Companies in the technology field, especially in San Francisco, are currently in competition to hire the best and brightest young software engineers. Tech companies use a cool creative office as a tool in their recruitment wars. The San Francisco Business Times selected Sharethrough, our tenants at our brick and timber building at 394 Pacific, one of the best places to work in 2014..

The article gives some good insights into what Millennials renters look for in apartments.

Millennials, 18 to 30 year-olds, have taken the rental housing market by storm. It is estimated that this generation make up nearly 40% of the housing market, and 90% of them are renters. Millennials recognize the many benefits of renting – many of which have nothing to do with money.

This trend offers a lot of opportunity for property owners, but appealing to this crowd means more than adding bike storage, being close to the farmer’s market and launching a mobile-friendly website. Investing in the right amenities and marketing strategies, understanding how to appeal to the Millennial renter mindset, and knowing how to keep them happy means you’ll be able to cater to this market with success.

We’ve put together this list of things Millennial renters can’t live without to give you a snapshot of what makes them so different and what you can do to attract them to your property.

Millennial Renters Love:
1. Extra Amenities
Amenities such as electric car charging ports, gyms, movie screening rooms and storage lockers would come at a significant cost to homeowners. When included in the cost of rent, these amenities are quite appealing to the Millennial generation. Consider upping your amenity game by thinking of opportunities to wow. Even having consistent cell phone reception throughout the building is an amenity that Millennials, many of whom don’t have landlines, expect and willing to pay a premium for.

2. Furry Friends
It is estimated that more than 76% of Millennials have furry friends. If your rental property is not pet-friendly, you’re only attracting 24% of this huge market.

3. Technology
This may sound hard to believe, but more than 22% of Millennials have never written a physical check. Be sure to give your Millennial renters options for payment, because 38% of them prefer to make payments online. Not only will this help you attract Millennial renters, but it can streamline your business operations. Millennials also love to text. Property managers who make themselves available via text can keep their tenants happy and feeling like you’re always available to them.

4. City Life
Many Millennial renters choose to live in urban areas because they like the convenience. Walking to grocery stores, taking public transportation and having easy access to nightlife and attractions is important. When advertising your property, consider its “Walk Score” and let renters know the amenities and attractions in the immediate area.

5. Safe Environments
More than 76% of Millennials list safe streets as their biggest priority when searching for an urban rental home. By adding security features such as bright entry lights, cameras or restricted entry, you can make your property feel safer.

6. Sharing the Love
Millennials rely heavily on word of mouth, ratings and reviews. In fact, they’re more likely to share bad experiences over good ones, so be sure to lead the way with great customer service. This can mean referral business from other Millennials who value and trust their friends’ experiences.

In Culver City and other Westside locations, offsite parking may be available more than a comfortable walking distance from the office.  In most cases, dedicated shuttles or drivers are too expensive to shuttle employees from these parking locations to work.  Perhaps, services like Uber Pool could be used to shuttle employees.  An Uber Pool driver could work the parking lots and shuttle employees to work at an affordable cost borne by the employer or landlord.

We are in the expansion part of the real estate cycle.  Prices continue to rise.   Prices  continue to arise until a recession collapses prices or other shock stabilizes prices.  In 1998, the Russian Debt crisis stabilized prices, and prices did not fall until the 2001 dot com bust/recession.

PMI did a focus group with its millennial workforce to further its research in how to best design apartments for the young tech workforce who may have roommates. PMI is under production with a four bedroom apartment designed for roommates in Silver Lake. The five main take away critiques and improvements from PMI’s millennials are outlined below.

1. Neat versus messy. A big problem is who does what chores and when. It is the old Odd Fellow problem. Oscar may not mind the unit being messy with the plates unwashed, while Felix may want the unit always to be neat. One solution to this would be mandatory maid service once a week and incorporate cost in the rent. Most likely, landlords will need the roommates to continue to settle this one among themselves.

2. Whose stuff is in the refrigerator? Roommates have food storage problems. Whether it be in a designated cabinet or shelf in the refrigerator, this is a hot button topic. Clear boundaries need to be expressed, because food can become a health issue if not taken care of. Sometimes, a roommate may borrow some food without asking, leave their food in the refrigerator past the expiration date, or carry their mess into the refrigerator. Sharing space in a refrigerator can be a tricky situation, which is why Millennials expressed a desire for separate refrigerators.

