Once-tired PacMutual Plaza is prime office space again
LA Times
March 27, 2014
News

In a sign that the definition of prime office space is undergoing a dramatic shift, an old downtown Los Angeles office complex — once considered second rate — is now outperforming many of its newer, glitzier competitors.
 

PacMutual Plaza, which dates to 1908, was one of the best addresses in Southern California until an unprecedented office building boom in the late 1980s and early 1990s brought a stately new crop of skyscrapers to town.

For decades to follow, PacMutual — in the same block as the Biltmore hotel in Pershing Square — was a lower-cost alternative to such elite enclaves of corporate America as U.S. Bank Tower, Two California Plaza and the Gas Company Tower.

 

As a young real estate professional in the late 1990s, Christopher Rising was informed that "PacMutual was for people who wanted to think they were in Class A space when they really weren't," he said.

 

The definition of what is first-class office space in downtown Los Angeles is in flux, however, as a growing number of tenants shun conventionally formal, discreet offices in favor of wide-open rooms. Exposed brick and polished concrete are preferred by many over carpet, drywall and dropped ceilings.
 

With that trend in mind, Rising went after historic PacMutual. His Rising Realty Partners bought the complex at 6th and Olive streets for $60 million in 2012 and set out to make its advanced age an asset instead of a liability.
Rising Realty ripped out false ceilings and scraped plaster off the brick walls. It lifted carpet to find marble floors laid by the original owner, Pacific Mutual Life Insurance Co. On some floors it tore down walls to make small offices into big ones, increasing the overall rentable square footage from 425,000 to 460,000.
 

"You can have higher density of employees in a big floor plan," said Nelson Rising, Christopher's business partner and father.
 

Occupancy in the building fell to nearly 50% as the Risings' renovation got underway and the landlords let go of tenants who had secured low-cost leases under previous owners. As they worked on refilling the building, the Risings hoped to appeal to both professional firms and companies in creative fields such as tech and entertainment.
 

Their strategy was to offer tenants the choice of conventional office space or hipper alternatives where concrete ceilings still bear the impressions of the boards that craftsmen used while casting them a century ago.
 

It turned out that the raw look associated with dot-com cool appealed to all kinds of companies, suggesting that the cloistered elegance associated with corporate offices of the late 20th century is growing passe.

 

Professionals such as attorneys want the new look too, said real estate broker Carle Pierose of Industry Partners, who lines up new tenants for the building.

 

"Just because I went to law school, it doesn't mean my office space has to suck," Pierose said of tenants' attitude. "I want it to reflect my lifestyle."
 

Rising Realty has signed 56 leases in the last year and a half, Pierose said. Among the new tenants are professional firms, online retailers, fashion companies and video game makers.
 

The biggest new tenant is Nasty Gal, an online fashion retailer that took 60,000 square feet.
 

Entertainment companies have historically avoided the downtown financial district, but Oscar-winning visual effects firm Magnopus left Santa Monica and agreed to a five-year lease for space at PacMutual with views of its gray beaux-arts-style exterior.

 

So far, the suits and the creative types who bring their dogs to work have managed to coexist, Christopher Rising said. The complex is more than 90% leased at rents that match or surpass typical downtown rates.
 

As part of its $25 million worth of improvements to PacMutual, Rising Realty has opened a courtyard off 6th Street that was closed off in the 1930s. Two restaurants will face the courtyard including Tender Greens and bakery Le Pain Quotidian, which will open next week.
 

French restaurant Tartine will open its first U.S. outpost on the Olive Street side of the complex under an 80-foot-tall wall of live greenery this summer.
 

Part of PacMutual's lure is its history. The three-building complex on 6th Street between Olive and Grand Avenue is among the oldest functioning office structures in the city.

 

Pacific Mutual Life Insurance Co. completed its first building at 6th and Olive streets in 1908. For decades the structure sported a big clock on the roof and a sign saying, "Time to insure."
 

The insurance company expanded its headquarters during a post-World War I building boom in Los Angeles. In 1921 an addition with two 12-story towers was attached on the west side of the original building. The builders said they required the largest single order for terra cotta ever placed on the Pacific coast to finish the exterior.

