, will manage the leasing and marketing effort and will establish a downtown L.A. office in Pac Mutual under the direction of Carle Pierose, who will be responsible for leasing, and Tom Majich, who will be in charge of construction management.
“We are seeing the boundaries of the creative office market shifting east,” says Jim Jacobsen, founder of Industry Partners. “With little or no space available in Santa Monica for creative users with a requirement of 10,000 square feet, downtown Los Angeles is becoming a more attractive alternative. Downtown L.A. has done a wonderful job in reinventing itself with more loft-style housing and an infrastructure of entertainment and services to support it, and as a result is attracting a new breed of office user.”
“We’re seeing something happening that’s been talked about for the last 20 years,” Christopher Rising tells GlobeSt.com. “There’s a real community down here—there are more people down here than in Lower Manhattan—and there’s such history to these buildings.”
Rising also says that the building was designed to have 14-foot ceilings, and real brick exists behind the drywall. “What’s amazing as we’ve been doing our demolition is that they actually painted over windows so you couldn’t see the drop ceilings. Now we are revealing the big, dramatic windows and real brick that people appreciate.”
Timing is key, and now is a great time to buy in this market, Rising tells GlobeSt.com. “Downtown is moving out of its infancy, and people are saying, ‘This is where we want to be.’ This is where young architects want to live and work. The authenticity of it makes us believe we’re going to lease it at good rates.”
GlobeSt.com also has recently heard reports that RRP is considering purchasing 500 Orange Tower, a 281,699-square-foot office property in Orange County that is reportedly on the block for $195 to $200 per square foot. Rising could not comment on whether or not the reports were accurate except to confirm that RRP has been in ongoing discussions about the property and other Orange County buildings. “These are great buildings, and we try to buy great buildings that have not been loved very much. They’re wonderful buildings, and if we could buy them, we would love to own them.”
Under the direction of Industry Partners, Houston-based real estate investment firm The Lionstone Group, is making a significant investment to reposition a vintage 1970’s industrial complex on Los Angeles’ Westside to meet the creative office demands for companies in the entertainment, media, tech, and creative industries.
The Annex, located at 5340 Alla Road, two blocks north of Playa Vista will include more than 60,000 square feet of newly renovated space and 17,000 square feet of new mezzanine flex space. Common area improvements will include sculpture gardens, outdoor conference and event spaces, along with lushly landscaped promenades and courtyards.
The landlord has removed all vestiges of outdated office space such as partitions and walled rooms, while capitalizing on the existing building skeleton with its large clear spans. The result will be a dynamic open office environment with ceiling heights of as much as 26 feet in the impressive atrium space. Minimum ceiling heights over the polished concrete floors will be no less than 13 feet. Roll up doors, energy efficient floor-to-ceiling windows and more than 600 square feet of new operable skylights will provide natural ventilation and daylight.
Lionstone Group makes the purchase. Such 'creative' offices in the Santa Monica and Venice area tend to fetch high rents and attract tenants in the technology and entertainment industries.
Santa Monica's status as the destination of choice for technology and entertainment businesses got another boost with the $90-million sale to a Houston real estate investment firm of five "creative" office buildings — those highly designed, edgy alternatives to typical corporate environs.
Lionstone Group, one of the largest owners of creative offices on the Westside, bought the buildings from a limited partnership made up of investors who are in the entertainment industry, brokers said. The deal comes at a time when well-located buildings are selling at a premium but others are languishing
Technology- and entertainment-industry businesses, which increasingly work together in such enterprises as video games and animated movies, have gravitated to the seaside in the last two decades. Workers in both sectors have shown a desire to avoid the kind of boxy glass and granite office towers favored by most of corporate America.
Instead, owners of such companies frequently set up shop in smaller buildings that once had industrial uses. Although unglamorous on the outside, the buildings tend to have renovated interiors rich in design, often with such features as walnut stairs and European-style kitchens.
One of the properties acquired by Lionstone is at 2415 Michigan Ave. in Bergamot Station, a former railroad yard and manufacturing center. Tenants there include game maker Hooky Interactive Inc. and entertainment support firm Pier 59 Studios West, real estate data provider CoStar Group said.
Other properties acquired by Lionstone are in downtown Santa Monica at 631 Wilshire Blvd., 625 Arizona Ave. and 401 Santa Monica Blvd. Those buildings and the Bergamot Station property were built before the 1950s and have been fully renovated, according to real estate brokerage Industry Partners, which represented the sellers.
The fifth building sold, at 1351 4th St., was built in 1995. Tenants there include radiology provider Image Advantage and farming company Bolthouse Farms.
"Everybody wants to be in Santa Monica," said commercial property broker Vince Muselli of Muselli Commercial Realtors, who was not involved in the transaction. Its restaurants, shops and ocean breezes are attractive to businesses, he said. "It's a great place to schmooze and make deals and just feel good about the world."
Although the coast appeals to many kinds of businesses, tech companies have made such a beeline to the area that Santa Monica and Venice have earned the nickname "Silicon Beach." Start-ups such as TrueCar Inc. and Riot Games are growing there alongside Internet stalwarts Yahoo Inc. and Google Inc.
"The demand for creative office space from tech, new media and postproduction companies is driving leasing activity on the Westside," making it one of the tightest office markets in the region, said broker Scott Rigsby of Industry Partners.
Rents in some buildings surpass $5.50 a square foot per month, twice the cost of space in a prominent downtown Los Angeles high-rise.
"Investors will pay a premium for property in Santa Monica and make less of a return on their investment because the foundation of this area is so good that there is a small likelihood investment will head south instead of north for the long term," broker Muselli said.
The five buildings purchased by Lionstone have a combined total of 165,000 square feet and are about 90% leased.
Other properties owned by Lionstone include Lantana Entertainment Media Campus and Penn Station Studios in Santa Monica and Alameda Media Center in Burbank.
By Roger Vincent, Los Angeles Times.
MTA To Re-Acquire Land Used To Park 450 Cars In January
With the Expo Light Rail Line set to run through the Lantana Media Center in Santa Monica, the 12-acre business campus isn’t taking any chances when it comes to dealing with the construction noise starting in 2012.
Located at 3000 Olympic Blvd., the Center’s ownership is about to build a 1500-foot long wall to ensure its more than 40 tenants employing more than 1,500 people aren’t affected during the several years of construction that lie ahead. Jim Jacobsen, CEO of brokerage firm Industry Partners that manages the five building business campus as local operating partner for owner The Lionstone Group, said a recent letter from MTA stated the land Lantana Media Center uses to park 450 cars would be re-acquired in January to make way for the Expo Light Rail Line. Three buildings lie to the north of the Expo Line’s route through the middle of the campus – two buildings are located south of the Expo Line construction zone. Jacobsen said its Board of Directors was prepared and informed about MTA re-acquiring the land – and that’s why it began discussions with the City and planning its noise barrier wall about a year ago. Now that Phase Two of the Expo Line is becoming a reality, he said things are falling into place to deal with the construction process.
“The big challenge, obviously, is that MTA is so compartmentalized,” Jacobsen said. “There are so many moving pieces, parts, and contingencies. What we’re doing is instituting a variety of capital improvements that will make Lantana an even better place to work regardless of what does or does not happen.” Jacobsen said the Center and its tenants were thrilled the Expo Line would serve them once completed, but they understand construction must happen first. “To help alleviate those concerns, we’re going to build a sound wall that’s roughly 1500 feet long by 12 feet high,” he said. “We’re literally going to build this highly engineered wall at the cost of $3 – $4 million, so for the next five years we have certainty of what the experience is going to be for our tenants.”
Gabriela Collins, Government/Community Relations Manager for Exposition Construction Authority (ECA), said a noise barrier wall would only be built next to Lantana Media Center’s property at the end of construction with the purpose to block out sound from operating trains, as detailed in the Final Environmental Impact Report (FEIR). During construction, Collins said a number of sound mitigation measures would be implemented, opposed to building a noise barrier wall at the start of the construction period. She said these initiatives included disabling back-up alarms on machinery and vehicles and using workers with flags instead. Sounds blankets would also be used to buffer and muffle noise when necessary. “We also make sure we respond to any noise complaints or concerns and if necessary, adjust construction work hours to respond to that,” Collins said.
While the MTA is mandated to stay within construction noise limits detailed in the FEIR, Jacobsen said the Lantana Media Center had invested in its own sound studies to go one step further to ensure its tenants were not adversely affected during construction.
“We have our own acoustic team saying if you build this wall, you can mitigate the sound by x, if you add landscaping, you can mitigate it by y,” he said. “Even though we don’t expect it, we are prepared for the worst case scenario. We’re trying to quantify the unknown, and preparing for that will give people comfort.”
Since the Expo Line and its construction period will take away the parking lot, Jacobsen said the Center would hire another 25 valet staff to cope with the impacted parking.
Jacobsen said he encouraged other businesses that border the upcoming Expo Line construction zone to do their own research so they are not caught off guard.
When finally complete in 2015, the Expo Light Rail Line will connect Downtown Los Angeles to Downtown Santa Monica. The 15.2 mile line will comprise of 19 stations serving popular destinations like USC, Exposition Park, the Crenshaw District, Culver City, Palms, Cheviot Hills, Rancho Park, West Los Angeles, Bergamot Station, and Downtown Santa Monica. Phase One of the line will travel from Downtown Los Angeles to Culver City. Service on Phase One is expected to begin by the end of this year or early next year, with service to the Culver City station in 2012. Phase Two will extend the line out to Santa Monica and construction is scheduled to be completed by 2015.
In March 2011, the Exposition Construction Authority awarded the design-build contract for Phase 2 to Skanska-Rados Joint Venture. Major construction is scheduled to begin in early 2012.
The Exposition Construction Authority will hold a design update community meeting next Tuesday, Nov. 15, for Phase Two of the Expo Line project. Stakeholders will receive information on the design progress and will have the opportunity to view progress renderings. The format will include a short presentation from 6:30 p.m. to 7 p.m. followed by an open house session from 7 p.m. to 8 p.m. to facilitate dialogue and community input. The meeting will be held at the Santa Monica Civic Auditorium, located at 1855 Main Street, Santa Monica. For more information, visit www.buildexpo.org.
