SILICON BEACH -‚Äî 1333, 201, 1447 ‚Ä¶¬† Randy Starr rattles off creative office space addresses like a bingo announcer.
The longtime Santa Monica real estate broker and principal at Avison Young specializes in those Silicon Beach-desired offices with skylights, exposed brick, and high ceilings.
As tech business booms in the city by the sea, creative office space vacancy rates are the lowest in the region.
Silicon Beach is expanding south because some companies can‚Äôt find the room here and others have found better deals but, Starr said, Santa Monica will always be the center.
The theory behind the controversial Hines development project planned for the east side of the city is, in part, that the city is short on creative office space.
The Daily Press spoke with Starr about the past, present, and future of one of most valuable commodities:
Daily Press: What was it like when you came to Santa Monica?
Randy Starr: I came in this area back in 1989 when this place was considered a ghost town. (City Hall) just redid the street of the promenade. The office tenants were more entertainment, accounting, law firms, stuff like that. It was before the whole creative market wave.¬† In those days, I would show spaces on the promenade and there was none of the foot traffic and it was just homeless people. I‚Äôm very pro-homeless and I‚Äôm sympathetic to them but in order to show a space I would sometimes give them two or three dollars just to clear the area. That‚Äôs literally how I did my first two or three deals there.
DP: What created Silicon Beach?
RS: Everyone says that Silicon Beach started in this last three or four years. It really happened in about 1998 or 1999. That was the first dot com wave. That was a time when everyone was really irresponsible. That‚Äôs when everyone was putting so much money into these companies. You had all these CEOs who were getting $80 million or $40 million and the CEOs were taking all that capital and taking these old spaces that might have been old law firm and accounting spaces and gutting them and making this creative office space.
RS: Irresponsibly. Because they were spending so much money in making these spaces spectacularly nice and they were burning money every single month and at that point everybody was waiting for a miracle, whatever their idea was. They‚Äôd go bust.
But what that created was all this infrastructure. It was the only good outcome. So when Silicon Beach started again, we had these spaces that already had the (tenant improvement) put into them.
Then the buildings were being built with the idea in mind that you can‚Äôt build a traditional office building. They‚Äôve seen what‚Äôs going on. You had all that being built at the same time and the city was embracing that kind of design. It was a decision by a lot of smart people and luck, there‚Äôs always luck in anything you do.
DP: Give an example of the irresponsible office makeovers.
RS: Doctor Evidence (right next door to Starr‚Äôs office) is a great company in a great space. That was actually built out in ‚Äò99. Back then a different tenant spent like $680,000 in approximately 7,500 square feet. That‚Äôs why tenants stay: Because we have all the products existing.
DS: So then why did the companies come for the first dot com wave?
RS: Because of the size of the floor plates and you had the beach, the promenade for everyone to walk on. Many of the same reasons as today.
When these young bright kids are coming out of Berkeley, UCLA, or Stanford and they‚Äôre looking at all these great startups with these great apps they may go on an interview and if the company has a great space here by the promenade or in Venice, if they‚Äôre getting the same salary in each place they‚Äôre going to want to work here.
DP: Imax and Sony both recently announced they‚Äôd be moving large offices to Playa Vista. Is Playa Vista threatening to steal Santa Monica‚Äôs most profitable businesses?
RS: They only go to Playa Vista if they have to. That‚Äôs usually if Colorado Center or Watergarden, buildings like that, don‚Äôt have space. They would want to be in Santa Monica. That‚Äôs because most of the upper echelon owners of the companies ‚Äî whether it‚Äôs the new kid who just got a bunch of money versus the more seasoned CEO who‚Äôs been through the dot com wave ‚Äî they all live generally still around Santa Monica, Palisades, Malibu.
The good news is that in Playa the rents are not too far off because of the cost to build out. We‚Äôre already built out here.