We are pleased to announce our acquisition of 5665 Fayette Street, a six unit apartment building just north of York Boulevard in Highland Park. The purchase price was $980,000 with a GRM of 13.7. This is PMI’s third property in Highland Park.

Just blocks from York Boulevard – one of two major commercial corridors in this neighborhood – 5665 Fayette is in a prime location within this up and coming neighborhood. Tenants and business owners alike have been flocking to Highland Park due to the artistic flavor, proximity to entertainment jobs, and walkability to entertainment and eating venues. We are moving just as quickly to provide creative and unique housing. We intend to reinvent and extensively renovate this 1960 building  into a contemporary modern complex to fit the taste of the Creatives moving into Highland Park. At the same time, we intend to maintain and enhance the original property’s garden character.
5665 Fayatte is PMI’s 19th property in Northeast Los Angeles.

Bisnow hosted a Rise of Silicon Beach conference on Thursday February 26th, 2015 at the Water Garden in Santa  Monica.  Matt Miller of Cresa led a panel of four Los Angeles Technology Company CEOs on what they were looking for in their office space.  Here are some of the takeaways.

1.  Companies look for the right vibe and right facility depending on  the company’s stage. As a start up, they may look for something more edgy and with less thrills and prestige.  Early stage companies need to consider what investors will think when they visit the company.  The offices should not appear extravagant.  Later stage companies want to portray that they made it.  This could take the form of many amenities:  gyms, cafeterias, yoga classes, meditation rooms, etc.

2.  The CEOs wanted their employees to stay on campus for lunch and not to leave the facility.

3.  It is now easier to recruit engineers to Los Angeles. There is now a critical mass of technology companies in Los Angeles, and it is socially acceptable to locate a tech company in Los Angeles now.   It use to be that you could only recruit entertainment, advertising, and media talent.  Now you can recruit engineers from out of town.  However, it is easier to recruit engineers trained in Los Angeles and not lose them to other geographical areas.

4.  The positives for recruiting are the beach and the weather.  Engineers from other areas enjoy the weather and are impressed with the beach amenities when they come to visit.

5.  The negatives for recruiting are the traffic and cost of housing.  Once  employees get older and have children, they want a house and are forced into long commutes.  Initially recruits fall in love with the beach scene and don’t realize the commute they may endure.

6.  Where a potential employee lives may greatly influence what firm he chooses to work at.

7.  The CEOs based their office location decisions on proximity to where they lived.

8.  There are different tech clusters all over Los Angeles with different personalities.

12.   Tech is moving to Downtown very slowly. Craycroft ventures just located an office in Downtown Los Angeles.  There is more tech in the South Bay. Commuting east is difficult.  Employees who live on the Westside don’t know how long it will take them to get home from Downtown, and it makes it hard for them to plan their day.  Also, employees who live in Downtown and commute to the Westside usually don’t last more than nine months.

13.  Lots of people live in the South Bay and commute into the Westside as long as they live north of Hermosa Beach.

14.  With all the travel requirements, proximity to LAX is still a consideration in the office location decision.

15.  Los Angeles has the newest and fastest growing tech scene, and it will grow faster than Seattle’s or Austin’s.

16.  Los Angeles capital sources do more seed funding.  For later stage funding, companies need to go to venture capital companies up North.

A condo in San Francisco is being sold with a free year of uber rides worth $5,000 to compensate for a lack of parking.

How about using that idea with office space.  The Landlord would provide an allowance in the lease for uber pool rides to and from local parking garages.

People lined up for ice cream in the Art District

I was downtown today on Saturday at 2pm in the Art District. I notice many young millennials out on the street walking around, browsing in several new or pop up retail store, or sitting at outdoor cafes. It was a different vibe than even several years ago.

Art District Patron Sitting outdoors in restaurant.

There was a distinct difference between these young millennials and those that are moving into Silver Lake, Echo Park, Virgil Village, and Highland.. The latter Northeasters are hipster, rockers, Gothic, or grunge. Those in the Art District were very fashionista.

Creative offices At 3525 Eastham

PMI has appointed Carl Muhlstein and his JLL team to lease its 17,000 square foot creative office availability at 3525 Eastham Avenue in Culver City. 3525 Eastham is a creative office building with 28 foot dramatic bow truss ceilings and is move in ready. PMI specializes primarily in smaller suites of 1,000 to 10,000 square foot space. PMI brought JLL on to help it lease this larger availability. The 17,000 square foot availability is one of the few such availabilities of its size in the super hot Culver City market, which has recently attracted tenants from tech, entertainment  and new media.

Carl’s special emphasis on the entertainment industry, creative office and workplace strategies makes him an ideal choice for this assignment.

Fear in 2009 and Greed in 2015

We have finally moved from fear to greed.  Nobody is worried about recessions.  Builders are building. Contractors are busy, and bids are going up.  Commercial and residential property prices are going up.  Interest rates are low.  To do deals today, you have to either lower your margins or increase risk or bet more on the future than the present.  Up it goes until it blows.

Plentiful Parking at the Reserve in Playa Vista

Playa Vista had plenty of large blocks of space at relatively affordable rates and parking .  In an expansion, large blocks of space are hard to find, and tech employers found it in Downtown Los Angeles.   In Los Angeles, parking for employees is also hard to find.  Downtown Los Angeles, Santa Monica, Culver City, and Hollywood have or will soon have transit but not plentiful parking.  At the moment, Los Angeles is a City of drivers.  Playa Vista landlords can accommodate 4 cars per 1000 square feet.  That was a winner.  You can read more on Playa Vista in the article below.

Playa Vista turning into Silicon Valley South as tech firms move in – LA Times.

Highland Park Renters Protest Gentrification

PMI has been involved in many investments in improving neighborhoods. This includes Santa Monica in the early 90s, Venice and Culver City in the mid 90s, and SOMA in the mid 2000s. In most cases, we invested in creative offices in improving areas after recessions.  Those offices were filled with companies that  brought jobs. We took obsolete warehouses and turned them into productive offices bringing in jobs And most people in the community thought that was a good thing.

We are now investing in Northeast LA and taking obsolete run down apartments and turning them into renovated creative apartments. We are helping improve the neighborhood. However, not every one in the community thinks this is a good thing. Lower income renters feel they are being displaced and pushed out of their neighborhood.   This was true of Venice in Los Angeles, Chelsea and Harlem in New York, and the Mission District in San Francisco.  Now it is happening in Northeast Los Angeles and specifically in Highland Park.  Recently, renters held protests against gentrification.  An apartment building that we are substantially  renovating was one of the properties cited by the protestors as displacing the original tenants.  We must now work to soften the impact of gentrification for this constituency.  You can read some of the issues in the Los Angeles Times Article below.

Highland Park renters feel the squeeze of gentrification – LA Times.

Open plans promote collaboration.  However it is critical to have the right mix of open and private spaces.  Some employees cannot function in open spaces.  Some need to be on the phone or in conferences.  Even those who can work well in an open plan will still need a private space for conferences.  Some open plans may not be providing the right mix of public/ private spaces.   Our experience would show that there be at least one private space per 1000 square feet, and this ratio should be increased for a density above 5 employees per 1000 square feet.

Who Moved My Cube? – HBR.