By Brenton Garen, Editor-In-Chief
In recent office leasing activity from Santa Monica, Imaging Advantage and Bolthouse Farms have each signed leases at 1351 4th Street, bringing the total occupancy of the 34k sf building to 93 percent. The property is owned by a local investor, who was repped by Scott Rigsby of Industry Partners in both transactions.
Imaging Advantage, a leading radiology transformation company, will relocate from 1505 Fourth St in Santa Monica after signing a five-year lease to occupy 6.6k sf. Bakersfield-based Bolthouse Farms, a market leader in baby carrot production, has signed a three-year lease for 6k sf on the second floor for its newly established Southern California product branding and consumer marketing operations.
Built in 1995, the four-story, exposed brick Craftsman-style building in Santa Monica's Central Business District features balconies and operable windows, self-contained HVAC and a keypad access secured entrance. Other tenants include Clearstone Venture Partners and Iconmobile.
Santa Monica remains one of the tightest office markets in the country, said Rigsby. Driving the market is the wide variety of traditional and creative office users that are drawn to the lifestyle, amenities and technological infrastructure that Santa Monica has to offer. It is a combination that is very difficult to replicate anywhere else in Southern California
On Sunday, Oct. 9, Los Angeles Times columnist Steve Lopez took the City of Los Angeles to task for subsidizing the move of the Gensler architectural firm from Santa Monica to downtown Los Angeles. In addition to the three-year tax holiday Los Angeles gives all relocating businesses, city officials used $1 million of federal anti-poverty funds to fund tenant improvements.
A week later, on Sunday the 16th, the Times, in an article assessing the office real estate market in Southern California, found that by a large margin Santa Monica, the city from which L.A. lured Gensler, had the strongest office market in the region, with the lowest vacancy rates and the highest rents. While L.A. needs to subsidize office development, developers are clamoring to build more offices in Santa Monica.
So what gives? Why does L.A. need to subsidize offices downtown when Santa Monica has developers banging on the door?
Readers might immediately respond that, "it's the beach" that makes Santa Monica more attractive, or the fact that it is part of the wealthy Westside of L.A. But from the long-term perspective, nothing was inevitable because of location. Beach or not, 30 years ago, Santa Monica was a dump.
In the '70s, the city's biggest employer, Douglas Aircraft, had departed for Long Beach, and other factories in the city's industrial core were shutting down. Malls in nearby cities had decimated the City's retail businesses. Santa Monica's once thriving downtown, notwithstanding a few high-rises that had been built on Ocean Avenue and a redevelopment agency-subsidized shopping mall, was dead. The Pier was so decrepit the City almost demolished it. Main Street in now trendy Ocean Park was a skid row.
In 1980 downtown L.A. was similarly depressed, but it had many advantages, most notably its being the hub for the region's transportation infrastructure, which grew over the next 30 years to include multiple rail connections including a subway to Hollywood and the San Fernando Valley, MetroLink commuter lines, and light rail connections to Long Beach, Pasadena and East L.A.
No, it wasn't location. The real difference that determined Santa Monica's success and L.A.'s failure to develop a self-sustaining, non-subsidized commercial real estate market was in governance. Thirty years ago left-wingers, riding the rent control movement, took control of Santa Monica politics and since then their policies have turned Santa Monica into a Mecca for business.
No, that's not what anyone expected 30 years ago when, as William Fulton documented in the first chapter of his seminal book about Southern California, The Reluctant Metropolis, Santa Monica became the first city to confront the Southern California "Growth Machine." As soon as the Left took control, the city council declared a moratorium on development and forced developers to negotiate public benefits before they could build.
Santa Monica followed that with citywide down-zoning, and although the City has approved much commercial development since 1981 -- nearly 10 million square feet -- when dealing with private developers negotiations have always focused on balancing the amount of development against what public benefits, often costly, the City can extract.
No surprise, but the development approval process is proverbially long and costly in Santa Monica. It goes without saying that Santa Monica has never given a tax holiday to any business moving into the city. Yet the developers keep coming.
Contrast that to downtown L.A., where it seems that nothing gets built without subsidy. Take the L.A. Live development by Anschutz Entertainment Group (AEG). While it's hard to sort all the goodies out, the trade magazine Building Trades News says AEG received $290 million in subsidies and tax breaks, in addition to the benefit of having the land for the project assembled by the City of L.A.'s redevelopment agency.
By now, the City of L.A. has been subsidizing development in downtown Los Angeles for generations. They're not going to stop, but you'd think that for all the money it has spent, L.A. would at least have got a district that could attract business on its own.
Yet no private developer has built an office tower in downtown L.A. for many years; in fact, older office buildings are being converted to apartments and condos. While that's a good use of old office buildings, in downtown Santa Monica a 1929 office building, without parking on-site, was rehabbed a few years ago and now fetches some of the highest rents in the region -- $6 per month per square foot.
So -- why do businesses want to do business in Santa Monica?
The answer is that Santa Monica has concentrated on public services to make the city a good place to live, and good places to live are also good places to work. While L.A. used redevelopment to subsidize office towers, which privatized the benefits and sucked development potential from the rest of downtown, Santa Monica has spent most of its capital on facilities that are open to the public or that benefit the public, such as parking structures, its bus system, parks, libraries, and affordable housing.
Santa Monica also down-zoned, which property owners opposed, but which had the effect of spreading the potential for development around to more properties at the same time that it reduced "supply." Down-zoning is supposed to make land worth less, but this made development rights more valuable.
You don't make anything more valuable by giving it away, which is what the City of L.A. does when it subsidizes oversized projects on favored developers' properties, which means that the values of everyone else's properties decline, discouraging investment.
An element of urban design is also involved: those subsidized skyscrapers in downtown L.A. place massive infrastructure demands on small footprints, turning surrounding streets into automobile-sewers. This further reduces value, since nobody chooses to work in such an environment.
You want a good business climate? Turn your city's government over to the Left.
By Frank Gruber, Columnist, Santa Monica Lookout News
SelectNY has signed a long-term lease to occupy 3,200 square feet in the 85,000 square foot Broadway Place, filling the last remaining space, announced Scott Rigsby of Industry Partners, leasing broker for landlord, The Lionstone Group.
Located in the heart of the Santa Monica Media District, Broadway Place is comprised of 17 individual historic adaptive reuse units, ranging in size from 3,000 to 16,000 square feet. Originally built in the 1950s for light industrial use, the exposed single bow truss buildings have been home to a variety of entertainment, new media and other creative firms for 20 years. The Lionstone Group acquired the property in 2004 from Beverly Hills-based Lexington Commercial Holdings. It is one of five adaptive reuse projects that it and Industry Partners have developed and leased in Santa Monica.
Rigsby, who, with Jim Jacobsen, represented the landlord in the lease with SelectNY, said, “Broadway Place is hard to replicate today. The high clear span space, polished concrete floors, operable windows and skylights allow for a very creative environment. The individual units allow each tenant to have its own identity, and, in a sense, it has been an incubator for many of the entertainment industry’s most successful companies.”
SelectNY is a leading independent branding and advertising group that specializes in the fashion and beauty sectors. Other tenants at Broadway Place include Human Worldwide, RKO Pictures, NALA Films, The Gary Group, On Music, House of Usher Films and Playboy Publishing.
EXPANSION: Beachbody signs $10 million lease for 91,000 square feet.
BEACHBODY LLC has expanded at Santa Monica's Lantana Entertainment
Media Campus. The fitness equipment maker known for its P90X workout added 36,500 square feet to its 3301 Exposition Blvd. headquarters. It signed a seven year lease valued at roughly $10 million for a total of 91,000 square feet.
"We're growing. Over the last two years, we grew from 200 to over 570 employees," said Jon Congdon, president of Beachbody. "We had nowhere to put our employees unless we got (more) space. We love the area and the campus environment."
Founded in 1998, Beachbody manufactures and markets in-home fitness and weight-loss equipment and programs, including the popular P90X and Hip Hop Abs programs.
The expanded space, previously vacant, will put the company on two floors in the Lantana South building, allowing Beachbody to build an exercise room to test new programs. It also brings the 130,000-square-foot building to 100 percent occupancy.
Lionstone Group, a Houston real estate investment firm, acquired the 12-acre, 460,000-square-foot complex or four low-rise office and studio production buildings in 2009 from Maguire Properties. Constructed in 2007, Lantana South is the newest building on the campus.
Earlier this year, Adconion Media Group, a digital media holding company, relocated its U.S. headquarters to 40,000 square feet in Lantana South. Other tenants in the complex include IMAX Corp., Dick Clark Productions and Revolution Studios.
Industry Partners' Jim Jacobsen and Scott Rigsby represented landlord Lionstone. Tony Morales and Tom Turley of Jones Lang LaSalle represented Beachbody.
Because it provides high-paying jobs and tends to recycle old commercial buildings for creative space, the entertainment industry is among the most desirable economic drivers for cities and states.
Digital technology revolutionized the way entertainment professionals work, bringing about a convergence of media, entertainment, and technology that allows creative companies to downsize their workspace and locate wherever they please.
"Technology has made a huge difference," observes Jim Jacobsen, a founding partner at Industry Partners, a Santa Monica, California, brokerage firm that specializes in creative space. One thing it did was facilitate decentralization of the studio system, he says. For example, JBFilms, owned by producer Jerry Bruckheimer, at one time required hundreds of thousands of square feet of space to accommodate its huge creative staff. Now both the JBFilms television and film divisions occupy just 30,000 square feet (2,800 sq m) on Tenth Street in Santa Monica, Jacobsen says.
Computer-generated imagery (CGI) and motion capture technologies enable filmmakers to create specials effects and insert actors into digitally created scenes, which reduces use of soundstages and shooting on location, points out Willie Schmidt, vice president of Studio Operations at Raleigh Studios Playa Vista. "Filmmakers can do so much more [in less space]," he says. These technologies allowed director James Cameron to produce about 85 percent of Avatar in 20,000 square feet (1,900 sq m) of space at the Hercules Campus at Playa Vista, a media and entertainment complex at the new 1,087-acre (440-ha) Playa Vista mixed-use community adjacent to Marina del Rey, California.
