We have a small 25,000 square foot office building a couple of blocks from the western end of the Westside Pavilion (the Landmark Theater side). The office building has a central location, is close to the freeways and the Expo Line, and is surrounded by a ton of amenities. However, in the office world that is not enough. The property is not near any other office buildings. Office tenants like to be near other office tenants including competitors, vendors, customers and suppliers. Central locations help businesses find employees, reduce transport time to visit vendors and customers, and can help define the business’ image. In real estate, the “Agglomeration Economies” are the cost reductions or savings that come about from efficiency gains associated with the concentration or clustering of firms/producers or economic activities and the formation of a localized production network.
Despite the advances made in telecommunications–office tenants still prefer to collaborate in a physical world.
Currently, 10951 Pico is in an agglomeration dessert. However, with 500,000 square feet of creative office, Hudson is likely to bring a major tenant as well as many other significant businesses and the needed agglomeration to make the location more desirable. The restaurant businesses will also benefit from a more robust lunch and after work business.
Hooray for competition. You can read how agglomeration economies can even occur in one building :http://www.pmiproperty.com/wp-content/uploads/2014/09/Wall_Street_12.pdf
The article about Hudson’s plan for the Westside Pavilion is below