 

The lobbies and hallways were swathed in marble from Italy and Alabama — more marble than in any other building of its kind in the country, according to the builder. Tiffany Studios, the famous New York design firm, supervised decoration of the public spaces, including a recreation room for 1,000 people. A three-story cafeteria and underground garage were added in the 1920s.

 

Tenants have included comedians Laurel & Hardy, Sen. Samuel Hayakawa and the law office of future President Richard Nixon.
 

Pacific Mutual stayed in Los Angeles until 1972, when it became one of the first major white-collar companies to set up headquarters in Orange County.
 

Rising Realty Partners owns and manages 12 properties including a tech complex in Old Pasadena. Next up for renovation is the former Lockheed headquarters in Calabasas that was later occupied by lenders Countrywide and Bank of America.
 

Christopher Rising says he now avoids describing the offices his company makes as "creative" and instead refers to them as "lifestyle" space because workers spend so many hours on the job that they want to be someplace comfortable.
 

"People," he said, "don't want to live in an office silo anymore."

Network? Let’s Party! Santa Monica as the New Silicon Valley
NY Times
March 14, 2014
News

LOS ANGELES — It was a Monday night, but Bar Marmont was packed. Women milled about in high heels and cropped fur coats (it was 50 degrees outside, this city’s version of a polar vortex). Hair had been meticulously coaxed into face-flattering waves, makeup freshly applied. “I’m going to get a massage on my lunch break tomorrow,” a woman at the bar told her friend, as she fiddled with a large gold necklace.

Nearby, Mark Salling, an actor from “Glee,” mingled with pals, and — wait, was that the guy who plays the British doctor on “The Mindy Project”? (Yes.) Beyoncé’s “Drunk in Love” was blaring. A model-like brunette wearing a rhinestone headband twerked gently in front of a GIF machine, the latest iteration of a photo booth, and made a halfhearted attempt at a duck face. 

The party was not celebrating a movie premier or a new perfume, but a collaboration between Tinder, the social network based West Hollywood, Calif., and Glamour magazine, which now offers celebrity dating advise on Tinder's smartphone app. Cupcakes decorated with the companies' logos had been made for the occasion. "There are a lot of synergy between the two brands," said Justin Mateen, a founder of Tinder. "It's something that's organic."

Synergy and organic are not words unfamiliar to Los Angeles, of course, but over the last few years, they are increasingly being applied not to entertainment deals and juicing regimens but Internet start-ups. So many of these now populate the boardwalk and beachfront real estate of Venice and Santa Monica that the area has become known as Silicon Beach, a three-mile strip where you’re as likely to find Warby Parkers and MacBooks as surf and skateboards.

The culture, the denizens of this area say, is quite distinct from its namesake to the North.

“It doesn’t feel as casual, it doesn’t feel as much about being a geeky start-up person, it feels more marketing-P.R.-y,” said Tara Brown, 39, nicknamed Tiger, a founder of a Santa Monica-based education technology business who moved from the Bay Area a few years ago and helped create Represent LA, a map of the local technology scene. “It’s more about, ‘What are you wearing?’ than ‘I’m doing a tech start-up.’ It’s more about rubbing shoulders.”

Indeed, according to Kevin Winston, founder of the networking group Digital LA, which helped organize a 500-person pool party at the Viceroy hotel last June for a festival celebrating Silicon Beach, hobnobbing here is as integral to building a company as is raising money and having an idea in the first place. “People tend to be very outgoing and realize that you need to meet other people to get your start-up going,” he said. “In other cities, you go out because you have to. Here, you go out because you want to.”

That said, there are many reasons companies set up shop in Silicon Beach beyond the potential for parties rife with free alcohol and beautiful people.

“We give bikes instead of parking spots,” said Wade Eyerly, 34, a founder ofSurf Air, an all-you-can-fly private-membership airline based in Santa Monica, six blocks from the beach. “The surfboards on the wall, I call them usable wall art.”

When the Surf Air team moved into its offices two years ago, they installed Ikea lockers in what used to be the printer room. “They’ve got deadbolts on them: You can change into a wet suit and go,” said Mr. Eyerly, who resigned from the company last month, though he remains in Los Angeles. “The culture is, get your work done and go.” Even the “go” part is up for innovation.

