Category Archives: Property Spotlights

With 16 properties spread throughout West Los Angeles and San Francisco, PMI owns and operates premiere corporate office space. This category introduces and promotes our unique creative suits.

San Francisco Mid-Market Makes a Comeback

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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.

Why Tech Firms are Moving to San Francisco

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In a recent San Francisco Business Journal article, Terry Cunningham, President and General Manager of Evault, a cloud back-up and recovery service, explained why the company moved its 100 person Emeryville offices to San Francisco.

Cunningham said one of the great advantages of relocating to San Francisco is that he has a “wider pool from which to recruit, because more people want to work in the city than in the South Bay, and the city is centrally located, making it easier commuting from the East Bay and other spots.”

Plus, Cunningham said San Francisco is just “hipper” than the South Bay.

“San Francisco is cool, and we were just in a wasteland down south.  There was nothing cool in the particular location we were in.  You had to get in your car to drive for lunch.”

Cunningham has been reveling in the walkabillity of his new neighborhood.  The environment, coupled with the new office’s design, makes for a “more intimate working culture, in which people get to know each other better,” he said.

Video Content Companies Make their Mark in West Los Angeles

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Los Angeles is behind such cities as New York, Boston, and San Francisco in digital technology. However, in the niche market of video content for the web, Los Angeles may be number one.  Los Angeles is flexing its content muscle to spawn startups involved in original content made for the web.  This movement is as old as the dot-com boom itself.  Since high-definition web video is so inexpensive to create, there is a renewed interest in producing new and innovative original programming for the web.  YouTube started adding over 100 new channels with all original content creators in 2011.  Netflix launched an original show on its platform in February of 2012, with plans to add more programming in 2013.  Hulu.com announced it will also start creating original programming for its users.  Many users of both sites have expressed their excitement and support of this creative action.

Web content companies are forming in different pockets all around Westside Los Angeles and Hollywood. Another prominent area where web content companies are clustering is around the Hayden Tract in Culver City.  PMI recently leased 13,000 square feet to Mahalo.com and 15,000 square feet to Sugar Publishing Inc.  Mahalo.com is a video and web company specializing in instructional content.  Recently, Mahalo started producing instructional applications for the iPad.  Sugar Publishing, Inc. is the parent company of the popular video site Popsugar.  Maker Studios, a YouTube content company, recently leased 18,000 square feet a few blocks away from Mahalo and Sugar at 5877 Rodeo.  According to this article from The Los Angeles Times, Los Angeles billionaire Patrick Soon-Shiong’s Four Wall Studios leased space at Conjuctive Point, adjacent to Mahalo and Sugar Publishing, and is allegedly building a $20 million studio in Culver City.

YouTube also recently leased 30,000 square feet for a studio in Playa Vista.  One of our previous tenants, Machinima.com, occupies 30,000 square feet in Hollywood.  They started with 150 square feet in one of our creative executive suites at 10951 Pico Boulevard in 2007.  They are now the most watched channel on YouTube.

Due to the fact there is so much interest in creative office space on the Westside, and especially in Culver City, now is the perfect time for solutions to be developed and executed in regards to the demand for parking.  Culver City must work to help supply the parking these incoming companies require.  Tenants are starting to make parking a large priority before they lease office space.  A broker representing one 50,000 square foot tenant recently called PMI’s offices to ask advice on how to handle their parking needs if they leased space in the Hayden Tract.  Culver City expressed a desire to ameliorate the parking situation and has already made some commitments to facilitate this resource.  In addition, improving the lunch time amenities for the increasing workforce would also be beneficial.

Some large content firms are rumored to be sniffing around Culver City for creative space.  We can’t say at this time if any or all of these firms will be successful in the long run.  PMI has had their share of tenant failures and successes in the past.  We are privileged to share that some of our previous tenant successes have included Twitter, Yammer, Eventbrite, Stylespot, and Applied Semantics.  Despite the challenges PMI has faced in its leasing history, we feel that leasing space to any growing technology company is worth the risk in this economy.

