Food trucks, folding chairs,and bicycles form the nucleus of an impromptu, semi-permanent food court.
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.
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.
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.
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.
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:
- The city has an incredibly large workforce of highly educated individuals.
- The city has one of the greatest concentrations of software engineers in the world.
- Two of the top universities in the country are located in the area.
- The city is dominant in venture capitalism.
- 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.
- 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.”
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.
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.
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.
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.