Why Downtown Will be LA's Next Tech Hub
Drive down most main drags in Downtown and you'll see the old office guard is still in charge, with towers full of accounting outfits and law firms aplenty. Will the market cash in on the tech boom? Gensler CEO Andy Cohen says it's sort of inevitable.
Andy told the more than 550 commercial real estate pros at Bisnow's Evolution of Downtown this week that it's all about availability. The tech hubs in LA remain closer to the water, but time and space are running out. "Playa is almost done and the Westside is full," Andy says. And while Hollywood is experiencing a renaissance of its own, where else can expanding tech companies look?
Andy says in the next one to three years, there will be a tech company that needs between 300k SF and 500k SF of space. "There will be nowhere else to find it but Downtown," he says.
Allen Matkins partner Peter Roth, who moderated the panel, says one big hole in the Downtown market is the complete lack of co-working space. Seemingly every major metro in the nation has a plethora of collaborative, on-demand office spaces available. Downtown LA is lagging, Peter says.
Late last year, collaborative workspace giant WeWork leased more than 44k SF at the Fine Arts Building at 811 W 7th St. WeWork deputy head of community Adam Wacenske says he expects big things for shared workspace in Downtown, as more startups look at the market.
Cross Campus CEO Ronen Olshansky also is bullish on Downtown, and rumors are swirling about the company's expansion into the market. Ronen says when he opened up his flagship in Santa Monica in 2012, he severely underestimated the demand for co-working space. Earlier this year, Cross Campus expanded into Pasadena. Downtown is next.
Even the "conventional" space in Downtown is changing. Rising Realty Partners is best known in the market for its stunning repositioning of the PacMutual campus. Originally built in 1908 with additions in 1921 and 1926, PacMutual is the oldest property in SoCal to be LEED Platinum certified. Rising SVP Marc Gittleman says when the company picked up the building, its last lease was done at about $1.80/SF. Today, rents start at $4/SF.