Rebooting the Boring Old Office Park
LA Downtown News 1/13/15 http://www.ladowntownnews.com/news/rebooting-the-boring-old-office-park/article_4805fe36-b955-11e5-95d0-7b96158faeb4.html
DTLA - The changes to the staid, 36-year-old Figueroa Courtyard office park have been gradual, but unmistakable.
Over the past few months, bright strips of color have been painted onto the roofline of the complex’s five concrete buildings. Street artists Bumblebee and Kelcey Fisher have added a pair of richly detailed murals near the main entrance on Figueroa Street. The hulking steel beams etched with “Figueroa Courtyard” and the grass-and-stone berms at the corner of Figueroa and Third streets have been demolished.
Inside the complex, bulky concrete planters and benches have been tossed to create airier walkways. A hammock and gear for games of cornhole flank one sidewalk. A lanky charging station for phones sits nearby, its blade-like solar panels stretching toward the sky.
Then there’s the work inside the two- to five-story buildings: Outdated drop ceilings, office walls and faded carpet are being torn away, replaced by raw concrete and open spaces. Hundreds of yards of fiber optic cable carry lightning-fast Internet throughout the buildings.
Even the name of the 1979 complex has changed to reflect the time and location — it is now called the Park DTLA.
It’s the newest effort from Rising Realty Partners, the development company led by Downtown real estate pioneer Nelson Rising and his son Christopher. The duo hit a home run with the renovation of the PacMutual building in the Financial District, transforming the aged property into a bright, modern creative office hub. Purchased in 2012 for $60 million, with $25 million invested in renovations, the PacMutual complex sold for $200 million in September.
Now, the company is wrapping up work on the 270,000-square-foot office park it acquired in January. As with PacMutual, RRP is aiming to lift the complex’s sagging occupancy — about 70% currently — and make Park DTLA a destination for tech and creative tenants.
The campus is unlike anything else in the Central City, said RRP President and COO Christopher Rising.
“What we saw and still see is that this is the only low-rise office campus in Downtown L.A. There will not be another one built in the future, in our opinion,” Rising said. “So we have a very unique campus feel, like something out of Playa Vista, right in the heart of Downtown L.A.”
RRP would not reveal the cost of the purchase or how much they are spending on the upgrade.
As with many creative office flips, RRP wants to create flexible rooms that can move from executive office to group space on the fly, said Rachel Lee, the company’s vice president for asset management and development.
While RRP would not disclose specific rents, ongoing lease talks are in the range of $3.20-$3.50 per square foot, according to Marc Gittleman, RRP’s senior vice president of third-party management. That’s slightly above the Downtown-wide average of $3.07 per square foot, but below the Los Angeles area average of $3.60 per square foot for Class-A office space, according to a third-quarter 2015 market analysis from the firm Transwestern.
Just as crucial to the renovation is changing how tenants utilize Park DTLA’s outdoor space.
“Figueroa Courtyard was made of traditional offices, just in a park setting. It wasn’t impacting how people worked,” Gittleman said on a recent tour of the campus. “It wasn’t an effective use of the open space.”
Case in point: That clunky Figueroa and Third entrance is becoming a tenant common area, with a wrap of hedges and lights strung above. The idea is to use it as workspace in the day and for parties or events in the evening, Lee said.
“It’s another feature for tenants that are leasing 2,000 square feet, but want to host their party here without added costs,” she noted.
The ability to work anywhere on the Park DTLA site is made possible through the use of RRP’s campus-wide WiFi system — the company has a partnership in a telecommunications outfit dubbed 5x5 Telecom. RRP had a similar set-up at PacMutual, giving tenants higher speeds, faster installation and servicing and lower costs than competing Internet service providers.
Key tenants in Park DTLA include UCLA Extension and American Public Media’s “Marketplace” radio program. Other tenants include the Associated Press and StubHub.
RRP’s work includes efforts to increase interaction among tenants and even the general public, Lee said. RRP is programming a slate of tenant events, like a recent ping-pong tournament, and also inviting Downtowners into the campus with film screenings and other happenings.
“We believe that creating an interactive community is part of the beauty of real estate. You can change the neighborhood for the better. That’s often only possible with residential, so this opportunity with commercial space is impactful,” Lee said.
That kind of communal environment and programming can be helpful in wooing a tenant looking to recruit young talent. The campus/park setting, on the western edge of the Central Business District, can also be a nice alternative for businesses looking for top-of-the-line offices in a more laid-back setting.
“Downtown has a lot of buildings that provide great workspaces, including open creative-style spaces, whether it’s a historic structure or a skyscraper, but there isn’t a low-slung campus setting like the Park project, and it allows [RRP] to have a lot of fun with open space and make something unique in a dense urban market.”
Park DTLA is still a work in progress, but RRP has already acquired its third Downtown project: One Bunker Hill, at Fifth Street and Grand Avenue near the foot of U.S. Bank Tower. The 1931, 14-story structure, originally the home of Southern California Edison, will have many of its original features restored and its “outdated” office spaces stripped and reworked, according to Christopher Rising.
While that building and Park DTLA have little in common at first glance, they both fit RRP’s philosophy: taking overlooked, aging structures and infusing them with energy.
*Shared by Jeff Vertun