Given this flexibility, companies engaged in entertainment and new media activities are clustering in districts with interesting, edgy architecture and attractive lifestyle amenities and services.
Creative clusters are a highly desirable economic driver because they have a positive impact on a city’s economy and urban renewal goals. Entertainment companies provide high-paying jobs, with salaries of $60,000 and up. Also, like artists, they recycle old industrial buildings, often initiating the transition of deteriorating commercial districts to hip, desirable neighborhoods.
For real estate professionals, the key to creating more clusters is an understanding of the type of environments that attract creative companies, says Jeff Pion, vice president in the Century City/Beverly Hills office of Los Angeles–based CB Richard Ellis. "If you look at where creative companies are going, they have redeeming qualities and locations where people want to live and work," he says.
Communities in the Los Angeles Westside region are attractive because they offer desirable lifestyle amenities and proximity to a major international airline hub, Los Angeles International Airport. "It’s about lifestyle," Pion says. "Playa Vista has lots of outdoor amenities, and in Santa Monica you can bicycle on the beach. In addition, Los Angeles is situated at the gateway to the Pacific Rim and has a robust airport with service to anywhere in the world." He also notes that the region has significant intellectual capital, including seven academic institutions focused on the creative arts, and thus a large pool of skilled creative professionals.
Santa Monica has probably benefited from decentralization of the studio system more than any other Westside community. Pion notes that Santa Monica is attractive to the creative class because it offers a classic southern California lifestyle, a seaside location, recreational opportunities, and a variety of restaurants at which to entertain clients. It also is located near communities where many entertainment professionals reside, including Malibu, Brentwood, Pacific Palisades, and Venice.
A significant number of entertainment companies have already recycled existing commercial buildings throughout the city. For instance, actor Tom Hanks and producer Gary Goetzman, partners at Playtone Productions, repositioned the old Santa Monica Seafood Company building on Fifth Street as a home for their company. Santa Monica also has a growing creative cluster in the 140-acre (57-ha) area around Bergamot Station, a rail stop that served passengers until 1953. In 1994, the city converted the 1875 station into an art museum and the site’s five corrugated-steel warehouse buildings into art galleries.
The city plans to build a new train station to accommodate the Exposition Light Rail system, which will link Westside cities to downtown Los Angeles and is scheduled to reach Santa Monica in 2015. The new rail station will be the centerpiece of Bergamot Transit Village, a transit-oriented development (TOD) the city has planned for the area.
Hines, a Houston-based developer, paid $73 million for a 7.1-acre (2.9-ha) brownfield site on 26th Street at Olympic Boulevard in Santa Monica that was formerly occupied by a Paper Mate manufacturing plant and has proposed a public/private partnership with the city to develop the Bergamot Transit Village project. The proposed TOD would have about 1 million square feet (93,000 sq m) of residential, retail, and office space, and would provide open space for parks and nearly 2,000 subterranean parking spaces. The plan, however, has generated criticism from both residents and city council members, who contend that the project’s footprint is too large for a village and that its design is not appropriate for the city.
Local artists initiated the transition of the Bergamot Station area to a creative enclave more than 20 years ago, converting industrial buildings into studio and gallery space. Over the past decade, industrial and low-rise office buildings in the Bergamot area, which encompasses both the Bergamot Transit Village and mixed-use creative districts, have attracted a wide variety of other creative companies, including design, media, and entertainment firms. Building exteriors have been restored to their original condition and interiors redesigned as contemporary office and creative workspace, notes Peter James, senior strategist in the Santa Monica Planning Department. "Behind the frosted-glass windows and crumbling facades are state-of-the-art studios and incredible interiors."
Brian Curtner, a principal at Toronto’s Quadrangle Architects, who designed a new Toronto headquarters for Corus Entertainment, believes that creative people prefer to recycle older buildings because "they like taking something and giving it a new life." Architect Rick Cortez, principal at RACDB, a design/build firm in Culver City, California, that specializes in design and buildout of creative space, suggests that creative people value authenticity—evidence that something real took place before they arrived. Unlike conventional office tenants, he says, creative people easily visualize design concepts and understand that a sincere design involves the way materials are used, rather than just what is used, and value saving a 60-year-old window or one old beam. "If I can storyboard it and show them other buildings we designed, they pick up on it fast."
He explains that one- and two-story office buildings are attractive because creative people embrace interaction with the environment, and these buildings have walk-up entries, windows that open, and street-level parking. These people often bike to work and like entering the building from the landscape, Cortez notes. They also like outdoor space for patios, picnic tables, or other seating and recreational amenities, such as a volleyball court.
Cortez is currently working with Jacobsen, the leasing broker, to prepare space for new tenants at Lantana Entertainment Media Campus, a 12-acre (4.9-ha) property on Olympic and Exposition boulevards in Santa Monica. Formerly occupied by aerospace contractor McDonnell Douglas, the 530,000-square-foot (49,000-sq-m) complex includes five buildings, one of which is owned and occupied by the National Academy of Recording Arts and Sciences, presenter of the Grammy Awards. Tenants in the other buildings, which are owned by Houston investment firm Lionstone Group, already include Steven Bochco Productions (NYPD Blue, Hill Street Blues), Imax Corp., NBC Universal Television, and Revolution Studios.
Creative companies are using their workplace to create brand or identity, Pion says. "When people visit, they want the space to speak to who they are. They want nontraditional space, not [space] on the third floor of a high rise." These companies want to create a comfortable atmosphere where people want to come to work, he adds. Designs, therefore, have open floor plans and gathering places such as a café or a commissary, or outdoor seating to foster collaboration, discussions, and sharing of ideas.
Creative companies also want their facilities to reflect a commitment to sustainability, Pion says. "Some LEED [Leadership in Energy and Environmental Design–certified facilities] are going in, and others are building to LEED criteria but not seeking certification," he notes.
"Our office space says much about us and the way we work," says Ben Hampshire, managing director for the Los Angeles–area office of the Mill, a London-based special effects company. "Our facility provides an inspirational environment to work in and blend. We want open space where people can get together and collaborate, and it has to be visually stunning.
"Creativity is incredibility important," he continues. "We have 60 employees, and everyone is on the same floor to facilitate communication. Separation slows down communication and prevents ‘happy accidents’—those unplanned things that happen in passing. Good stuff comes from communication. Communication happens when people aren’t separated."
Shared space and collaboration are inherent in these organizations, says Curtner. "The mandate at Corus was to bring people out of their silos so they can collaborate across markets." Corus owns several television and radio stations, as well as animation and children’s book publishing divisions. The key for designers is an understanding of what makes a space a creative environment, as well as supports brand or identity and meets a company’s goals and objectives, he says. "It’s what works for the people inside [the building]—inspires them and is uplifting."
The three-story, 400,000-square-foot (37,000-sq-m) Corus Quay Building in Toronto has a five-story atrium that takes advantage of its waterfront view and provides lots of space and natural light as relief from cubicle workspaces. Concrete floors and exposed trusses provide a dramatic contrast to the bright, colorful interiors and whimsical design, furnishings, and finishing materials. Plus, foosball tables and a slide from the third floor to the first help create a playful, relaxed atmosphere that engenders communication and creativity, Curtner says.
In Santa Monica, the Mill has outgrown its facility and is moving into a 1950s-era manufacturing building at the Blackwelder industrial complex in Culver City, which has been repurposed as creative space by Cortez. The Blackwelder property has 25 small, architecturally distinct buildings, each of which gives the tenant an opportunity to create a unique identity, notes Jacobsen, the property’s leasing broker.
The Mill’s new facility has an 18,000-square-foot (1,700-sq-m) floor plate and a ceiling open to the rafters, exposing trusses and allowing plenty of natural light to enter. Cortez added a 6,000-square-foot (560-sq-m) mezzanine that will be used for meeting space and a rooftop deck for employee gatherings and parties.
Pion is charged with leasing the 452,000 square feet (42,000 sq m) of commercial space at the Hercules Campus in Playa Vista. The 28.2-acre (11.4-ha) property has characteristics creative companies prefer, such as architecturally interesting buildings, a location near the beach and airport, and access to recreational and retail amenities at Playa Vista.
The Hercules Campus has ten deteriorating, 1940s-era office buildings that formerly served as the headquarters for Hughes Aircraft Company. The buildings are being renovated and repositioned as office and creative space for entertainment and high-tech media companies. The campus also has a seven-story redwood hangar that was home to Howard Hughes’s H-4 Hercules—better known as the Spruce Goose—an experimental wooden airplane. This facility has been converted into a movie studio operated by Raleigh Studios.
Wayne Ratkovich, president and CEO of the Ratkovich Company, which owns the Hercules Campus, points out that creative tenants have goals different from those of conventional office tenants. "Creatives like a casual environment where they can bring a dog to work," he says. "They want to know if the wireless is hot outside and if there are picnic tables, a dog park nearby, and recreation. This is stuff we don’t hear from lawyers and other traditional tenants." This concept of the workplace as a lifestyle is known as the "Google effect," he notes.
"[Southern California] is blessed to have the entertainment industry because even in a poor economy, it thrives," he adds. "We are preparing our buildings to receive those types of tenants." Landlords who want to work with creative tenants need to listen carefully to what they want, he says.
The Google effect is not confined to the West Coast, but is spreading nationwide. For instance, a mix of artists and high-tech, media, design, and entertainment entrepreneurs has turned old warehouses in downtown Phoenix into creative space, notes Kimber Lanning, executive director of Local First Arizona, a business promotion organization. She cites a facility occupied by Moses Anshell, a marketing and advertising firm, as an example. "It doesn’t feel like a workplace," Lanning says. "They have ping-pong, showers, and dogs come to work."
Phoenix also is experimenting with co-op creative space, such as CO+HOOTS, which provides entrepreneurs engaged in unrelated creative activities an affordable workspace and the opportunity to brainstorm with like-minded people.
Likewise, an empty 166,000-square-foot (15,400-sq-m) warehouse in downtown Detroit that once served as a Chrysler distribution center was a production studio for ABC’s Detroit 1-8-7 series.
Since publication of Richard Florida’s book The Rise of the Creative Class in 2002, more and more state and local governments recognize the value of entertainment and media companies as economic drivers and are providing incentives to attract and support them.
