Changing Office Trends Hold Major Implications for Future Office Demand

Like many other parts of our economy, the office market is going through seismic shifts in demand usage.  Private offices are out, and open workspace is in.  Some of the causes for this shift are technological.

Twenty years ago, no one used email; instead they fielded or made about 70 to 100 phone calls a day.  Today, most people field or make around ten phone calls a day and send, respond, or read 100 emails.  Hence, the need for private space–either in offices or workstations–has radically decreased.

Digital storage has lessened the need for physical storage.  Cloud based computing allows one to work anywhere.  The result is fitting more people into less space and thereby reducing the demand for office space.  Companies are figuring out that they can reduce real estate costs and, at the same time, create a more contemporary environment.  Office owners must focus on making their space more productive to be more competitive.

The higher density in office space movement exhibits the following:

1.  Working in open environments with less walls and partitions.

2.  More shared collaborative spaces: conference rooms, meeting rooms, break rooms, bigger kitchens and informal meeting areas.  Some of these areas are also used for focused work or making phone calls for those who need private space at variable times throughout the day.

3.  Amenities and Break areas: coffee refreshment areas, ping pong table, and Foosball.

Below is an as built plan of the West Los Angeles 10951 Pico Boulevard Third Floor, excluding the mezzanine, which is roughly about 8,000 square feet.  The plan shows 20 private spaces and room for about 12 workers in the open area.

As Built 8000 sq ft

As Built 8,000 Square Feet

This next space study shows an extreme move to density with five enclosed areas, including a conference room and room for a 115 workers in open areas.

Max Density

Max Density

A more optimal plan for a software company would involve a max density of 10 people per 1000 square feet.  This would include more disbursed private spaces such as a small conference rooms and workrooms with computers and phones.  Some open area would be converted to informal meeting and recreational areas that would bring density down to 5 to 6 per 1000, but still allow temporary scaling of people if required.

For an example, click on the link below:

28041 – 2013 04-09 Conference Room Options

Creative space helps alleviate the impact of this density, as volume and natural light give the sense of greater space despite the density.

Volume Mitigates Density

Volume Mitigates Density

Read the full story on changing office trends from the CoStar Group’s website here.

Creative Spaces for Creative Companies– Moxie Pictures

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.

Incorporating Coffee Shop Ideals in Creative Office Space Design

An article from Gensler was published recently which discusses what we can learn from a coffee shop relative to the current design of office spaces.  One observation the article mentions is to have people sit facing away from walls.  When you go into a coffee shop alone and select a seat–you will typically take the seat with your back against the wall and facing out.  Gensler concludes that this is the way most people prefer to work.

The article further talks about this method being implemented in one of their studies with fantastic results.  The seating approach used has increased collaboration in the office.  The way people sit at their desks and can be seen by others allows people to better notice when someone else is available talk or work with.  With increased collaboration and respect among employees, this workplace becomes a more comfortable and enjoyable place to be.

The article also points out that different generations of people tend to exhibit the same tastes in regard to seating and working at a coffee shop.  This too, can be great for a company that is wanting to transition to a open plan.  Knowing that workers of different ages don’t greatly differ in their office style work space tastes will help make the decision to change the layout of the office an easy one.

There are seven points to this article to take into consideration in remodeling or designing creative office space.  Companies may experiment with these ideas and possibly make an effort to modify the office plan in order to increase collaborations and creativity throughout the workforce.

We have not tried any of these ideas out.  However, we have seen the importance of the kitchen and break area grow.  In one 12,000 square foot suite, we built two kitchen and break areas.  In another 10,000 square foot deal, the tenant refused to move in until the kitchen break area was totally finished because the tenant viewed it as a critical part of the space.

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

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

Creative Spaces for Creative Companies– Applied Semantics

Gil Elbaz co-founded Applied Semantics, later acquired by Google in April 2003 for $102 million.  Google used the technology from Elbaz’s software to create the AdSense program.  Adsense allows publishers in the Google Network of content sites to serve automatic text, image, video, and rich media advertisements that are targeted to site content and audience. For example, if an article appeared about dogs, advertisements for dog food may appear with it.  Applied Semantics was located in Santa Monica at PMI’s at 2644 30th Street building from 2003-2005 both prior to and after Google’s acquisition. PMI produces creative spaces for creative people.

Image courtesy of the Los Angeles Times

Media Company Sugar Publishing, Inc. Leases 15,300 Square Feet in Culver City

Sugar Publishing, Inc., a privately owned media company that produces a network of blogs and ecommerce sites for women, leased 15,300 square feet at 3525 Eastham Avenue in Culver City’s Hayden Tract this month.  Sugar follows Mahalo Inc., another digital media company, who leased 13,300 square feet in November at the same property and also left Santa Monica in search of more affordable creative offices.

Culver City has become one of the best Westside alternatives to Santa Monica for creative space at significantly lower rents.  The area is now a hotbed for entertainment and media companies due to its prime location on the Westside, its new restaurant and art scene, and its plentiful supply of converted warehouses. With 3525 Eastham being positioned well in the Hayden Tract, PMI designed the building with creative companies in mind.  According to Jeffrey Palmer of PMI, “PMI originally designed 3525 Eastham for software and web based companies that need high density while maintaining a creative environment; although the design works very well for entertainment companies as well.”  The 24 foot soaring bow-truss ceiling, multiple oversized glass roll-up doors and numerous skylights help create a sense of spaciousness even with very high employee counts.  The City of Culver City is very interested in attracting digital media firms to the area.  It recently committed to purchase 180 parking space privileges in a parking structure to be built by a local developer.  Culver City has invested in parking and transportation infrastructure (including new redevelopments at the nearby Expo light rail station at Washington and National) to help entice these new digital technology companies to Culver City.  In addition, a new Hayden Tract Owners Association has formed to build 120 additional parking spaces on a former Cal Tran easement and to promote other improvements to the Hayden Tract.

Sugar Publishing has expanded from their San Francisco & New York locations to begin their tenure in Los Angeles.  Sugar prides itself in providing their 20 million global unique users insanely addictive content, unmatched shopping experiences and a robust social community.  The company has two business segments focusing on original content and commerce with a portfolio of brands including PopSugar, FabSugar, BellaSugar, FitSugar, GeekSugar, PetSugar, and PopSugar Retail Therapy.  Cementing their spot as a media force to be reckoned with, in May 2010, Sugar was named among the Hottest Companies in San Francisco. Sugar’s employees are extremely passionate about the brand, which shows in the amount and quality of content they produce on their numerous sites.

Brian Sugar currently serves as the company’s CEO and Publisher, while Lisa Sugar is the company’s Editor-in-Chief.  According to their website, the story behind the creation of Sugar, Inc. came from a comment at Oscars party Brian and Lisa Sugar threw at their home in February of 2005.  In 2006, they received Series A Funding from Sequoia Capital and have been expanding ever since.

During the pre-leasing process, PMI Properties was represented by David Wilson of Lee & Associates and Sugar Publishing, Inc. was represented by Matt Brainard of Studley, Inc.

Wall Street Journal Spotlights PMI Properties’ Harrison Building

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.