By Dennis Kaiser
Connect Westside Los Angeles brought together more than 300 attendees at the Luxe Sunset for a full afternoon of CRE conversations and networking. Three deep-dive panel discussions featured some of the region’s top industry leaders, who shared insights on trends shaping the market. Connect Media will be recapping the panels this week. Today, we’ll share a few key takeaways from the Opportunities in Office: Development, Design, and Investment panel from last week’s conference.
The conversation among office developers, owners and brokers was moderated by Greenberg Glusker LLP’s Henry Finkelstein, and focused on the revitalization of West Los Angeles and how it is being transformed into a destination for work, live, and play.
Lincoln Property Company’s Kent Handleman notes that political constraints are the primary barriers to new development in Los Angeles, since demand remains high, especially for well-conceived projects. Though for a city of its size, he points out there are few projects being built. Still, tenants have proven to seek out quality workspaces because it is a “solution for businesses to recruit and retain talent,” says Handleman.
Cresa’s Matthew Miller agreed that there is demand for new office product, especially the right projects. That includes those with the right design, with plenty of parking and in the right location. He says, transit is the big differentiator. That’s what is helping push out into such markets as the DTLA Arts District.
Boston Properties’ Jon Lange noted that it is not just tenants who are willing to pay a premium for the right office space in the right location. Investors are also chasing similar types of properties.
Eastdil Secured’s Stephen Somer noted that the Westside market is moving away from the commodity real estate office product and more towards what tenants want, which tends to be more creative office environments. Though he was surprised at the price PCT traded for in El Segundo.
That’s a market that has experienced at surge in interest for companies besides the government and defense contractors, which have long held a stronghold there. Now, the demographic has shifted in El Segundo to the “decision makers and the cool people,” says Somer, and a “new generation is cycling through” as they move out of their parents’ house.
Miller notes that El Segundo has a host of amenities now that are popular among the younger demographic, and it has shifted away from just being a “value opportunity.” Though Somer notes it still “feels inexpensive compared to other markets for the type of product you get.”
That has spurred redevelopment of 1950 or 1960’s-era buildings, as well as new projects that may feel like something from a similar time period, in markets like Playa Vista or Culver City, too. That’s what happened at C3 in Corporate Pointe where a vertical warehouse was created by Gensler, and it helped spur higher rents than typically were achieved in Culver City. Handleman says, the right type of “product drove it despite the location.”
Though the move to a completely open work environment in a creative office space has experienced some pullback, it still is in demand, depending on the type of company culture or work being performed. Miller says it is hard to over-generalize, though tenants in the entertainment sector tend to prefer privacy, while tech companies favor open plans.
For a firm like the Honest Company, a dense workstation environment is balanced with a “ton of open space like break areas, kitchen, lounge, gaming and exterior working spaces,” notes Handleman.
In terms of availabilities, Miller says for tenants in the 30,000-square-foot range or under, they are able to find opportunities to convert warehouses, but it is “very difficult” to find conversion space for larger size requirements. That may lead to some compromises, such as going into a low-rise suburban location or giving up on the dream of a warehouse.
Dennis Kaiser is Vice President of Content and Public Relations for
Connect Commercial Real Estate. Dennis is a communications
leader with more than 30 years of experience.
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