Curtner says Toronto accepted and acted on Florida’s concept of the creative class and its importance to a city. "The city is invested in creative industries and will go out of the way to attract these organizations," he says, noting that Toronto put up the $159.5 million needed to build the Corus facility.
Even with perfect weather and an attractive location, Santa Monica is not taking its advantages for granted, says James; the city continues to look for ways to attract and support its creative community. Santa Monica built a high-bandwidth fiber optics network, which it initially intended just for city use, Jones notes, but the network’s tremendous capacity has enabled the city to offer local businesses the opportunity to tap into this resource at a heavily discounted rate.
Because entertainment and new media companies require high bandwidth to transport large digital files to clients and media outlets, this constitutes an extraordinary draw for creative enterprises. The network’s ten-gigabyte capacity is ten times that provided by commercial telecommunications firms and costs less, says Jory Wolf, Santa Monica’s chief information officer. In addition, companies on the city’s network receive bundled internet service provider rates.
The film sector is a premium economic driver not only because it provides high-paying jobs, but also because it has a greater impact on the local economy than other business types, says Nick Smerigan, chief operating officer at Mesa del Sol’s Albuquerque Studios in New Mexico. The film industry is a massive consumer, he says, spending huge amounts of money on materials to build sets and to house, feed, and entertain staff. According to Smerigan, every dollar spent on a film production generates $11 to $12 as it circulates through the local economy, compared with $2 to $3 for other business types.
With such high stakes, several states, including New Mexico, Louisiana, Georgia, Massachusetts, Texas, and Michigan, provide tax credits and outright cash rebates for in-state film production, and each has progressively upped the ante to gain a competitive advantage. Michigan currently tops the list, offering filmmakers up to 42 percent in tax credits for film production costs in the state, though the average is 35 percent, according to Christopher Baum, senior vice president for sales and marketing at Film Detroit, a division of the Detroit Metro Convention & Visitors Bureau dedicated to supporting film and television production in the three-county region.
"Creative clusters can’t be forced," contends Mike Daly, president of Mesa del Sol. Filmmakers go where there is a pool of skilled, creative professionals. Therefore, state and local governments are attempting to grow creative clusters by establishing programs to train workers for industry jobs and providing incentives to build and support facilities that offer services filmmakers require.
New Mexico provides a 25 percent tax incentive for films produced in the state. In addition, the University of New Mexico has established a film and media department and is building a new media campus across the street from Albuquerque Studios; a vocational college to train line crew is also in the works. The long-term plan for Albuquerque Studios calls for a studio village, with an estimated 50,000 square feet (4,600-sq-m) of retail space to support about 2,000 production workers.
The Michigan State Employees’ Retirement System invested $30 million in Raleigh Michigan Studios, an $80 million media complex in Pontiac that includes a 175,000-square-foot (16,300-sq-m) state-of-the-art film studio with nine soundstages and a defunct 360,000-square-foot (33,000-sq-m) General Motors office campus repositioned as creative space.
This project is injecting new life into a city that had fallen on hard times, notes Baum. With completion of the studio, he says, "Pontiac will take off like a rocket." The new studio will make film production in the city a year-round business and generate about 1,000 new jobs, Baum says.
Detroit leaders, in fact, are extremely pleased with the performance of Michigan’s film incentive program. A recent analysis by Ernst & Young’s Washington, D.C., office found that in 2010 alone, the industry created 3,860 full-time jobs in Michigan with an average salary of $53,700 a year and generated an estimated $50 million impact on retail sales statewide, returning $6 for every $1 spent.
In reviewing the report, Larry Alexander, president and CEO of the Detroit Metro Convention & Visitors Bureau, noted that an $84.7 million investment had yielded over a half billion dollars in economic activity. "Sounds like a pretty good deal to us," he said.
By Patricia Kirk
Despite a mandate to provide sufficient quantities of land suitable to accommodate existing, new and relocating industrial firms, an alarmingly large percentage of the industrial stock in Los Angeles is disappearing. More than one fourth of industrial land is already used for non industrial purposes such as retail and multifamily, according to a report published by the Department of City Planning and the Community Redevelopment more than THREE YEARS ago, suggesting that the number may be much larger today.
Blackwelder is an example of the creative reuse and reinvention of industrial space as industrial space in West Los Angeles’ Light Manufacturing District. Blackwelder successfully preserves the industrial character of the individual structures while taking advantage of the high ceilings and wide clearances required for one of Los Angeles’ most critical industrial uses…studio and production. Where welders, cabinet and furniture manufactures once plied their trade is now home to such entertainment companies as The Mill, Bandito Films, On Board Entertainment and Hungryman.
Daniel Miller, Hollywood Reporter (moderator)
Jim Jacobsen, Industry Partners
Mark Potter, Alcion
Jonathan Genton, Genton Property
Dan Duffy, Hungryman
Robin Sheinfield, The Mill (invited)
Open Road closes seven-year $2.5 million deal for top-floor headquarters.
A new motion picture studio founded by Regal Entertainment Group and AMC Entertainment Group, Inc. is establishing its headquarters in Brentwood. Open Road Films is setting up shop at12301 Wilshire Blvd. after signing a seven yearlease, valued at just under $2.5 million. Headed by former Lions Gate Entertainment Group and Weinstein Co. executive Tom Ortenberg, the studio will occupy about half of the top floor, or approximately 9,000 square feet of the newly renovated six-story building located between Centinela Avenue and Bundy Drive.
Eager to ensure they have an adequate supply of films to screen, Knoxville, Tenn.- based Regal and Kansas City, Mo.-based AMC established Open Road as some of the major studios narrow the window between theatrical release and a film’s appearance on home entertainment platforms. DirecTV recently announced it will offer a Sony film later this year 60 days after release.
Open Road will open its doors June 1, with space for 45 people. The company will buy small film projects at any stage of production, from scripts to completed movies. It plans to release up to 10 movies a year, with its first film, still undisclosed, coming out later this year.
Built in 1976, the building formerly known as Wilshire Pacific Plaza was acquired in 2008 by a subsidiary of TPMC Realty Corp. The Dallas-based private equity firm completed a $5 million renovation last year.
“Representing a large tenant like this, we had 15 different options to look at,” said Travis Landrum, partner at Industry Partners, who represented Open Road. “It was a great economic package: belowmarket, long-term deal that met all their needs and was a cool creative space.”
Also representing Open Road was Industry Partners’ Andrew Jennison. The landlord was represented by Christian Holland of Coldwell Banker Commercial Westmac.
Industry Partners’ offices at the Lantana campus in Santa Monica are shrinking—and that’s a good thing, we’re told by Travis Landrum, Jim Jacobsen, and Scott Rigsby (Andrew Jennison was off skiing). Yesterday, work began to add showers and expand the building’s café as part of a lease for Adconion Media Group. To make room, one of Industry Partners’ office walls will be pushed in about eight feet (now that’s commitment). The LEED Gold building is one of five properties on the 460k SF campus. Industry Partners is the local operating partner for Lantana owner The Lionstone Group. This means it’s the Houston-based private real estate investment firm’s local presence, handling not just leasing but also managing architecture and construction. The building (which rode along 60% leased since in was built in ‘08) is now 100% leased.
The extended team includes architect John Robinson of RAC Design Build and general contractor Keith Austin of Gardner Austin, data jockey Shawn Thompson of Thompson Professional Services, managing broker Brett Voris, and office manager/den mother Dina Proctor. Lantana had always been viewed as short-term production space for entertainment tenants—but that’s changing. Industry Partners started renewing existing tenants who were on month-to-month leases (mainly in the Lantana Center building) and extending them to three- to 10-years. The firm did preemptive construction before a tenant even came into play, centered on a $2.5M renovation of the building that included redoing the dark lobby to put in glass and an art wall, improving the lighting, adding a café, upgrading the landscaping with native, drought tolerant plants plus a California oak, and preparing spec spaces.
The firm specializes in Westside creative space. It appears the Westwide, in general, is poised for a pickup—Lantana itself has increased to 96% occupied from 72% in less than a year, with 170k SF leased in the past 12 months. A year ago, tenants in the 2,500 to 5,000 SF size range had 25 spaces to pick from. Today, 10. Interest is getting “cutthroat” with multiple people stacked up on a building, looking at the same two or three spaces. The biggest drivers are a new Santa Monica land use plan that defines where development is allowed, increased residential in areas like Santa Monica and Culver City, and the Expo light rail line that will connect downtown to the Westside—with a stop on La Cienega, where Industry Partners’ listings include the 25-building Blackwelder creative campus. It’s going to expand the areas where people are willing to have offices.
Before launching Industry Partners, Jim was co-president and partner of Lee & Associates/West LA, and Scott was a VP, while Travis and Andrew came from Madison Partners. Starting a new firm meant Industry Partners was able to wipe the board clean. They started with a cloud computing platform and agreed upfront to be “super-collaborators.” Info goes into a shared database, then everybody corrects one another and argues about whose data is more accurate. (Sounds like Wikipedia for leasing.)
London, England-based Escape Studios has established its first US office after signing a deal for 8k sf of office space at Yahoo! Center, located at 2400 Broadway in Santa Monica. The five-year lease has a total value of $1.4 mil, which works out to an average of $2.92/sf/mo.
Escape Studios, one of the most successful computer graphics educational academies in the world, trains and places students in jobs in visual effects and 3D animation in film, television, video games and advertising. Former LucasFilm Director of Training Tad Leckman serves as Academic Director for the new U.S. campus.
Travis Landrum of Industry Partners represented the tenant. Chris Houge of LA Realty Partners repped the landlord, Equity Office.
“Escape was looking for a creative environment that was not only conducive to learning, but space that would mirror the functionality and style of the industry’s best post production houses,” says Landrum. “The space, which was formerly used by Apple, Inc. as a training center, provided everything Escape needed. Plus Yahoo! Center was able to accommodate the high parking requirement of a learning facility of this type.”
Sunny Santa Monica, Calif., Stands Out in Luring the Talent That ‘Does Not Like to Work
in High-Rise Office Buildings’
Office occupancy rates in this seaside city have soared in an otherwise lackluster Los Angeles market, fueled by an entertainment-industry expansion. The move is part of an uneven recovery in the property market benefiting certain pockets of cities and metropolitan areas.
