Nelson Rising Recognized with Lifetime Achievement Award at Connect LA

Nelson Rising Recognized with Lifetime Achievement Award at Connect LA

By Dennis Kaiser | Connect Media

Connect Los Angeles brought together more than 450 CRE leaders for an information packed conference June 21st at the Hotel Indigo DTLA. During four panel discussions, top CRE leaders shared insights about the future of Los Angeles CRE, including how neighborhoods are being transformed, investment and development opportunities, CRE investment strategies and capital markets. Connect Media will be sharing more in-depth reports of each panel over the coming days, but here’s a few key takeaways and highlights that stood out from yesterday’s conversations.

Long Beach Civic Center, Queen Mary Project Expected To Bring More People Downtown

Many are anticipating the construction of the new Long Beach Civic Center.

When it is built, it will mark the first time a U.S. municipal government will deliver a city asset under a performance-based “design-build-finance-maintain” structure, according to Plenary Concessions Executive Chairman Dale Bonner.

Why There Is A Renaissance In DTLA

By Karen Jordan | Bisnow

There were nearly 30 cranes in DTLA at the close of last year, placing the city in third nationwide, with Seattle at No. 1, according to a report by Rider Levett Bucknall. LA now has 36 cranes, the firm reports.

Those cranes in the air are an indicator of what developers know — LA is drawing in people and businesses, and DTLA is giving them reasons to stay.
 

People want to walk to work, something DTLA increasingly offers, according to Sonnenblick Principal Bob Sonnenblick.

"The ability to walk to work is huge," he said.

Parks also add to the appeal, and renovating Pershing Square would be a game-changer, according to CBRE Senior Vice President Anthony Gatti.

A plan to reno Pershing Square made headlines last year when a French firm, Agence Ter, won a competition organized by LA City Councilman Jose Huizar and the nonprofit Pershing Square Renew.

The project could include replacing concrete with grass and opening up the park more to the sidewalks around it, the LA Times reports.

The increasing number of restaurants from other parts of the country opening up outposts is also contributing to a booming DTLA, Gatti said.

"The restaurants in downtown LA are off the charts," he said. "They're the best restaurants in Los Angeles."

Those coming into DTLA find that the historic buildings that have yet to be renovated offer the opportunity to create new spaces that will bring in more tenants.

Rising Realty Partners Senior Vice President Matthew Ahrens said he does not see a better submarket across the nation for office.

Sonnenblick said he is convinced opening public transportation that connects downtown LA to Santa Monica will really energize DTLA.

"This is experiencing this wonderful renaissance, but it can only work if we support it, and we're passionate about it," Gatti said at Bisnow's LA Downtown Renaissance event.

As the former Central City Association CEO, Carol Schatz said she is proud of how the organization helped shape the DTLA renaissance, coming up with the concept of the adaptive reuse ordinance.

"Building and safety grabbed it and made sure it was actually developed," Schatz said. "We didn't know whether the departments would support it or not. So that happened. It was passed in 1999, and then Staples opened a few months later, and that was it. Those two things are what set off the renaissance."

She also started the Downtown Center BID.

The developers in the room were encouraged to think of their projects not as stand-alone developments but as extensions of their communities, LA Police Commission Vice President Steve Soboroff said.

MWest Holdings Chief Investment Officer Matthew Ellis and Oceanwide Plaza Senior Manager Public Relations Daniel Atwater said it is important to think of ways to serve those communities.

"We have to do more for the community," Atwater said. "It has to be ingrained."

Oceanwide Plaza is a 4.6-acre project east of Staples Center that will have a Park Hyatt, 160k SF of retail, 504 condos, a 700-foot-long LED screen and a two-acre park.

Oceanwide is establishing a community relations program to look at education, jobs and the homeless and find ways to provide programs in those areas, according to Atwater.

 

Private Sector Filling The Void Created By Paris Agreement Pull Out

By Chris Rising

President Trump’s decision to pull out of the Paris Climate Agreement has, not surprisingly, invited strong vocal criticism from many leading voices around the world. Under the Paris Climate Agreement, the United States had pledged over $1 billion dollars to support global reduction of carbon emissions. Now these funds must be found elsewhere.

Property Managers Need These 3 Qualities

Commercial real estate looks vastly different now than it did 40 years ago, let alone five years ago. Employees are working nontraditional hours, building floor plans don’t necessarily include cubicles or corner offices, and tenants want amenities that go beyond just having a restaurant downstairs.

