10951 Pico Creative Offices Home to New and Old Tech Startups

10951 Penthouse

10951 Pico Penthouse Space

The 10951 Pico building was the birthplace of one of YouTube’s most successful content providers, Machinima.  In 2006, Machinima was founded by Allen DeBevoise in a 150 square foot suite in the Penthouse.  By July 2012, they already had 191 million unique users who viewed an excess of 2.1 billion videos on their YouTube channel and website and occupied 30,000 square feet in Hollywood.

10951 Pico also serves as the corporate headquarters for Bebo, a social networking site that was at one time a contender with Myspace and Friendster.  Little Black Bag, a social e-commerce company backed by David Tisch and Mark Suster, recently moved into the ground floor suite.

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New Penthouse Cafe Kitchen

With it’s open and collaborative Penthouse space, and upgraded cafe style kitchen, 10951 Pico will continue to house creative offices to inspire the new tech startups joining the ranks, as well as continuing to go above and beyond to accommodate and maintain close ties to older tech startups.

Marina Marketplace Opening Spring 2013

Marina Marketplace, next to our Marina Glencoe Studios, is currently being renovated and should be completed by spring this year.  Marina Marketplace is a place for shopping, dining, entertainment, and fitness with popular stores including Barnes and Nobles, Sport Chalet, DSW Shoes, Gelsons, to name a few.  New additions in the spring will include Yard House, Pier 1 Imports, Le Pain Quotidien, and Tender Greens.  Restaurants will have outdoor dining areas with umbrellas and creative lighting.  Marina Marketplace will also have plenty of parking for customers.

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AMC Dine-in Theaters and Equinox have recently opened.  AMC Dine-in Theaters contains two types of theaters: one as a casual dine-in and the other with a full cocktail bar and luxury recliners.  Moviegoers can reserve their seats prior to arrival.  During the movie, one can place an order as easy as pressing the call button for a server.  Whether people are waiting for a movie to start or hanging around after the movie has finished, MacGruffins Bar and Lounge is open for patrons to enjoy.

Please visit here to view the new full directory of Marina Marketplace.

Los Angeles Rents to Spike in 2013 if No Economic Downturn

Apartments in Los Angeles are still recovering from the downturn in late 2008.  Vacancies continue to decline and according to many surveys, now hover in the low 3% range.  Many sub-markets are actually below 3%.  According to PMI’s research, the last time apartment vacancies fell below 3% (in 1997 and 2006), strong rent increases followed.  The U.S. economy grew strongly in both 1997 and 2006, and we don’t know if we can say the same thing about 2013.  Rent growth may not be nearly as strong in 2013 as in those years.

However, Los Angeles vacancies are likely to fall below 3% if the economy does not take a turn for the worst.  As I result, one could expect rents to increase 10% over the next 18 months.  Indeed, several Los Angeles owners have experienced record low vacancies this year (1 to 2%).  Unlike the office market, where owners will incur high vacancy rates to achieve very high rents, apartment owners will allow their occupancies to drift down to very low levels before testing rents.  Apartment owners tend to be more cash flow sensitive, and apartment tenants tend to be very rent sensitive.  After a year of very low vacancies, apartment owners will begin to explore and test rents or eliminate concessions.

Different reports show that job prospects for young adults have improved.  This has encouraged them to start households after many years of living with roommates or their parents.  This trend also coincides with a move back to urban centers where apartment living is common and convenient.  Very little in the way of significant new apartment supply will be delivered during 2013.  Although home sales and prices are likely continue to improve also in 2013–residential financing still remains very difficult.  A move in the economy will either improve this forecast if positive or negate it if negative.

Gentrification of Rose Avenue in Venice

PMI has a creative office building on Rose near Main Street and the new Google offices.  The property was always a performer for us because of its proximity to the popular Main Street in Santa Monica on its north, Abbot Kinney in Venice on its south, and Venice Beach on its west.  If you went a few blocks East on Rose Avenue, the area become seedy with homeless, crime, and run down retail.  In the last six years, this area has transformed and gentrified into a new hip location.  The Los Angeles Times article describes this transformation.

Venice’s new bloom – Los Angeles Times.

Represent LA: Geographical Breakdown of Startups in Los Angeles

Represent LA is a website that maps the location of new tech start ups and investors in Los Angeles.  The map is useful because it allows people to browse according to location, investors, or company name.  With Represent LA, it’s easy to see which areas have the highest and lowest numbers of startups, which could be a factor for a new startup in their search for leasing creative space.  The creators of the website also promote a sense of community and support by offering up the ability for companies who do not see their business on the map to submit their information to be added.

