WEST L.A. — Developers, financiers and prospective tenants gathered just outside Santa Monica Wednesday to discuss the ins and outs of a type of real estate that city officials expect will play a big role in the city by the sea's future — creative office.
This new type of office space figures in the 2010 Land Use and Circulation Element, as well as several proposed projects on the east side of Santa Monica. It's often more expensive to build and rent than traditional office space because of the requirements of the companies that want it, often technology or media firms looking to provide not only a nice desk for their employees, but collaborative space and recreation opportunities.
The space also fits more people, in some cases up to twice as many as typical offices. That could have implications on traffic, which firms and their landlords try to mitigate by placing them near transit and providing alternate ways to get to work.
Ultimately, what makes an office "creative" varies from space to space and tenant to tenant, said Joseph Donaldson, director of facilities for Santa Monica-based Riot Games.
"I have to admit, at times my thoughts about it are still evolving," Donaldson told Brad Gross, the national director of DTZ, a corporate real estate services and facilities management firm.
Gross moderated a panel composed of creative office tenants at the Creative Office Summit, put on by events and e-publication firm Bisnow. The convocation took place in Element L.A., a 12-acre campus just outside of Santa Monica on Bundy Drive.
The space evoked the concept both panels of users and developers were trying to describe — high, curved ceilings with exposed wooden rafters capped an open layout which fit the crowd of listeners just in from the light breakfast set up in an outdoor causeway.
When it's finished, the Element L.A. campus will include basketball courts and green space, all with the same wireless Internet access available inside the four buildings that compose its primary office space.
It represents a major deviation from traditional high-rise office space for more traditional businesses like law firms as well as a bow to the changing needs of technology and other creative companies looking to locate on the Westside and the emerging market in Downtown Los Angeles.
The term can mean many things, said Peter James, senior strategic planner with City Hall.
"In Bergamot, we see lots of raw and very high ceilings, exposed plumbing, open floor plans and mezzanines in buildings that have been reused from their industrial and manufacturing past," James said. "These buildings, old as they are, often command higher rents than brand new ‘class a' office space because the tenants value authenticity and style."
Those "open floor plans" mean more people in a smaller space to promote collaboration between employees while other sections of the same building may be more appropriate for "heads down," solo work.
It also has major implications on traffic patterns, since the workers often use bicycles and transit for their commutes, which often happen at odd times since the kinds of businesses that use the spaces tend to have employees that work much longer hours than the traditional 9 a.m. to 5 p.m., James said.
Employees in creative office spaces matched those in traditional offices in 2013, although it far outpaced traditional spaces in 2009 when the recession hit companies — and their pocketbooks — particularly hard.
In an attempt to downsize space rather than anything else, firms flocked to the new kind of office space, according to a report by CBRE, a global research and consulting firm.
Employees only fill their traditional office space 48 percent of the time depending on the kind of industry, according to the report.
Office space per person dropped by 70 percent between 1970 and 2012 (from 600 square feet to 176), according to a report by CoreNet Global, a leading association for corporate real estate executives. That is supposed to go up to 75 percent by 2017.
Despite those figures, proposed agreements for a development in Santa Monica by the Hines Corp. estimated roughly 286 square feet per worker, which caused the City Council to direct planning officials to make sure the figures for it and a possible agreement for the Bergamot Transit Village matched modern practice.
While the trend toward smaller offices picked up in 2009 and 2010 because of the recession, creative office space became a desirable commodity for other reasons that became costly to developers, said David Simon, executive vice president with Kilroy Realty.
The "why" on the expense question varies from space to space — creative office tenants want more amenities than their traditional counterparts, be that bicycles and associated amenities for their employees, sports courts like at Element L.A. or an agreement to bring dogs to the building.
Milan Ratkovich, development manager for the Ratkovich Co., had a fairly unusual request from his Venice tenant, Google.
"On a Thursday afternoon, they sent an e-mail asking, ‘What are your insurance requirements for bringing a 4.5-ton elephant to the parking lot?'" Ratkovich said. "That's not a request a landlord gets every day."
It's a trend that landlords will have to get used to, said Howard Stern, president of Hudson Pacific Properties.
"That's the new game in town, and it's here to stay," Stern said.
ashley@www.smdp.com