Santa Monica’s office-vacancy rate fell to 11.5% in the fourth quarter, from 14.3% in the same period a year earlier, while vacancies for overall Los Angeles County remained at a recessionary peak of 17%, according to estimates by Grubb & Ellis Co., a real-estate-brokerage firm based in Santa Ana, Calif.
Santa Monica’s vacancies peaked at 16.2% in the first quarter of 2010. In the fourth quarter, Santa Monica led the way in Los Angeles County, ending 12 consecutive quarters of adding more office space to the market than its net new leases, according to Grubb & Ellis.
The Santa Monica market and adjoining areas of Los Angeles’s Westside have benefited from a trend of entertainment firms—many specializing in technical aspects such as film postproduction—flocking there during 2010, in large part because so many Hollywood workers live near the beach. Online game maker Riot Games Inc., for instance, announced in 2010 it would move its headquarters from Culver City, which is farther inland, to Santa Monica this spring in part to be closer to employees and attract new talent.
“In the greater L.A. area, few municipalities are as desirable for living and working,” said BrandonBeck, chief executive of Riot Games, which has grown to more than 200 employees from 50 a year ago and has openings for nearly 100 more positions. Mr. Beck said the game maker is relocating to 60,000 square feet in Santa Monica’s Yahoo Center campus from 23,000 square feet in Culver City.
Santa Monica also is filled with low-rise buildings such as the fully leased Lantana Media Campus that entertainment companies prefer, industry officials say. “That kind of talent does not like to work in high-rise office buildings,” said Jeffrey Pion, an executive vice president of CB Richard Ellis, a brokerage firm based in Los Angeles.
Nationally, the office market began to recover in 2010, with the U.S. vacancy rate dipping to 17.7% in the fourth quarter from the recession’s peak of 17.9% in both the first and second quarters, according to Grubb & Ellis. In 2009’s fourth quarter, the rate was 17.4%.
The national market has been lifted by a return to job growth, although the nearly one million jobs added in 2010 contrasts with nearly nine million lost in the downturn, said Grubb & Ellis Chief Economist Bob Bach.
A number of other markets outperformed the overall market. In the San Francisco Bay area, Palo Alto’s office vacancy rate of 9.9% in the fourth quarter was lower than those of most other cities, including San Francisco’s 15.5%, according to CB Richard Ellis. The main reason, brokers say, is that Palo Alto is home to fast-growing tech firms.
Elsewhere, CB Richard Ellis said, the financial-market rebound helped pull New York’s vacancy rate to 8.4% in the fourth quarter, while biotechnology growth helped reduce vacancies in the middle area of Cambridge, Mass., to 6%, compared with a Boston metro rate of 13%. In the Pittsburgh suburbs of Beaver and Butler counties, growth in energy and technology reduced vacancies to 4%, compared with a metro rate of 11.2%.
Modest price increases are being reported in some of these markets, including in Santa Monica, where asking rents for the most-expensive spaces rose 0.5% to $3.26 a square foot in the fourth quarter, from $3.07 a year earlier, while the most-expensive rents for Los Angeles County fell 1% over the same time, according to Grubb & Ellis. Santa Monica rents had fallen by about one-half since 2007.
“Every week we notice less space” on the market, said Jim Jacobsen, founder of Industry Partners, a real-estate brokerage firm in Santa Monica. Mr. Jacobsen added during a tour of properties last week that the market started coming back early last year in tandem with a recovery in national advertising, which helps support the entertainment industry.
At Equity Office, which manages three million square feet of office space in Santa Monica, officials say a drop in their portfolio from a vacancy rate as high as 15% in 2010 to about 12% has prompted it to start scaling back tenant concessions, such as breaks on parking. But with many surrounding markets still soft, construction on some planned new buildings in the area may take another “two to three years,” said Frank Campbell, market managing director for Equity Office, a Chicago-based affiliate of investment company Blackstone Group.
The market has heated enough to support some big acquisitions. In February, Broadreach Capital Markets sold Tribeca West, a 150,000-square-foot campus in West Los Angeles, to Santa Monica-based Ocean West Capital Partners for $58 million. Broadreach, based in Los Angeles, had acquired the property in 2005 for $30 million and added amenities such as wireless connections and increased garden space to appeal to postproduction companies, said David Simon, managing director of Broadreach. “These guys like to sit outside with their laptop computers,” Mr. Simon said.
They also like to be near like-minded companies. The main reason London-based Escape Studios announced last month it was opening its first U.S. computer-graphics school, in Santa Monica, was to be closer to the Hollywood postproduction concerns there, said Dom Davenport, Escape’s founder and CEO. The firm signed a five-year lease for 7,986 square feet valued at $1.4 million, Industry Partners said.
By Jim Carlton
Game Show Network has renewed an approximately 50,000-square-foot lease at the Arboretum Courtyard office complex, located at 2150 Colorado Blvd. in Santa Monica. The producer of nationally televised game shows, including “Wheel of Fortune” and “Jeopardy,” inked a 7.5-year deal at the two-building, 143,555-square-foot property, which was built in 1998.
Cresa Partners’ Dave Toomey and Brian Davies represented the tenant in the lease transaction, and Scott Rigsby and Jim Jacobsen of Industry Partners represented the landlord, Equity Office. An Arboretum Courtyard tenant since 2002, GSN currently occupies all but a portion of the ground floor of one of the four-story, Class A buildings. Other notable tenants in the complex include Google, Fentress Architects and Business.com.
SANTA MONICA, CA-The Game Show Network has signed a 50,000-square-foot lease renewal at the Arboretum Courtyard here, one of a series of recently inked office leases in L.A. County totaling nearly 129,000 square feet. The other deals were in Downtown L.A. and Manhattan Beach.
The Game Show Network, which is a producer of nationally televised game shows including “Wheel of Fortune” and “Jeopardy,” renewed in a seven and-a-half year deal at the Arboretum Courtyard, at 2150 Colorado Blvd., according to Scott Rigsby of Industry Partners, which represented landlord Equity Office in the transaction. “Santa Monica has become home to an increasing number of high profile entertainment and technology companies, and the Arboretum Courtyard is located in the heart of the city’s entertainment and media corridor,” said Rigsby, who along with partner Jim Jacobsen represented Equity Office. The tenant was represented by Dave Toomey and Brian Davies of Cresa Partners.
GSN has been a tenant at Arboretum Courtyard since 2002 when it subleased 35,000 of space from IBM. It transitioned into a direct lease with Equity Office in 2006. GSN occupies all but a portion of the ground floor of one of the two four-story buildings comprising Arboretum Courtyard. Financial terms of the latest lease were not disclosed.
Built in 1998, Arboretum Courtyard is a two-building class A office complex totaling 143,555 rentable square feet and features a landscaped courtyard, a reflecting pool, usable balconies and operable windows. Other notable tenants in the complex include Google, Libbie Wealth Management, Fentress Architects, Business.com, and Del Shaw Moonves.
The law firm of Holland & Knight has signed a 41,664-square-foot lease at Mellon Bank Center at 400 S. Hope St. in Downtown Los Angeles. Holland & Knight, a Top 100 Am Law (American Lawyer) international law firm, is relocating its Los Angeles offices after several years at US Bank Tower, also in Downtown L.A. The law firm was represented by Transwestern executive managing director Jonathan Larsen. The landlord was represented by John Ollen, managing director of Leasing for Tishman Speyer. The lease term is for seven years, with an approximate value of $10.4 million.
Larsen said that Holland & Knight achieved a below-market deal abd significant monument signage at Mellon Bank. In addition, the property recently completed a lobby renovation, repositioning the building for a higher profile, he added. The renovated space is designed provide for the office’s approximately 80 lawyers and staff, and to meet future needs. Holland & Knight Los Angeles executive partner Jerry Levine said that the move “not only demonstrates our firm’s commitment to the L.A. community and our clients, but will allow for growth in our office and on the West Coast.”
The law firm of Haight Brown & Bonesteel signed a 10-year, 27,280-square-foot sublease from Jones Day at City National Plaza, at 555 S. Flower St. in Downtown Los Angeles. The new space will be used for the company’s corporate headquarters. Haight Brown & Bonesteel, a leading law firm in California for more than 70 years, previously occupied space in West Los Angeles.
The law firm was represented by Jones Lang LaSalle’s team of managing director Tony Morales and SVP Darren Eades. Jones Day was represented by Eric Duncanson of Cushman & Wakefield.
Chris Stouder, managing partner of Haight Brown & Bonesteel, said that moving downtown “has been part of our strategic expansion plan since I became managing partner.” Added Stouder: “The increasing need to be in a location that allows us to attract numerous, highly qualified professionals makes the timing right for this move. We need to be located in the heart of the city.”
Currently, approximately 223,295 square feet of sublease office space is available in Downtown Los Angeles, according to Jones Lang LaSalle Research. Eades said that in searching for sublease space for law firms, “Due to the lack of second generation law firm space, it is critical to know how all firms are currently utilizing their space in order to take a proactive approach to identifying alternatives for your client.”
In deals negotiated by JLL in Manhattan Beach, tenants signed leases for approximately 10,000 square feet at Manhattan Towers, a class A, two-building complex totalling 309,705 square feet at 1230 and 1240 Rosecrans Ave. Jones Lang LaSalle managing directors Chris Strickfaden and Steve Solomon, along with Mark Mattis of PM Realty Group, represented the landlord, Wells REIT II, and are responsible for leasing at the complex.
The leases signed included: APEX signed a five-year lease for 3,530 square feet and was represented by Gary Horwitz of Jones Lang LaSalle. Oppenheimer & Co. for 3,039 square feet for five years to relocate its regional office from another building in Manhattan Beach. The company represented itself in the transaction. Spolin Silverman Cohen & Bossserman signed for five years for 2,061 square feet in a move from Santa Monica. The firm was represented by John Ottinger of Tenant Advisors Corp. Edward S. Jones signed a three-year renewal for approximately 1,000 square feet and represented itself.
By Bob Howard
The Game Show Network LLC has renewed its lease for roughly 50,000 square feet of headquarters space at 2150 Colorado Blvd. in Santa Monica. Terms of the seven and a half year deal with landlord Equity Office were not disclosed.