From the Dark Days in SoMa to a Bright, Booming Future

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In 2003, after the dot-com bust, PMI sensed an amazing purchasing opportunity in San Francisco. The area south of Market, known as SoMa, had vacancies reaching upwards of 40%, leasing brokers  began describing the area as “toxic.” SoMa looked like a promising area to recreate the magic acquisitions PMI assumed in the Los Angeles Westside during the mid-90s property grab.

By 2003, entertainment, advertising, and media companies on the Westside of Los Angeles had helped the area stage a rapid comeback from the tech crash. Late in 2003, PMI sold a 75,000 square foot Santa Monica creative office property to a Texas-based realty pension adviser. It was the first time an institutional buyer purchased a Westside creative office building. Soon after, the buying frenzy started and creative offices were being bought and sold at record prices. Comparatively, in SoMa during 2003 and 2004, only residential converters were buying creative office buildings and for under $125 per square foot.

PMI targeted San Francisco as a prime place to purchase creative office buildings for several reasons:

  1. The city has an incredibly large workforce of highly educated individuals.
  2. The city has one of the greatest concentrations of software engineers in the world.
  3. Two of the top universities in the country are located in the area.
  4. The city is dominant in venture capitalism.
  5. We took into account Richard Florida’s “Creative Class,” in which he argues that the world’s power and wealth will be concentrated in super regions of knowledge workers. We agreed with his theory and believed San Francisco  fit the paradigm perfectly.
  6. We considered the study of the history of innovation, which shows that the discovery of disruptive technology tends to end in a bursting of bubbles and is followed by an even greater and more mature expansion of the technology (a cycle that can happen many times).

While San Francisco seemed a great arbitrage, we were too frightened to buy anything in 2003. It wasn’t until late 2005 that we bought our first property, with the tenants and cash flow in place at the time. The deals were not as good as buying empty buildings, but they were a lot better than the creative office deals on the Los Angeles Westside. Rents climbed from $22 modified gross per square foot in 2005 to $36 modified gross per square foot in 2007and then collapsed below $22 modified gross per square foot in 2009.

With rents at an all time low and a building half vacant, we went on a search for the best start-up companies we could find and made them deals they could not refuse. Our first two takers were Eventbrite and Yammer. In another building, we leased a space to a startup called Twitter.

As described in this article from the San Francisco Business Times, things got much better in San Francisco. Rents are now well over $40 modified gross per square foot. The arbitrage between San Francisco and the Los Angeles Westside is no more. REITs and institutional investors dominate the business now.

“My warning,” says Jeffrey Palmer of PMI Properties, “is that this is a very volatile business. At some point in the cycle–both on the rise and fall, what you are experiencing may be volatility.”

Creative Spaces for Creative Companies– Moxie Pictures

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Photo taken from Memory Alpha Wiki article on Robert Legato

Robert Legato is a prominent name in the entertainment industry, specializing in visual effects and post production for such films as The Departed, Interview with a Vampire, Apollo 13, Avatar, Titanic, and most recently, Hugo. His skill has earned him a dozen nominations and academy awards for Visual Effects in the movies Titanic (1997) and Hugo (2011). Once part of Moxie Pictures, a former tenant at PMI’s 2644 30th Street in Santa Monica from 2006 to 2008, PMI is proud to have been home to this visual effects wizard and congratulates him on his most recent Oscar.

Opower, an Energy Efficient Software Company, is PMI’s Newest Tenant at Harrison Property in San Francisco

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Our newest tenant on the second floor of 642 Harrison in San Francisco has a goal to make the world more energy-efficient.  It’s a pretty lofty goal for a company only founded in 2007.  Opower is a software as a service company that partners with utility companies to promote energy efficiency.  According to their website, Opower is a new customer engagement platform for the utility industry.  It reinvented the way utilities interact with customers—from the quality of the information provided to the way it’s presented and delivered.  It helps people use energy more efficiently and ultimately save money on their energy bills.  And it vastly improves the overall customer experience by making energy use personally relevant.  For example, when monthly invoices arrive at a customer’s home, they can see the average utility bill cost in their neighborhood, along with suggestions on how to reduce their energy consumption.  If they are well over the average compared to other homes in the area, they then have Opower’s suggestions right at their fingertips to help alleviate some of their energy costs.

