410 Townsend

539 Bryant

PMI Properties is pleased to announce the sale of two iconic South of Market San Francisco creative office buildings: the 75,000 square foot 410 Townsend Street and the 55,000 square foot 539 Bryant Street. The buyers were affiliates of Zurich Alternative Asset Management.  The purchase price matched or exceeded those obtained by class A trophy conventional high rise office buildings.  The sale dramatizes the new demand and popularity of warehouses converted into creative offices in key media and technology markets.

PMI Properties purchased the properties in the mid 2000s during the recovery of web based software companies.  They made the bold move of branding the buildings for web start-ups by introducing the first collaborative office designs, utilizing a flexible leasing policy, and leasing exclusively to web start-ups.  This strategy was enacted to create a cluster effect and effectively brand the building as the center of tech start-up activity.  The successful strategy was featured in the Wall Street Journal in 2010.

In it’s start-up phase, Twitter moved into a 4,000 square foot office at 539 Bryant after their first round of venture capital funding.  Other successful start-ups at these two buildings include Yammer (sold to Microsoft for $1 billion dollars), Playdom (sold to Disney for $763 million), Tech Crunch (sold to AOL), Guardian Edge (sold to Symantec),  Aperture (sold to Google), Ioda (sold to Sony), Coding Technologies (sold to Dolby), Xobni (sold to Yahoo!), Eventbrite, OpenDNS, Scribd, Zendesk, Jaspersoft, Ustream and Yousendit (now known as Hightail).

Recently, Adobe leased most of 410 Townsend for ten years and HKS Architects leased the ground floor of 539 Bryant for ten years.  Coincidentally, Adobe bought the start-up Macromedia who started at 410 Townsend in the 1980s.

Santa Monica passed a sweeping rezoning of the Bergamont Station Area, which encompasses most of the LSMD (from Bergamont to Colorado Avenue).  Most of the area is being up-zoned into a new zoning called Mixed Use Creative.  Mixed Use Creative will allow greater densities as well as office, retail, multifamily, and creative office.  The City has not yet provided a definition of creative office. A small area near Berkeley and Stanford will be preserved for low density creative office only.  The City is requiring the first 40 feet of Nebraska Avenue frontage to be used for small retail.  They envision Nebraska south of Stewart to turn into a walking street loaded with outdoor cafes.  Oh Vey.

Parking requirements will be lowered to 2 cars per 1000. For the first time in LA County, the City is imposing a parking maximum of 4 cars per 1000 that will drop to a maximum of 2 cars per 1000 as the area is developed. The parking requirements are among the lowest in the Los Angeles County.  Curb LA first reported this sweeping zoning legislation.  The article below has a great pictorial of the new zoning (click on the pictures).

SaMo Approves Big Plans for the Bergamot Station Area – PlanningWatch – Curbed LA.

The Culver City Planning Commission last Wednesday voted for a plan to encourage additional and alternative parking in the Hayden and Blackwelder Tract.  Under the new plan, a parking district would be created whereby owners could lease offsite parking anywhere in the district to satisfy parking requirements.  Further, parking requirements could be satisfied by mechanical parking, valet parking, or compact parking.

Meanwhile, the Santa Monica City Council  approved a plan for the Bergamont Transit Area (the old LSMD near Bergamont Station)  that reduces  required parking for office to 2 cars per 1000 square feet but also limits properties to a maximum of four cars per 1000 square feet.  As more parking spaces are built in the area, the maximum amount of parking that a property can have will be 2 spaces per 1000 square feet.

Many apartment dwellers do not know where to store their bikes.  CB2 has a non-obtrusive bike holder for $50 that goes on the wall.  It allows the bike to hang on the wall like art work.

CB@ $50 Bike Holder

Creative office is hot.  What was considered a fad and unpractical just 15 years ago, is now becoming main stream.  Pension funds and investment advisors who once only bought class A highrises, have recently pursued creative offices in major growth markets.  Creative offices buildings are achieving sub-10% vacancy rates while many conventional office buildings have vacancy rates hovering closer to 20%. Companies outside technology and entertainment look to emulate the efficiencies and collaborative environments achieved in creative offices. Today, people can work everywhere.  The office needs to be more interesting and interactive.

In markets where tenant demand for creative office is strong–(San Francisco and Los Angeles), property owners of conventional space, especially class b and c vanilla offices, are trying to find ways to make their space appeal to creative users.  One way involves deconstruction:  exposing the natural building elements–like steel, ducting, or concrete. Another involves removing the suspended ceiling and creating an open ceiling plan with greater volumes.

Gensler proposes another way:  cut and remove floors to create  atrium.  The owner will lose footage but gain much more interesting space.  We did this 15 years ago when we re-developed Penn Station in Santa Monica.  We cut away sections of the second floor to create expansive first floor volumes for  this aging and tired 75,000 R&D warehouse in Santa Monica.  By also exposing the wood structural ceilings as well as concrete floors, we created a dazzling atrium:

Before Atrium

After Atrium

After Atrium 2

Gensler did this same technique in a boring three story bank building in downtown Los Angeles.  .

In a recent LA Times article, Gensler discussed the issue:

“Making underused office properties desirable again may require radical modifications inside and out, real estate experts say. Few owners have taken bold actions yet, but architects and urban planners are scheming about how such transformations might be accomplished.

Cutting out chunks of an office building’s interior to create an atrium or theater, adding loft-like mezzanines on floors with high ceilings or grafting on outdoor staircases are among the ways that structures could be dramatically remodeled to be more efficient and appeal to changing tastes.”

You can read the full article below. Plus, the article has a 360 degree interactive picture of Gensler’s new downtown Los Angeles headquarters.

via Big changes are coming to conventional office buildings – latimes.com.