“For a little while, I actually thought about paddleboarding to work,” said Todd Emaus, 33, a founder of Twenty20, an online marketplace for art created on smartphones. At the time, Mr. Emaus lived a mile and a half down the shore from Twenty20’s office. But reality intervened. “I just couldn’t figure out how to get my computer safe there every day,” he said. “I rode my beach cruiser instead.”

Then there’s the star factor. With Hollywood a freeway away, many Silicon Beach companies have been able to lure celebrity users and investors. When the actor Jared Leto expressed interest in investing in Surf Air, Mr. Eyerly’s team was able to drive to Mr. Leto’s Hollywood Hills home and sell him on the company there (though Mr. Eyerly noted he didn’t immediately know who Mr. Leto was). In the early days of Tinder, Mr. Mateen, 27, tested the dating app on some of his model friends. “They were like, ‘Ugh, I don’t need that,’ but now, some of them are our most active users,” he said.

Instead of going to set every morning, the actress Jessica Alba now shows up at the Santa Monica headquarters of her start-up, the Honest Company, which sells natural baby and home products. Her desk sits among the rest (though it’s differentiated by its hot-pink color) and she put her personal stamp on the sprawling warehouselike space, picking out furniture and hanging art in the conference rooms, which have names like “Smile,” “Play” and “Love.”

“We were thinking of using our children’s names but some people have more children than others, and it was too difficult to choose,” she said. “So we just took words from our manifesto.”

Ms. Alba can talk confidently about customer acquisition and growth opportunities and says things like, “You obviously have to pivot based off of results.” “I went to Brian Lee school,” she explained, referring to a founder of the Honest Company who also helped found LegalZoom and schooled her on the ways of the start-up world.

“She told me that if she wasn’t an actress, she would have gone to school and gotten an M.B.A. and started a business,” Mr. Lee said. He turned to Ms. Alba: “It happened. You’re basically getting your M.B.A. now.”

Ms. Alba laughed and said, “I try not to make too many mistakes,” before going steely-eyed. “This allows me to apply that very brass-tacks, results-oriented, business mind-set that I just naturally have,” she said. “Going on a talk show is the easy part.

Most in Silicon Beach do not have the instant networking power of celebrity, and therein some have seen opportunity. Last year, Jeremy Umland, a former investment banker, opened 41 Ocean, a private social club on Santa Monica’s picturesque Ocean Avenue. It now has about 600 members who come for fund-raising parties, private dinners and a quiet place to work during the day on vintage couches. “It’s the watering hole of the tech community, more than any other place,” said Paul Bricault, a member who is managing partner at Amplify LA, a “start-up accelerator” in Venice. “I remember being at a board meeting and a guy from San Francisco told me he was heading down there for an event and he was a member.”

Inevitably, a conversation about Silicon Beach turns into a discussion of its merits compared to Silicon Valley. (Michael Heyward, a founder of the Santa Monica-based social network Whisper, said of San Francisco: “It’s not so friendly. It’s the fog.”) Arvind Murthy, the founder of Bear State Coffee, an artisanal-coffee subscription service, praised L.A.’s “new optimism” and “Williamsburg rooftop summer energy” in contrast to San Francisco, where “you really are a small fish in a huge pond,” he said.

“That’s the great thing about L.A., it’s not as snooty,” Mr. Murthy further mused between sips of rosé at Flores, an airy bar and restaurant off Olympic Boulevard, where start-up offices have taken root in former studio lots. “And I can’t believe I’m saying that about L.A., but in San Francisco, it’s like, ‘Who’s funding you, where’s your money?’ Same thing in New York. It’s ‘Where’s your office?’ We’re so under the radar here, which is nice.”

That environment can come with its own problems. “It’s hard to find people with the mentality that you want in a start-up, where someone’s really going to hustle and move fast,” said Mr. Emaus of Twenty20.

Still, he and many others settled in Silicon Beach agree there are too many things working in its favor to consider relocating: low rents, gorgeous weather, the potential to engage in water sports on the way to work and the occasional party. After all, for Silicon Beach to gain the fame and cultural recognition of Silicon Valley (not to mention Silicon Alley), it may need to call in some favors from that old fogey, Hollywood.

“There’s this guarded optimism, at least that I feel, that everyone thinks L.A. could be the next big thing,” Mr. Emaus said.