Opower decided to PMI Properties’ 642 Harrison would be a great candidate for their next office because of its size and prime location.  Opower’s decision to choose Harrison in the competitive SoMa market was featured in this article as well: Big Race for Space in SoMa, Wall Street Journal, January 26 2012.

They also have established an online presence with social media outlets such as Facebook and Twitter, as well as having their own, “Hey, it’s OPOWER!” blog.  Their website has many interesting and innovative ways to share information about their vision and what the company has accomplished.  There is an “OMeter” page that keeps a running tab on how many kilowatt-hours Opower has saved, and lists some interesting facts on what could be done with all that energy.  Opower also finds ways to engage and entertain their employees.  Their website lists activities such as a quarterly company outing, innovation day, soccer and ping-pong teams, and the ability to bring your dog to work.

Photo courtesy of Opower's website.

Opower was founded in 2007 by long-time friends Dan Yates and Alex Laskey.  When they started their company, lots of people were excited about cleaner energy production using renewable energy sources, like the sun and wind.  Dan and Alex knew that these sources wouldn’t be tapped in the short-term, even though they are important.  Their answer to reducing carbon emissions right now was curbing wasteful use of the types of energy produced today.  By utilizing the 1.4 billion utility bills that are mailed to customers each year, they would be able to send energy-saving ideas to hundreds of millions of households.  After creating a prototype, they went to two of America’s major energy markets, California and Texas.  The amount of interest they received from utilities, state legislators, and environmental groups soon led to first round venture capital funding from MHS Capital.

Photo courtesy of Opower's website.

They have garnered support from other green centered companies, as well as President Barack Obama. He visited their headquarters in Arlington, Virginia in 2010 and praised their work ethic and success during the hard economic times in addition to their ability to provide clean energy jobs.  They have been featured in articles from The Wall Street Journal, Techcruch, CNN, and Green Tech Media, to name a few.

You can visit Opower’s website at http://www.opower.com. You can read their blog at www.heyitsopower.com and follow them on Twitter @Opower and Facebook: www.facebook.com/heyitsopower

Culver City Moves Aggressively to Attract Creative Office Firms with Innovative Redevelopment

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Culver City is doing many things to make the city attractive to new businesses that would occupy creative offices.  The city is working with the Hayden Tract Property Owners Association to create 120 new parking spaces on the rail spur in the Hayden Tract.  These parking spaces will be just west of Stellar between Eastham and Hayden Avenue.  Recently, the city boldly moved at the end of January to pass three redevelopment properties that could benefit creative office tenants in the Hayden Tract.  For example,  Culver City committed to spend $5 million dollars to purchase 180 parking rights for public use in a new parking garage.  This garage is slated to be built on Higuera and Hayden by Hackman Properties. This garage will supplement a new 500 car garage at La Cienega and Jefferson recently completed by Cal Tran in conjunction with the opening of the Expo light rail later this year.  In addition, new street parking along National Boulevard between Washington and Jefferson has been added.  The Syd Krononthal Park at Eastham and National has received a new signal and a cross walk leading to it.  Not only will Culver City have an elevated Expo light rail station at La Cienega and Jefferson, but it will also have a similar station at Washington and Venice.  A new bike line and walking path will span the entire length of the light rail line.

Culver City is expected to build a pedestrian plaza and make landscape improvements around the station.  A temporary 600 car parking lot will be provided on the city’s land near the station as well.  The City also approved in late January an agreement with Lowe Development to sell this land parcel next to the Culver City light rail station so Lowe can build a development.  This future development area will have a mix of housing, office, retail and restaurant use.  These developments will be surrounding a large central open space amenity that will connect seamlessly with the new station.  In addition, the development will include 1,500 parking spaces, some of which will be for monthly rental to Hayden Tract owners and companies.

Close by, at Culver and Washington (9300 Washington), Culver City at the end of January committed to sell Hudson Realty and Combined Properties’ land to build a mixed use project. The proposed project includes ground-level retail, a four-story office building, and a grand stairway that leads pedestrians up to a restaurant pavilion.  There will also be a landscaped elevated plaza perched above the existing Town Square. The City in late January committed to sell land to build a new state of the art jazz club that will be operated by the Jazz Bakery.