The company, which maintains a stable of game shows that includes Wheel of Fortune and Jeopardy!, has maintained offices at the property, called Arboretum Courtyard, since 2002. The 143,555-square-foot complex is home to several media tenants, including Google and Business.com.
Among Game Show Network’s televised shows are Deal or No Deal and The Newlywed Game. The company also produces games for its website, mobile phones and other interactive media platforms. The company’s eponymous cable channel, which airs reruns of game shows including Jeopardy!, carries original content, including updated and new game shows. Equity Office was represented by Scott Rigsby and Jim Jacobsen of commercial real estate brokerage Industry Partners, and Dave Toomey and Brian Davies of Cresa Partners represented Game Show Network.
by Daniel Miller
The blue people are on the move.
Director James Cameron and 20th Century Fox have signed a lease for studio and office space at MBS Media Campus in Manhattan Beach and will use the facility for the motion capture photography and high-tech production on two highly anticipated sequels to Avatar, the biggest blockbuster of all time.
Cameron confirmed to THR the deal for space at the 1600 Rosecrans Ave. property, formerly known as Manhattan Beach Studios, in a brief interview at the National Association of Broadcasters show in Las Vegas on Monday. The length and dollar value of the lease are not known.
The 580,000-square-foot studio and office facility, which houses 15 soundstages, also is likely to become the new home of Cameron’s company, Lightstorm Entertainment. Sources said Cameron has been in the market for as much as 90,000 square feet of production and office space. Production of the original Avatar was centered in Playa Vista at a property now known as the Hercules Campus, named for the Spruce Goose, the mammoth airplane built there by Howard Hughes in the 1940s. During the film’s four years of production, Lightstorm remained headquartered at a threestory, 26,277-square-foot office building Santa Monica, but Cameron spent most of his time in Playa Vista.
If things go as planned, Cameron would consolidate his offices and studio into one location -- down the coast from his Malibu home. His Santa Monica office building is listed for sale for $11.85 million by brokerage CB Richard Ellis Group. Entertainment office specialist Jim Jacobsen of Industry Partners, who is not involved in selling the building, said there have been several offers made for the Santa Monica Boulevard property but a deal has not been struck. In a brief interview with THR on Monday following his keynote address at NAB, Cameron did not provide details on whether Lightstorm would also be relocated.
Completion of the Manhattan Beach deal with Raleigh Studios, which operates the property for its owner, private equity firm Carlyle Group, ends a long search for Avatar’s new home. Cameron considered returning to the Hercules site, now owned by the Ratkovich Co., which purchased the property last year for $32.4 million, but the timing was a problem because the aging facility is undergoing renovations throughout this year. Ratkovich Co. told THR: “Lightstorm Entertainment expressed interest…however we are not currently in negotiations.”
By Carolyn Giardina
SANTA MONICA, CA – London, England-based Escape Studios has established its first U.S. presence at the Yahoo! Center in Santa Monica after signing a five-year lease for 7,986 square feet in a transaction valued at $1.4 million, according to Travis Landrum of Industry Partners who represented the tenant.
Escape Studios, one of the most successful computer graphics educational academies in the world, trains and places students in jobs in visual effects and 3D animation in film, television, video games and advertising. Former LucasFilm Director of Training Tad Leckman serves as Academic Director for the new U.S. campus.
“Escape was looking for a creative environment that was not only conducive to learning, but space that would mirror the functionality and style of the industry’s best post production houses,” says Landrum. “The space, which was formerly used by Apple, Inc. as a training center, provided everything Escape needed. Plus Yahoo! Center was able to accommodate the high parking requirement of a learning facility of this type.”
Encompassing an entire city block Yahoo! Center is a highly amenitized 15-acre Class A office campus comprised of six low-rise office buildings totaling 1.2 million square feet situated around a 3.5 acre park.
LA brokerage veteran Jim Jacobsen has formed Industry Partners, an entrepreneurial real estate services firm specializing in the representation of landlords, tenants and developers with a particular focus on creative work environments and adaptive reuse projects in West Los Angeles. Jacobsen, the former co-president and partner of Lee & Associates/West Los Angeles, has designed Industry Partners as a departure from the typical real estate brokerage firm.
In addition to traditional brokerage services, Industry Partners, which recently acted as local operating partner for The Lionstone Group in the sale of a ground leasehold interest on 1800 Stewart St in Santa Monica to bio tech firm Agensys, may also team with its clients to acquire, redevelop or provide financing if needed on a project, according to Jacobsen.
“What will distinguish Industry Partners from other real estate brokerages will be our integrated team approach that, depending on the situation, may require us to act as more than brokers to fulfill a client need,” he says. “We’re starting off with some exceptional people who have the freedom to use their broad and diverse base of experience and expertise to do what makes the most sense for the situation.”
Jacobsen’s experience includes the sale of the 463k sf Lantana Media Center to Lionstone Group and the 400k sf “Post Office Building” in Playa Vista. With an extensive background in adaptive reuse, Jacobsen has converted dozens of obsolete warehouses into studio and office space for the entertainment industry. He is also credited with eight of the 10 properties cited by the City of Santa Monica as exemplary models of quality, eco-friendly construction.
Joining Jacobsen at Industry Partners is former Lee & Associates/West Los Angeles vice president Scott Rigsby, and former L.A. Realty Partner Directors Andrew Jennison and Travis Landrum.
One of Lee & Associates top-ranked producers, Rigsby was responsible for closing approximately 1 msf of creative office space transactions in West Los Angeles for such clients as Disney, 20th Century Fox, Miramax, Activision and Dreamworks. Rigsby has extensive office and creative space experience, as well as expertise in
the areas of development, design and space planning.
Jennison, who specializes in all aspects of office leasing and investment sales, brings to Industry Partners a particular expertise in property valuations, lease analysis, strategic planning, cost reduction analysis and marketing. Jennison has leased more than 3 msf of office space and brokered investments sales exceeding $300 mil in value.
Landrum represents tenants, landlords, and investors on all aspects of their real estate requirements. Previously, he was with Madison Realty Partners and CB Richard Ellis where he worked in the Los Angeles Private Client group in Boulder.
Jim Jacobsen, one of the most successful commercial real estate brokers on Los Angeles’ Westside has formed Industry Partners, an entrepreneurial real estate services firm specializing in the representation of landlords, tenants and developers with a particular focus on creative work environments and adaptive reuse projects in West Los Angeles.
“Industry Partners is not going to be your father’s real estate firm,” says Jacobsen who at 39, has been in the real estate industry for nearly two decades. “There is an energy and edginess that is unique to the Westside as well as to those who work or want to be here, and Industry Partners will reflect that in the different ways we will tackle issues for the building owner, the tenant and the community.”
In addition to traditional brokerage services, Industry Partners, which recently acted as local operating partner for The Lionstone Group in the sale of a ground leasehold interest on 1800 Stewart Street in Santa Monica to bio tech firm Agensys, may also team with its clients to acquire, redevelop or provide financing if needed on a project, according to Jacobsen.
“What will distinguish Industry Partners from other real estate brokerages will be our integrated team approach, that depending on the situation, may require us to act as more than brokers to fulfill a client need,” he says. “We’re starting off with some exceptional people who have the freedom to use their broad and diverse base of experience and expertise to do what makes the most sense for the situation.”
That experience starts with Jacobsen, who has closed some of the largest landlord transactions on the Westside including the sale of the 463,000 square-foot Lantana Media Center to Lionstone Group and the400,000 square-foot “Post Office Building” in Playa Vista. With an extensive background in adaptive reuse, Jacobsen has converted dozens of obsolete warehouses into studio and office space for the entertainment industry. He is also credited with eight of the 10 properties cited by the City of Santa Monica as exemplary models of quality, eco-friendly construction. Jim graduated from ULCA in 1992 and serves on the board of the Los Angeles Commercial Real Estate Association and is a member of the Urban Land Institute.
Joining Jacobsen at Industry Partners is former Lee & Associates/West Los Angeles vice president Scott Rigsby, and former L.A. Realty Partner Directors Andrew Jennison and Travis Landrum.
One of Lee & Associates top-ranked producers, Rigsby was responsible for closing approximately one million square feet of creative office space transactions in West Los Angeles for such clients as Disney, 20th Century Fox, Miramax, Activision and Dreamworks. Rigsby has extensive office and creative space experience, as well as expertise in the areas of development, design and space planning. He graduated from the University of Arizona with a degree in Finance. Jennison, who specializes in all aspects of office leasing and investment sales, brings to Industry Partners a particular expertise in property valuations, lease analysis, strategic planning, cost reduction analysis and marketing. Jennison has leased more than three million square feet of office space and brokered investments sales exceeding $300 million in value. He received
a BA in Business and International Relations with an emphasis in Business Administration from the University of Southern California in 1999.
Landrum represents tenants, landlords, and investors on all aspects of their real estate requirements. Previously, he was with Madison Realty Partners and CB Richard Ellis where he worked in the Los Angeles Private Client group. Landrum received a BS in Business Administration, with an emphasis in Finance, from the University of Colorado in Boulder.d on by production companies, including Buffy the Vampire Slayer.
Agensys Inc broke ground this week on its 160k SF office/R&D/ manufacturing/lab facility at 1800 Stewart in Santa Monica. Studley corporate managing director Matt Brainard, who repped Agensys, tells us the completed development will be valued in excess of $95M.
Calling the deal a milestone in establishing the biotech business on the Westside, Matt anticipates it’ll draw more such users. Agensys, a subsidiary of Astellas Pharma, conducts R&D on therapeutic human monoclonal antibodies and antibody drug conjugates for the treatment of cancer. (Don’t worry, doctors are just as confused by terms like triple net and BIM.) It was “far from your typical deal,” he says, in that it involved the purchase of a ground lease from The Lionstone Group and a development agreement with the City of Santa Monica, also the landowner. The term of the ground lease was extended to accommodate the new development.
The property’s occupied by two structures totaling about 127k SF. They’re demolishing those, scraping the site, and increasing the lot’s building coverage. While developing anything in Santa Monica is a challenge, Studley had a team of specialized consultants and collectively, they were able to navigate through the City’s system and get through all the hurdles within one year. Designed by HLW, the Agensys project will be LEED certified and include a commissary, clean rooms and corporate offices, as well as a pocket park, sculpture garden, and café open to the public.