The geographical breakdown of startups within Los Angeles can be determined by exploring the Represent LA map.  Currently, downtown Santa Monica and Venice have the highest concentration of start ups, followed by the area east of downtown Santa Monica.  Surprisingly, Santa Monica airport area has many startups while Playa Vista does not.

Downtown Los Angeles, Hollywood, Culver City, El Segundo, Pasadena, Tri-Cities, and the greater South Bay have moderate levels of start ups.  San Fernando Valley, Century City, Westwood, and the Beverly Hills area contain low levels of startups.  The fewest startups, however, are located in Malibu, South Los Angeles, Mid-City, East Los Angeles, and the San Gabriel Valley.

It seems that Silicon Beach is continuing to grow as an area that start ups are drawn to, which is consistent with the articles we have shared about in past.  Conversely, Pasadena’s start up activity seems to be on the decline.  Represent LA’s map is a great way to find start ups, coworking space, investors, or consulting firms in Los Angeles and will hopefully be another resource tech start ups will be able to efficiently use.

Will Parking Panda Come to Los Angeles Next?

After offering their services to drivers in Washington D.C. and Baltimore, Parking Panda has gone live in the Bay Area.  Here is another disruptive San Francisco based technology that enables garage owners and homeowners to rent out their unused parking spaces (think of homeowners with empty driveways during the day), and in turn, allows drivers to find those spaces and submit rental requests.  TechCrunch outlines the exciting details for commuters in their article published today.

Image courtesy of TechCrunch

The Parking Panda application allows users to view available parking spaces based on their current driving location.  Parking Panda has only gone live in three cities for full functionality for parking spot listings and rental requests.  In 25 other cities, Parking Panda offers a parking finder function for drivers.  Parking Panda has plans to go live in Boston, Philadelphia, Austin, and another west coast city within the next few months.

Parking Panda’s website and application has an easily accessible interface that allows users to either “Find Parking,” “List a Space,” and a link that explains “How it Works.”

Scarce parking in Los Angeles has long been an issue, especially on the Westside.  Numerous tech, media and digital tenants are searching for ways to find more parking spots for their employees on a daily basis.  In August, we published a blog, “The Coming Collision of Office Densification and Parking in Los Angeles,” where we described the parking conundrum that most of the Los Angeles workforce has to deal with.  Parking Panda may help alleviate apart of this dilemma, and we hope to see this promising company expand to Southern California in the near future.

RidePal: An Alternative for LA Commuters

The latest article from TechCrunch introduced RidePal, a company that recently received $500K from 500 startups.  RidePal is part of the collaborative consumption movement that originates out of social networking in the Bay Area. Referred to as a “Google Shuttle for the rest of us,” RidePal is an innovative idea that should also be brought to Los Angeles.  It has the potential to alleviate the parking conundrum and terrible commutes that plague Los Angelenos.  The service allows companies, employers, and building owners to share the cost of shuttle services to transport employees to and from work.

Image courtesy of RidePal’s website

RidePal is a system that offers shared commuting buses equipped with Wi-Fi as well as a ticketing, reservation, and management platform.  It currently uses a total of 15 routes that link San Francisco with the east bay, south bay, and peninsula.  RidePal partners with several bus companies and builds new routes based on the demands and needs of companies and their employees.  The shuttle program has been especially attractive for growing companies that are looking to expand their workforce because it is easier to retain and recruit employees from outside the area.

Not only is RidePal an eco-friendly method of transportation, but it also benefits both companies and employees.  Businesses that choose to bring this service to their employees don’t need to pay for the entire bus, but only pay for the capacity they need, which allows them to save costs.  For employees, RidePal offers the opportunity to spend their normal commuting hours surfing the Web, completing work, or just enjoying newly freed up time that was spent driving before.

If RidePal was brought to Los Angeles, Culver City, for example, could finally put to use their underutilized city and privately owned parking lots.  The shuttle bus would provide transportation at these parking lots as well as to the Expo stations.  It would only take one major employer without sufficient on-site parking and the Expo to begin this service to offsite parking lots and the Expo. The cost could be shared with other employers who want to also use a shuttle service for this purpose.

After San Francisco, RidePal aims to eventually bring their service to other top urban clusters.  Hopefully the program’s success in Northern California will influence companies in Los Angeles to take a second look into similar ride-sharing programs for their employees.

