Tag Archives: Los Angeles

RidePal: An Alternative for LA Commuters

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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

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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

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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.

Examples of Los Angeles’ Emerging Video Content for the Web Companies

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Los Angeles is finally gaining some success in finding a way to apply its creative talents in media and entertainment to the web.  As a result, a new emerging industry is forming that combines artist’s talents with digital tech expertise. These companies produce original video content for the web.  Below are some stories on couple of these firms.

Culver City Evolves from Quiet Community to Urban Area; Gains a ‘Media for the Web’ Cluster

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Maker Studios, a company that produces media content for the web, just signed a 50,000 square foot lease at 3562 Eastham Drive in Culver City.  Maker Studios joins other recent media-for-the web content companies in the Hayden Tract.  Several companies include Four Wall Studios, Mahalo, and Popsugar.  The cluster of these firms gives rise to a small community that could encourage other firms in this emerging industry to also seek office space in Culver City.

The success of these firms would also help create a new source of demand for Culver City creative space.  These media-for-the web firms join other creative office companies in Culver City that include digital advertising, entertainment, old media, and software firms.  A recent article from the Los Angeles Times discusses the success of Culver City and its challenges.  The addition of 1100 parking spaces at the Washington and La Cienega Expo stations helped convince these firms to locate in Culver City.  As some tech companies scale to 10 employees per 1000 square feet, the Expo line may provide one of the few ways for firms to help provide an alternative to parking to accommodate such density.

Culver City has transformed into one of main areas on the Westside that many tech and media tenants have been drawn to for creative office space.  In the second quarter of 2012, Culver City  had a net absorption of 16,000 square feet, with the asking rates for Class A and Class B space remaining constant from the first and second quarters of 2012.

The Future of Office Workspace: Less is More

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Some may argue that office space in West Los Angeles has become too plentiful. Soft markets, when there is an excess of supply over demand, occur about 80% of the time.  Conversely, tight markets occur about 20% of the time.  Los Angeles brokers and building owners have to face the reality that demand has been decreasing over the last two decades.  This industry is very mature, and it may be time for a change.  As this article from CoStar Group points out, one of the changes that should be made in office design is to accommodate the needs of the next workforce generation.  Unfortunately, the next generation demands less, not more, office space per employee.

To add value to their properties, Westside Los Angeles office owners will need to design spaces that operate with greater efficiency.  They will also have to account for greater densities of employees in these spaces.  These two tasks need to be accomplished simultaneously while continuing to foster an interesting and creative atmosphere.  These environments will further promote collaboration and will have a positive effect on employees rather than sticking them in cubicle farms.

The Westside does not need more space, but simply better quality of space. Despite a 20% vacancy rate in Playa Vista, developers are planning to bring on another million square feet of office space in the next couple of years.  If the future workforce demands less space, one may question why this is being planned.  Investors, developers and owners have to ask themselves if they are meeting a tenant demand or investor demand.

Silicon Beach Startup BetterWorks Has Shut Down

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TechCruch has reported that BetterWorks, a startup based in the Silicon Beach area has shut its doors at the end of May.  This is a giant blow to the Silicon Beach startup movement in Los Angeles.  Silicon Beach needs a startup that can stand the test of time and be a big hit in order to start competing with other tech hotbed areas in the country.

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.”

Forbes Blog Attempts to Crown Los Angeles Ahead of Silicon Valley in the Startup Race

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We might be so bold as to say that Los Angeles surpassing Silicon Valley in the startup race is not going to happen.  However, this recent article in Forbes does not actually discuss the placement of Los Angeles or Silicon Valley in the startup race. Instead, it speaks of the resistance one marketing tech worker had in moving to Los Angeles from San Francisco.  Despite the misconceptions that some Silicon Valley residents may have about the tech and startup scene in Southern California, this article points out that there is a lot of promise in Los Angeles.  A good argument that is made in the article is if L.A. wants to gain a traction on a higher spot in the tech startup race, there needs to be more tech talent that is interested in entrepreneurship.

All differences aside, we have a lot of tech in Los Angeles.  If aerospace technology were to be included, we may blow away Silicon Valley.  During the dotcom boom, Los Angeles had the number four spot in venture capital funding behind Silicon Valley, Boston, and New York according to the National Venture Capital Association.  Guess What?  We still have the number four spot.  As the technology industry comes back as a whole, Los Angeles tech is coming back as well.  We are rebuilding the infrastructure we had during the dotcom boom.  Although some valuations may appear bubbly–venture funding does not even come close to rivaling the dot com boom.  Venture funding reached $99 billion in 2000 versus $28 billion in 2011.

Los Angeles will not catch up to the Bay area anytime soon in technology and startups, and conversely, the Bay Area will not catch up to Los Angeles in the movie and media realm.  Both have too much history, infrastructure, institutions, and alumni in each of their respective areas of domination.  Los Angeles can excel in the niche tech areas of content convergence, such as Hulu and Demand Media.  LA can also do extremely well in advertising and marketing tech (Adly), and ecommerce (Shopzilla, Fandango).