Lionstone planned to renovate the buildings as creative office space. It was repped by Industry Partners’ Jim Jacobsen and Scott Rigsby. Jim, whom we spoke to yesterday, notes they repped Lionstone in acquiring the ground lease from a company called NBS in 2007 for $10M, then embarked on a complete core-and-shell renovation as the Houston-based company’s local operating partner. They were a third of the way through the process when Jim and Scott began working with Studley and Agensys on the deal for the latter to take the entire four-acre site (including working with the City on the ground-lease extension). Jim says it was a complex transaction and took place “when the world was coming to a standstill.” But there was plenty of action inside—Jim says the buildings were used off and on by production companies, including Buffy the Vampire Slayer.
SANTA MONICA, CA-The Lionstone Group, a Houston-based investment firm, has sold its ground leasehold interest on a four-acre parcel at 1800 Stewart St. in Santa Monica to biotech company Agensys Inc. Agensys plans to build a new 160,000-square-foot headquarters on the site.
The two buildings currently sitting on the site will be demolished for the $95-million project, which will be ready for occupancy by Agensys in early 2013. The biotech firm—which specializes in the development of proteins to fight cancer—will consolidate its six separate office, R&D, manufacturing, and laboratory facilities into the new development. Construction will begin this month on the project, which is designed to accommodate the firm’s rapid growth from 180 employees to more than 300 over the next three years, according to Agensys executive vice president of finance and operations, Paul Kanan.
Kanan explains that the company’s first choice had always been to stay in Santa Monica due to its amenities for its employees, many of whom live in the area. “It’s been a challenge to find adequate space in Santa Monica to accommodate this new facility which is essential for our continued growth. “We were founded in Santa Monica 14 years ago and it is great to be able to stay here and build the special facilities we need for our cancer research and manufacturing of antibody products.”
This sale required almost two years of discussions with the City and local officials to obtain the assurances needed to move forward, says Dan Dubrowski, a founding partner of Lionstone. The former American Standard water heater manufacturing facility has remained bare since being shuttered by the kitchen and bath appliance manufacturer in 1980. Currently located on the site south of Olympic Boulevard, are several obsolete steel Butler and concrete tilt-up industrial buildings that were built between 1950 and 1970, according to a prepared statement. The property is immediately adjacent to the Bergamot Station Art Center and the future 26th/Olympic station of the planned Expo Light Rail Line that will run from downtown Los Angeles to Santa Monica. The site is part of a nine-acre parcel acquired by the City of Santa Monica in 1989 from Southern Pacific Railroad and was considered for use as a maintenance yard for the planned 15.2 mile Expo Light Rail Line. The Lionstone Group acquired the ground lease on the four-acre parcel in 2007 through Lionstone Cash Flow Office One LP, a joint venture between Lionstone and the Oregon Public Employees Retirement Fund.
Jim Jacobsen and Scott Rigsby of Santa Monica-based Industry Partners acted as the local operating partner for The Lionstone Group in the transaction. The sale of the ground leasehold to Agensys follows extensive negotiations with the City, initially to keep the proposed light rail yard off the 1800 Stewart site, and later to secure development approvals and extend the lease term, which was set to expire in 2030, according to Jacobsen, Lionstone’s operating partner for commercial real estate development and brokerage.
“This was an extremely complex transaction with several moving parts, not the least of which was a comprehensive development agreement that provides numerous public benefits to the City, including a sculpture garden, pedestrian walkway, public café, and an internship program for local high school and college students,” says Jacobsen. “However, the key to the deal was the significant extension of the ground lease term.”
Agensys was represented by Matthew Brainard, corporate managing director in the Los Angeles office of Studley. Stacy Wilder, senior managing director of Studley’s project management services for Los Angeles, was also instrumental in executing the development agreement with the City and will oversee the construction of the new building. Jessica Foldes was also a member of the Studley brokerage team representing Agensys in the transaction.
“Clearly, Agensys has a significant presence in Santa Monica and is a highly sought after tenant. We proactively and creatively pursued all viable opportunities, including evaluating the entire Westside and South Bay markets, before recommitting to the City of Santa Monica,” says Brainard. “Working in tandem with Agensys, the City, and a team of expert consultants, we were able to structure a transaction that provides the company with a specialized facility constructed specifically to meet its corporate needs as well as the opportunity to remain in Santa Monica.”
Wilder adds that “With the exemplary assistance of our team of consultants—the law firms of Advisors LLP and Ambruster Goldsmith & Delvac LLP as well as community relations firm the Karie Group, we were able to execute our agreements with the City within one year, an expeditious timeframe to say the least, and one that ensured the property acquisition closed in a timely manner.” Studley also negotiated interim expansion space to accommodate Agensys’ growth prior to the project’s completion.
“Over the course of the last 12 months, Studley negotiated and secured three additional facilities in Santa Monica totaling nearly 50,000 square feet. These interim facilities are an essential component in accommodating Agensys’ growing operations while under construction at 1800 Stewart,” Brainard adds. The company currently occupies approximately 100,000 square feet across multiple facilities in Santa Monica.
The new building, designed by HLW, incorporates highly efficient, sustainable architecture and will be LEED certified. Features include a full commissary, open green area, manufacturing facility, laboratories, clean rooms, and corporate offices. Additionally, the development will include a pedestrian path, pocket park, sculpture garden, and café which will be open to the public.
Robert Plotkowski acted on behalf of Advisors LLP, a transactional law and consulting firm, in providing legal services related to the ground lease purchase and extension. Dale Goldsmith of land use firm Ambruster Goldsmith & Delvac LLP led the negotiations related to the development agreement.
By Natalie Dolce
The Lionstone Group, a Houston-based real estate investment firm, announced it has sold its ground leasehold interest on a four-acre parcel in Santa Monica, CA to Agensys, a biotech company that plans to build a 160,000-square-foot headquarters and clean research and development facility at the site.
Agensys, a wholly owned affiliate of Astellas Pharma US Inc., specializes in the development of proteins and antibody drugs to fight cancer. The sale of the site at 1800 Stewart St., a former American Standard water heater manufacturing facility, required almost two years of discussions with city and local officials, said Dan Dubrowski, a founding partner of Lionstone. Jim Jacobsen and Scott Rigsby of locally based Industry Partners acted as the local operating partner for Lionstone in the transaction.
Dubrowski described the deal as a “huge win” for all parties.
“Santa Monica keeps one of its most prestigious companies and a high-quality, knowledge-based employer, Agensys purchases an ideal location to consolidate their operations into a new world-class facility, and Lionstone sells part of its Santa Monica holdings and delivers very solid financial returns for our investor.”
Construction begins this month and Agensys will consolidate six Santa Monica facilities into the new $95 million complex when it is completed in 2013. The project is designed to accommodate the firm’s rapid growth from 180 employees to more than 300 over the next three years, according to Agensys Executive Vice President Paul Kanan.
The water heater factory has remained unoccupied since being closed by American Standard more than 30 years ago. The site is part of a nine-acre parcel acquired by the city in 1989 from Southern Pacific Railroad and was previously considered for use as a maintenance yard for the planned 15.2 mile light rail line that will run from downtown Los Angeles to Santa Monica. The Lionstone Group acquired the ground lease on the four-acre parcel in 2007 through Lionstone Cash Flow Office One, LP, a joint venture between Lionstone and the Oregon Public Employees Retirement Fund.
Construction is set to begin this month on a $95-million development where the biotech firm will manufacture antibodies to fight cancer.
The project, which received city approval this week, allows a consolidation and expansion of operations for Agensys Inc. The Santa Monica firm researches and develops new cancer therapies, some of which are in clinical trials.
Agensys will consolidate its office, research, laboratory and manufacturing space in the development at 1800 Stewart St. on land leased from the city. Buildings on the former railroad yard have been used for manufacturing water heaters and, more recently, filming the television show "Buffy the Vampire Slayer," according to real estate broker Jim Jacobsen of Industry Partners.
Part of a steel building on the site once used as a sound stage will be incorporated into the design of the new 160,000-square-foot complex by architect HLW International. The complex, which is expected to be completed by early 2013, will allow Agensys to consolidate to three locations in Santa Monica from six, said Paul Kanan, executive vice president of Agensys.
With the new facility, Agensys expects to boost its workforce to about 300 employees by 2015 from 185 now, Kanan said. "It was the only site that could accommodate what we want to do."
The location was industrialized in the 1870s as a stop on a trolley line connecting Los Angeles and the Santa Monica Pier. Bergamot Station lives on, next to the Agensys site, as an art gallery complex and cultural center.
Agensys took control of the property in a complex transaction that involved buying the ground lease from Houston investment firm Lionstone Group, extending it past 2030 and negotiating a development agreement with the city. Jacobsen helped Lionstone in the deal. Real estate services firm Studley Inc. represented Agensys and will oversee construction of the new building.
Agensys was founded in 1997 and acquired by Japan-based Astellas Pharma Inc. in 2007.
"Our mission is to feed Astellas' pipeline with products," Kanan said.
By Roger Vincent
Two top executives have left the West L.A. office of Lee & Associates to found Industry Partners, a commercial real estate brokerage specializing in creative space.
Jim Jacobsen, a former co-president, and Scott Rigsby, a former vice president, are heading up the new outfit, which is based in a 2,000-square-foot office in Santa Monica’sLantana Entertainment Media Campus, a key account. The two have been joined by Andrew Jennison and Travis Landrum, formerly of LA Realty Partners.
Jacobsen said he left Lee amicably, and wanted to create his own company without heavy corporate overhead costs and focus on a hot market segment. “We saw this as a chance, with all of us being under 40, to start something new and be singularly focused on a new market,” Jacobsen said. “We think everything is primarily headed for the specific product we deal with on the Westside.”
Industry Partners plans to offer a wide variety of creative space services: representing buyers, builders and tenants, and providing leasing, sales, conversion and build-to-suit consultation. The brokerage is representing Houston real estate investment firm Lionstone Group, which last year bought the Lantana campus, an office park that stretches across 12 acres and contains 463,000 square feet of space.