New York Triples Post-Production Credit; Moves Aggressively to Take LA Business

New York has recaptured most of the jobs lost there during the recession.  Mayor Michael Bloomberg has done a great job at attracting technology tenants to the Big Apple.  For example, Google has a million square foot facility in the Chelsea area of New York.  That space trumps its 100,000 square foot facility in the Venice area of Los Angeles.  The music sharing service Spotify, and Livestream, the market leader for live event coverage, are also located in New York.  There is a website, called Made in NY Digital Map, that points out digital and tech tenants located throughout the city.

Not only is New York attracting tech and digital tenants, but they are also starting to court a substantial piece of L.A.’s film post-production business with a recent tax credit.  New York Governor Andrew Cuomo recently enacted this law, which increases the previous 10% credit to a whopping 30% on post-production costs.  If a company wants to earn a slightly larger credit, they can venture to upstate New York and get a 35% credit.  New York is aggressively going after L.A.’s post production business, which has a heavy concentration on the Westside of Los Angeles.  This is the first type of post-production credit the industry has seen.  Time will tell if companies will move to the East Coast to take advantage of it.

New York has been having an astounding year in TV production, mainly because of its film tax credit program.  They are setting aside more than $400 million a year in order to attract film and TV productions. Compared to the $100 million that California spends, one has to wonder why they aren’t putting up much of a fight against New York.

The Los Angeles Times goes more in-depth about this subject in their recent article.

The Coming Collision of Office Densification and Parking in Los Angeles

Office tenants, especially in digital technology, continue to fit more people into the same amount of space.  Open floor plans and higher ceilings support this greater density.  In Los Angeles, workers drive to work and parking is limited.  The normal office building has three parking spaces per 1,000 square feet of office space.  All the while, office density is growing to five users per 1,000 square feet and greater.  Companies want to supply parking for their employees.  They don’t want to force their employees to carpool, have to take transit, walk more than very short distances to park, or have to ride a shuttle.  This reality is hard on planners.  It will be a good idea to begin to introduce the Los Angeles creative work force to these alternative methods.  The reality is that brokers and tenants are requesting additional onsite parking more frequently.  Densities are continuing to go up and building owners, brokers, and companies need to deal with issue.

San Francisco Mid-Market Makes a Comeback

When PMI first started looking to purchase office buildings in 2003 in San Francisco, a couple of brokers tried to sell us buildings in San Francisco’s Mid-Market areas.  They said it was going to make a comeback.  Most others said that they had heard that for years.  The area had a large population of homeless people, homeless shelters, and single room occupancy housings.  We were told by all the cognoscenti to stay away.

In 2010, San Francisco boomed with tech tenants.  Super star tenants found it difficult to find very large blocks of space in prime areas like SoMa.  One of our tenants, Twitter, started in 6,000 square feet.  They were a runaway success and started shopping for 150,000 square feet with expansion options for another 150,000 square feet.  Twitter threatened to move out of San Francisco because of a city payroll tax that would tax stock options upon their exercise.  San Francisco Mayor Ed Lee set up Mid Market as a payroll tax-free zone.  Real Estate magnate Shorenstien Properties then purchased a million square foot clunker of a building in Mid Market, planned a creative office renovation, and made Twitter a deal they could not refuse.

Another one of our tenants, Zendesk, moved to Mid Market because we were out of space in our SoMa building.  Zendesk got a great deal and achieved their rent objectives.  Yammer, who is also our tenant, moved into the same building that Twitter did after Kilroy wanted too large a letter of credit as security (Yammer was recently purchased by Microsoft–who knew).

So why is it that Mid-Market succeeded this time?  Primarily it is because Twitter became a magnet that attracted other tech tenants.  Mayor Lee and Shorenstien Properties offered Twitter such a fantastic deal they would have been crazy not to accept it.  This was done during a market where creative space was running low because tech business was booming.

In the New Geography of Jobs, Berkeley professor of economics Enrico Moretti comments that super star companies attract other super stars and even “wanna-be” companies like a magnet.  Indeed, he attributes the success of Seattle in tech to the fact that Bill Gates decided to relocate there to scale Microsoft.  In San Francisco, Twitter was the super star and it attracted other companies, like Yammer, among others.  The payroll tax-free zone and a landlord willing to give a cost leader to attract a super star helped.

Here is an article from Reuben and Junius expanding more on the rebirth of Mid-Market.