The City has aggressively been courting new creative companies to locate in Culver City.  Unlike other Westside cities in Los Angeles, Culver City has displayed the ability to meet with companies and offer expedited permitting for their improvement.

Creative office  tenants appreciate Culver City for it’s rich urban experience. Culver City attracts young, knowledgeable workers due to the mix of chic restaurants, vibrant bar scene, new art district, the close proximity to affordable apartments, and easy access to Santa Monica, Hollywood, and Downtown Los Angeles.  Playa Vista, a competitve location for creative companies, lacks this rich urban experience.  In 2000, Culver City became a magnet for entertainment and internet companies fleeing the high rents of Santa Monica.  Culver City had a plentiful supply of architecturally attractive industrial buildings preferred by the creative types.  At the current time, however, Culver City is addressing the insufficient parking problem that many of these buildings have.

Culver City has a rich history of bold moves in redevelopment. It invested heavily in infrastructure and parking in its downtown district.  Culver City went so far as to build and own a multiplex theatre and Trader Joe’s in early 2000.  The current new developments come as no surprise from a city that is always in the forefront of innovation. Culver City has done an amazing job creating and executing the many improvements that will make it one of the prime locations to live, work, and play.

Stylespot Graduates from 10951 Pico Creative Penthouse Space

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PMI’s former tenant Stylespot.com went from small offices to grand success in the past few years.  Stylespot helps consumers link celebrity photos with stores that sell the fashions worn by the celebutants.  Stylespot started in a 300 square foot office in PMI’s highly creative Penthouse suites, which resemble a New York Penthouse.  Stylespot informs visitors about what their favorite celebrities wore, where they can buy it, or how to get the look for less.  On their website, there are separate areas for visitors to shop for outfits specific celebrities have worn, a way to put a certain look together based on the designer or what celebrity fashionista vistors gravitate towards, and a way to discover the trends in pop culture fashion.

Stylespot, founded by Rafi Gordon and Alex Amin, was venture backed by Idealab when it was founded in 2009.  It has recently been acquired by Kaboodle, the online social shopping site owned by Hearst Corporation.  Kaboodle announced the acquisition late Friday, February 3rd.  Financial terms of the acquisition were not disclosed.   According to Kaboodle, Gordon and Amin will continue as co-CEOs of the company, operating as an individual website Kaboodle also said that its Chief Operating Officer, Steven Chien, will report to Gordon as part of the merger. Together, these two companies are now known as Image Network, Inc.  Gordon and Amin’s prior company was Baseline Research, which they sold to the New York Times Company in 2006.

Congratulations to Stylespot.  We wish them all the success.

Inside view of 10951 Pico Building, where Stylespot grew from.

PMI has provided creative office space for many other successful startups in Los Angeles and San Francisco in their early phase. Some well known tenants include Twitter, Applied Semantics, Aperture and Playdom. Check out our full list of tenants in this article.

Wall Street Journal Spotlights PMI Properties’ Harrison Building

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PMI Properties’ newest acquisition, 642 Harrison in San Francisco, was featured in a Wall Street Journal article last month.  The article spotlights the burgeoning SoMa district in San Francisco and the rapid growth that buildings in the area are experiencing within the last year.

PMI Properties was able to snag Harrison before the prices started to rise in SoMa. Compared to other agencies who paid $330 and $423 a square foot, PMI was able to purchase Harrison at $265 a square foot. The early mover’s advantage definitely was key in this transaction.

In order to attract new tenants to the space at Harrison, we renovated the second floor, created new PMI Properties banners for the outside of the building, and appealed to tech and digital media companies with vintage Time magazine posters of a young Bill Gates and Steve Jobs in the foyer. With the diminishing vacancy rate in the SoMa district, businesses are searching frantically to lease space.  The pricing game has become increasingly competitive as well, as evidenced by PMI’s recent lease negotion process with our newest tenant, Opower.

Overall, SoMa has blossomed into a tech and digital media mecca, with PMI’s Harrison right at the center. We are thrilled to be providing space to creative tenants who continue to cultivate amazing ideas and innovations.

To read the entire Wall Street journal article, please click here.