Other listings include a 227,000-square-foot Class C industrial space at 13031 W. Jefferson Blvd. and a 75,000-square-foot Class B office building at 1630 Stewart St. in Santa Monica.
Patrick Ayau, a principle with Lee, said the departure was natural for an executive of Jacobsen’s experience.
“In our business, we’ve very entrepreneurial to begin with and I think for him, it was time to fly his flag,” Ayau said.
By Max Zimbert
West L.A. Assets Include 463,000 SF of Production, Creative Office Space Maguire Properties sold four buildings totaling 463,000 square feet at Lantana Entertainment Media Campus in Santa Monica, CA, to The Lionstone Group. The price was not disclosed. Lionstone, a Houston-based real estate investment company, made the acquisition on behalf of Lionstone Urban Investments Two, its $400 million fund that buys real estate in high-amenity urban areas.
The studio production and creative office properties include two- and three story buildings on 12 acres in Los Angeles’ Westside. One building was built in 1959 and the others delivered between 2000 and 2008.
The assets are: Lantana West, 67,187 square feet at 2900 W. Olympic Blvd., Lantana Center, 172,002 square feet at 2900 W. Olympic Blvd., IMAX Building, 65,998 square feet at 3003 Exposition Blvd., and Lantana South, 132,976 square feet at 3301 Exposition Blvd. The tenants include IMAX Corp., NBC Universal Television, Dick Clark Productions and Revolution Studios.
While the entire 12-acre land parcel was included in the deal, all but one of the campus’ buildings were involved. The Grammy Foundation owns and occupies the 67,000-square-foot building at 3030 W. Olympic Blvd. known as Lantana East. Lionstone owns the land underneath.
The investment firm now has more than 1 million square feet of creative and adaptive reuse building space in its West L.A. portfolio.
“Market rates in the West Los Angeles and Santa Monica entertainment and media district have stabilized, with positive third and fourth quarter absorption,” said Jim Jacobsen, co-president at Lee & Associates\West L.A. and a Lionstone strategic partner.
Jacobsen believes the current number of square footage that has thus transacted in the third and fourth quarters of this year indicate a positive trend in the West L.A.-Santa Monica Entertainment/Media/Tech submarket.
“With more than 600,000 square feet in new deals and renewals in the fourth quarter alone, it is clear that the remaining availability at Lantana will meet with a positive market response,” he said.
Maguire originally purchased three buildings at the campus, a 305,187-square-foot portfolio, in December 2004 from Lantana North Hines Development LLC for $136.8 million, or approximately $448 per square foot. At that time, two buildings on Exposition and West Olympic boulevards were still in the proposal stage
Lee\West L.A. helped negotiate the deal. Jacobsen will lead in the management, brokerage, renovations and LEED certification efforts of the campus.
By Laurie Forbes
Maguire Properties has sold the five-building, 530k sf Lantana Entertainment Media Complex in Santa Monica as the latest step in the company’s ongoing efforts to eliminate debt and remain solvent. The majority of the studio/creative office campus – four buildings containing 463k sf of space – was purchased by Houston-based The Lionstone Group, while a fifth building was acquired by the Recording Academy.
Situated on 12 acres at Olympic and Exposition Blvds, the property is home to a number of entertainment companies including IMAX Corporation, NBC Universal Television, Dick Clark Productions, and Revolution Studios, along with the current offices for prolific television producer Steven Bochco and the popular Stefan’s at L.A. Farm restaurant.
The transaction is said to be the largest office property acquisition in Los Angeles County in 2009. Although the actual deal value was not disclosed, the Los Angeles Times is reporting that the sale came in at more than $200 mil, which would put it at over $375/sf.
The Recording Academy, the musician’s organization that awards the Grammys each year, bought a three-story, 67k sf building just completed last year by Maguire at 3030 Olympic Blvd. The Academy has been at tenant in the building since signing a 15-year lease worth $15 mil this past March.
Lionstone’s purchase was made through its Lionstone Urban Investments Two, a $400 mil fund that acquires real estate assets in high-amenity urban areas. With this deal, Lionstone now owns over 1 msf of properties in West Los Angeles. This purchase represents the fund’s sixth property along Santa Monica’s media and tech corridor.
The Santa Monica office of Lee & Associates assisted Lionstone in the acquisition and will continue to handle leasing duties at the campus for the new owner. Lee’s West LA President, Jim Jacobsen, will oversee the marketing duties as well as planned renovations and LEED certification efforts.
Cushman & Wakefield’s Carl Muhlstein and Andrew McDonald handled negotiations for Maguire. The Recording Academy was repped by Arlene Sommer and Mark Robinson of Studley.
Maguire purchased the Lantana campus from Hines U.S. Office Development Fund at the end of 2004 for $136.8 mil. At the time, the complex consisted of three buildings containing 332k sf of space along with entitlements for the additional 195k sf. C&W’s Muhlstein and Mike DeSantis brokered that deal on behalf of Hines.
By Allen Wolfsheimer
SANTA MONICA, CA-Maguire Properties has sold its 12-acre, 463,000-square-foot Lantana Media Entertainment Campus here to the Houston-based Lionstone Group and has sold a 66,899-square-foot building on the campus to Naras Properties Inc. as the Downtown Los Angeles-based REIT continues its efforts to eliminate debt. Terms of the sales were not disclosed, but Maguire says that the deals will eliminate $176 million of debt and generate $19 million in net proceeds for the company.
The Lantana Campus is home to the Recording Academy, the musicians’ organization that hands out the Grammy Awards, which maintains its headquarters at the campus. Naras Properties is an affiliate of the Recording Academy, which signed a 15-year lease for the 66,899-square-foot headquarters building in 2008. Terms of the lease were not disclosed, but sources at the time pegged it at $91 million, making it one of the highest rental rates ever signed on the Westside of L.A. at about $7.55 per sf per month over the 15-year term.
The sales of the properties continue a Maguire debt-reducing strategy that has included the sales of other office properties in Los Angeles and Orange counties as well as allowing some of its properties to go into default. As of Sept. 30, Maguire had $4.4 billion of total consolidated debt, including just under $ billion of debt associated with properties in default, according to a public filing by the REIT.
Maguire bought the Lantana Campus from Hines US Office Development Fund in late 2004 for nearly $137 million, financing the purchase in part with a $98 million, five-year fixed rate loan provided by Greenwich Capital Financial Products Inc.
The Lantana Media Campus mortgage and construction loans were scheduled to mature in January and June 2010 respectively, according to recent Maguire filings. The REIT said it was marketing this property for sale in hopes of disposing of it before the maturity dates of the loans.
Maguire was represented by Carl Muhlstein and Andrew McDonald of Cushman & Wakefield in the sale, with the Recording Academy represented by its executive managing director, Arlene Sommer, and corporate managing director Mark Robinson of Studley’s West Los Angeles office.
Lionstone Group founding partner Tom Bacon said in a statement that the acquisition of the Lantana Campus demonstrates that the company is confident in the recovery of the West Los Angeles-Santa Monica sub-market. Lionstone bought the Lantana Campus as part of Lionstone Urban Investments Two, a $400 million fund that acquires real estate assets in high-amenity urban areas. The addition of Lantana increases Lionstone’s West Los Angeles position to more than one million square feet of creative and adaptive reuse properties, and represents its sixth property along Santa Monica’s media and tech corridor.
Lee & Associates\West Los Angeles in Santa Monica, which assisted in the transaction, is Lionstone’s West Los Angeles consultant and will assume brokerage responsibilities for the property. Jim Jacobsen, Lee\West LA co-president and long-time Lionstone strategic partner, will oversee management of the Lantana campus, including brokerage, renovations and completion of LEED certification efforts.
By Bob Howard
Houston-based The Lionstone Group has purchased the 12-acre Lantana Entertainment Media Campus in Santa Monica, Calif. from Maguire Properties. The 463.000-square-foot studio production and creative office property comprises four buildings. Jim Jacobsen of Lee & Associates-West L.A. helped broker the deal. Lantana is one of the largest entertainment properties on Los Angeles’ Westside.
[Creative office space and its aesthetics is not limited to architects, tech and media firms. Creative space is increasingly the preferred work place for traditional knowledge-based industries like law firms and financial services. In this LABJ article, Industry Partners' Carle Pierose gives some insight on creative office space and its ascendance as the new Class A.]
Downtown L.A.’s PacMutual, which has been repositioned to appeal to creative office tenants, last month signed its second-largest lease with an unexpected tenant: a new law firm.
Trial lawyers John Hueston and Brian Hennigan formed Hueston Hennigan in January after splitting from Century City firm Irell & Manella, taking four other Irell partners and more than 20 associates with them. The new firm signed a lease late last month for 21,000 square feet in the 446,023-square-foot Class A office complex at 523 W. Sixth St. The property is now 95 percent leased.
“This demonstrates that well-executed creative office space is the new Class A in downtown Los Angeles, and Hueston’s lease is further evidence of its broad appeal,” said Carle Pierose, a partner at Santa Monica’s Industry Partners, who represented landlord Rising Realty Partners in the transaction.
Terms of the deal were not disclosed, but industry sources said it was a five- to seven-year lease valued at about $9 million.
The firm has occupied 6,000 square feet of temporary office space in the building since January, and about 30 people will work in the space when construction is complete.
Rising bought the building for $60 million in 2012 and has spent about $25 million to upgrade and reposition it as a creative office complex.
Asking rents at PacMutual, near Pershing Square in the Central Business District, are as high $4 a square foot, according to CoStar Group Inc., surpassing the $3.29 fourth-quarter market average for downtown, according to data from Jones Lang LaSalle Inc. There have been 58 lease deals signed in the building over the last two years.
Hueston Hennigan, a white-collar criminal defense practice, chose the location because it was close to the courthouses. The office is being built out to include lawyer offices around the perimeter and group stations at the center.
“We want to emphasize people coming together to share ideas,” said Moez Kaba, a founding partner. “It’s not a hierarchical space with the senior partners locked in their offices, so it is going to be more like what you’d imagine for a Silicon Beach startup space.”
Mike McKeever, a senior vice president at the downtown office of Jones Lang LaSalle, represented Hueston Hennigan in the deal. He said creative office space is in short supply downtown, especially in the Central Business District.