Downtown's Dog Daze
Downtown LA's office building owners would love to establish a creative office market, but will these pet-loving tenants be allowed to bring their dogs to work? (And if so, will those dogs be allowed to bring their chew toys to work?) That was one of the topics explored last week at Bisnow's fourth-annual State of the Market.
Brookfield leasing VP James Malone says the acquisition of the MPG portfolio was a "good bet" for the firm. Explaining why the company took such a large position in Downtown LA, he says Brookfield has seen the same level of activity in other revitalized markets like Toronto and Manhattan. Besides that, "They're great assets" with a lot of history to them. Indeed, one of them, The Gas Company Tower, served as our venue. (And thus we will be added to the historical record.)
Howard Stern says creative office tenants will go vertical, but it has to be organic and have a feel that represents their culture. "You can't take a big father's office, open up the ceilings, and expect them to walk in there." Howard is headed to Tuscany for the next several months, having recently left his job as president of Hudson Pacific. (We're all expecting postcards, Howard.)
According to Rising Realty Partners president Chris Rising, the company's projects reflect the new LA: an open environment with young people who are excited. Given the wealth of local universities, there's a reason for people to be here. "All you have to do is come out of college with a great idea, have a computer, and you're in business." (Just don't tell your clients that you're living in your parents' house.)
Looking at other markets can be instructive (now that you're out of school, you can even copy off their papers). Senior managing director John Miller notes Tishman Speyer built 555 Mission in San Francisco at the end of the last cycle and filled it with traditional tenants. Its new project, Foundry Square III, will be anchored by tech firm Neustar. But with numerous law firm leases expiring in 2015-2016, he says, traditional tenants aren't out of the picture.
Watt Cos president Nadine Watt says the 30-year-old Watt Plaza recently achieved LEED Platinum and added a dog run (or walk if your dog is lazy). The company also built some creative spaces in addition to the office tower complex's traditional suites, because "there's room for both." The company has irons in the fire in other markets besides LA, including Maui and Park City, where Watt has a mixed-use retail and luxury condo project on Main Street.
President and CEO Richard Stockton notes Singapore-based OUE made its first US acquisition last year with the US Bank Tower and is bullish on the prospects for Downtown LA. They're also value-add and patient investors. Even though the recovery here is lagging other markets like San Fran and New York, he says, "We have a great asset."
Allen Matkins partner Tony Natsis moderated our owner and developer panel. He asked if dogs, a common sight in other tech and creative strongholds, or lizards (not so common) will be allowed inside Downtown LA office buildings. According to Richard, don't look for tenants' four-legged friends in US Bank Tower anytime soon—there's a segment of office tenants who don't want dogs in the workplace, he says.
We couldn't put on events without sponsors—we snapped Kastle Systems' Chris McKenzie before the program. James believes Downtown "over a long period of time" will rise to the level of other markets that Brookfield is in. Noting that companies look at employees now as though they're customers and end users, Howard says doing deals requires building a relationship with a tenant's head of People and Culture as much as with the CFO and CEO.
We also snapped CPM One Source's Mike Bennett. One of the few Downtown LA naysayers on the panel, John says he's having a hard time getting excited about the market because the residential boom may not translate into office demand. On the other hand, Nadine says you can't underestimate Downtown; Century City is a little tough because of traffic gridlock. Chris counts Frogtown, Highland Park, and Boyle Heights among the parts of the city his company thinks are next.