COLORADO AVE The announcement last week that advertising giant Rubin Postaer and Associates will move from the Yahoo Center to spacier digs in Playa Vista marks the most recent transplant in a series of companies that have packed their bags and headed south, raising concerns about the price of commercial real estate and lack of space in Santa Monica.
One of the largest advertising firms in Southern California — with clients including American Honda, Blue Cross and am/pm — Rubin Postaer recently inked a lease agreement to occupy the former U.S. Postal Service building off of Jefferson Boulevard in two years.
Gerry Rubin and Larry Postaer cofounded the agency in 1986 in West Los Angeles and relocated the business to Second Street in Downtown about five years later. The company quickly grew, expanding to four different offices in and around the Third Street Promenade, until in 2003 when they all consolidated and moved into the Yahoo Center.
With the company bulging at the seams again, executives began looking for a new home, surveying altogether more than 30 different properties on the Westside, ultimately choosing a 227,000 square foot facility in Playa Vista because of what it had to offer in cost and size.
“One of our priorities was to be in a facility that we could brand,” Rubin said. “We just could not find such a space, such a facility in Santa Monica that would allow us the opportunity to do that.”
A handful of bigger businesses have uprooted the past decade in favor of cheaper and roomier possibilities in Culver City, Marina del Rey and Playa Vista where space is relatively more plentiful than in Santa Monica, a city that is mostly built out.
Such was the case for the X PRIZE Foundation. In need of more room, the nonprofit moved last month from its long-time home on Fourth Street to Playa Vista. The organization, which inspired the first private flight to space, was launched in 1995 with the goal of creating breakthrough projects for the benefit of mankind by offering hefty prizes for winning competitions.
Sarah Evans, spokeswoman for X PRIZE, told the Daily Press last month that the growing organization was moving because of the need for more space, unable to expand in their present quarters.
Some of the other companies that have departed Santa Monica in recent years include Metro-Goldwyn-Mayer and Symantec Corp., which after more than 10 years off Cloverfield Boulevard, moved to its own building in Culver City during the fall of 2007.
“It’s not a reflection of Santa Monica,” Cris Paden, spokesman for Symantec Corp., said. “We just needed the room and space to build our own building.”
Janet Blum, the executive director of the Westside Economic Collaborative, said the departure of some companies to the south has been a problem for the city for quite a long time, pointing out the issue isn’t just about cost, but rather the space constraints.
The regional nonprofit organization aims to strengthen the local economy by promoting workforce development and local business initiatives. Blum said that from the collaborative’s point of view, a business moving from Santa Monica to another part of the Westside doesn’t necessarily present a problem, pointing out that the dollars being spent still remains in the region.
“That money flows to each of the municipalities that abut each other,” she said. “If someone was moving across the border to Playa Vista — although from Santa Monica’s perspective that is a problem — from the regional perspective it’s not since we have to assume they chose to remain in the vicinity for all the reasons that make Santa Monica wonderful.”
Playa Vista could grow to become a real estate competitor to Santa Monica, offering a lower business tax structure, more square footage, cheaper rents and access to restaurants and retail, according to Joseph Gabbaian, the senior vice president for Grubb & Ellis Company in West Los Angeles.
Gabbaian, who has practiced commercial real estate in Santa Monica for 20 years, said that some of the more reasonably priced vacancies in the city are for sub leases, which create problems for companies seeking long-term agreements.
A number of large media and technology companies have announced plans to move to new developments underway in Playa Vista, including Fox Interactive Media, which will occupy several thousand square feet in the Horizon at Playa Vista.
Belkin International, a leader in connectivity solutions, signed a lease to occupy 150,000 square feet in The Campus at Playa Vista, a 64-acre office development that just began construction in July.
“If Playa Vista starts getting a core of big companies, especially if they get clients in the entertainment industry and get momentum, it might become a big drain,” Gabbaian said.
The fact that there are already a number of media companies in Playa Vista made it an even more attractive option for Rubin Postaer and Associates. The locale is also closer to one of the firm’s biggest clients, American Honda, which is in Torrance.
“It appears to be coming into its own center for the creative entertainment arts,” Rubin said.
Experts stress that Santa Monica still remains one of the most ideal locations on the Westside for businesses, including up-and-coming ventures. Some existing Santa Monica companies in search of more space have found success in the city.
The Recording Academy, which is currently located on Pico Boulevard, plans to move to the Lantana Entertainment Media Campus on Olympic Boulevard next year.
One of the newest faces in town is Tsavo Media, a new Web publishing company that opened its headquarters at a 5,000 square feet space on Main Street last month.
“The Santa Monica area has become the hub of interactive here in L.A. so for us it wasn’t really a question,” founder Mike Jones said. “It’s where the talent is, where the partners are, and where the clients are.”