3. Whose bathroom is the guest bathroom? Why is my roommate in the bathroom exactly when I need it? It’s just a simple fact – someone’s bathroom is going to be used by guests when they come over. In most instances, it will be the bathroom that is separate from the bedroom. Because roommates share bathrooms, there are potential scheduling conflicts that arise as well. To avoid these scheduling conflicts, roommates may have to coordinate with each other in the mornings before work or school. There also might be some competition in who will wake up first in order to get first access to the bathroom. To avoid this headache, PMI is designing its four bedroom property so that each bedroom will have its own bathroom.

4. If your friends are over, where do I go with my friends? Roommates sometimes have friends over at the same time. As a result, multiple distinct social rooms are recommended. One group can use the living room while the other group can use the patio, kitchen, or den area.

5. The walls are too thin. This problem stems from roommates being able to overhear conversations or noise from adjacent rooms. The decades old solution was to provide double master units where the rooms are separated by other rooms (living, kitchen, bathroom). Another solution could be the use of Quiet Rock or double drywall on the demising wall.

As with any roommate situation, each apartment with roommates is different and can have their own set of unique problems. However, PMI is focused on solving these five major issues that were prevalent in their focus group study.
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I have written in the past about the limited solutions LA creative office workers will accept for parking.  LA creative office workers, unlike their San Francisco/Silicon Valley counterparts, don’t like walking or transit.  LA creative office workers want convenient parking, and if not, valet.  New services are forming that will provide valet parking with cars stored in more remote locations.  Perhaps the new app Luxe and its counterparts can be adopted to accommodate creative office workers.

Luxe Valet App Eliminates the Headache of Finding a Parking Spot – NYTimes.com.

New Media Company’s creative offices at the Digital Bungalows

PMI leased a 3800 square foot suite to a new media firm at its Digital Bungalows in Santa Monica. The company produces high quality videos of exercise classes with top instructors in a variety not found on free sources. The videos are available by monthly membership to be viewed on any internet connected devise.

New media companies have fueled the growth of office absorption in Santa Monica and the Westside. This is one example of that trend.

Last week, the Real Estate Investment Advisers held a panel on investment trends. Everyone was complaining of the intense competition for properties driving down yields. One strategy discussed was to seek properties in secondary markets. Some investors sought properties in the best secondary locations to make up for the yield compression. However, unlike previous expansions, more investors are now seeking to move up the risk curve in new construction in prime markets. These investors claim that when the market turns down, these markets will suffer less or return much faster than secondary markets.

Original Force 3D Animation, aChinese animation firm, has leased from an 8,000 square foot creative office with PMI.  Located at 8671 Hayden Place in the Hayden Tract, Culver City is again adding another creative tenant to the ranks.

Established in 1999, Original Force provides professional animation and 3D services for feature films, television, and computer games on a multitude of platforms.  Original Force has became long-term partners and master vendors of Microsoft, Sony, EA, Disney, Tencent, SNDA, and Netease.

David Wilson and James Wilson of Lee and Associates represented both sides in consummating a five year lease.

There has been a lot of activity between the United States. and China in the entertainment realm. American entertainment companies are benefiting by featuring their talents and productions in China.  Some pundits have speculated that China could be as significant a revenue source as the United States.  Likewise, Chinese entertainment companies are starting to enter the United States.

The momentum for Chinese investment in the United States remains strong: Chinese companies spent $2.1 billion in the second quarter on investments here in the States, with more than $10 billion worth of deals currently pending.

In this case, the Culver City office market benefited from the global interaction.

I attended the LACRA Capital Market Conference and he Market Insight Conference last week.  Here are some takeaways.

Asian and Chinese money is prolific and buying up trophy and other commercial properties.  These buyers are in for the long haul and use low to no leverage.

Value add loans on 50% occupied large commercial properties carry a rate of 3.5 to 4% interest only, while long term 10 year debt can be locked in at 4 to 4.5% interest rates.

Overall the Los Angeles office market made little progress with vacancies staying flat, while specific markets are surging.  Hot markets include the Westside, but also El Segundo has begun to surge due to the growth of local tech companies.  In specific sub-markets,  brokers are now talking about rent spikes.  Even before this expansion develops, one broker frets that the good times may not last.  Downtown holds a lot of promise but tech growth has not yet materialized.

Media, tech, advertising, and other creative industries continue to drive the Los Angeles office market recovery.  Prosperity is coming to markets with histories of these tenancies.  El Segundo, for example, is  fraught with bright talent from  aerospace .  On the Westside– media, tech, and entertainment talent drives the growth. in those markets. Hollywood prospers from its long history with film and music companies.  Fashion, art, and architecture will drive Downtown’s office market resurgence.