Google Takes Power Position

Los Angeles Business Journal | By Daina Beth Solomon

Google owns more than a dozen data centers around the world – giant warehouses buzzing with servers that let internet users download Beyoncé videos, email puppy photos, or look for the nearest gas station on their smartphone.

Most of these centers sit in far-flung, sparsely populated places such as The Dalles, Ore., and Council Bluffs, Iowa. But as demand grows for rapid data access, Google is making strides to cover the gaps through leased space, with downtown Los Angeles one of its latest targets.The Mountain View tech giant last month signed a deal to house servers and consume up to 1 megawatt of power in space leased by Zayo Group Holdings Inc. at One Wilshire, according to industry sources.

Google’s desire for a local power boost suggests more major companies might follow as a burst of consumer demand outweighs downtown’s high costs compared with smaller cities, according to data center development professionals.

There are 2.3 million square feet of leasable data space in Los Angeles, charged up with 210 megawatts of power, according to real estate company Jones Lang LaSalle. An additional 20,000 square feet were under construction in Los Angeles County at the end of last year, set to provide 3 megawatts more. (The energy generated by 1 megawatt would be enough to power about 1,000 U.S. homes for a year.)

Nationwide, leasable data centers in major markets occupy at least 41.5 million square feet, consuming 3,560 megawatts, or enough to power 3.6 million homes.

“People are taking more space and more power to get the internet of things and the delivery of services and applications closer to the user,” said Marc Gittleman, senior vice president at downtown’s Rising Realty Partners, which owns a data center just west of downtown. “Whether it’s Google or Microsoft or Amazon Web Services, … we will be seeing more groups like that with higher density downtown.”

Bulking up

Denver-based Zayo zoomed into downtown last month, announcing it had signed a lease with One Wilshire owner GI Partners to take 24,215 square feet with access to 2 megawatts of power.

The deal is part of Zayo’s aim to expand its Southern California network of co-location sites – spaces that provide businesses the equipment, space, power, cooling systems, security, and networking abilities to store and share vast amounts of data.

“As we looked at California, there are some key interconnection facilities, and arguably the most important is One Wilshire,” said TJ Karklins, senior vice president of the company’s Zayo co-location business segment. “We tether our remote data centers into that facility and make them more capable to provide solutions at lower latency speeds.”

Businesses can lease space for their servers by the cabinet, which typically measure 25 to 27 square feet. Karklins said Zayo was marketing itself to media, cloud, and software companies and those providing data services in fields such as health care and manufacturing.

He wouldn’t confirm Google’s tenancy at One Wilshire.

Google representatives declined to comment.

Zayo said in a press release that strong customer demand in Los Angeles drove its expansion, including an agreement with a major web company as an anchor tenant.

One Wilshire, at Wilshire Boulevard and Grand Avenue, was built as a traditional office in 1966 and was updated for telecommunications uses beginning in the 1990s. San Francisco-based private equity firm GI bought it in 2013 for almost $438 million, a downtown record. On the heels of Zayo’s lease, GI announced it would add 9 megawatts of power to the building by summer 2018, bringing the building’s total supply to 30 megawatts.

Zayo’s space in the 30-story tower is a raw shell. Karklins said data center construction runs from $7 million to $10 million a megawatt, meaning Zayo’s space could cost up to $20 million to build out.

The company said it planned to begin construction this summer and open in the fall.

Michael Siteman, national accounts manager at internet infrastructure provider Internap, said that despite the expensive construction costs, Zayo should be poised to keep control over its space and fetch high rents from subtenants who are clamoring for an L.A. presence.

“It allows (Zayo) to make more profit,” Siteman said. “There are a lot of Google customers here. The closer they get to the edge where those customers are, the faster they’re able to deliver content and information.”

Costly business

Lease rates for co-location companies typically range from $125 to $195 a kilowatt, Siteman said, putting Zayo’s monthly rent for 2 megawatts at One Wilshire as much as $390,000. Although data centers calculate rates based on power, not square footage, the 24,000-square-foot lease would amount to roughly $16 a square foot. Asking rents for traditional office space in downtown are $3.55 a square foot, according to first-quarter data from JLL.

The building also provides power and cooling, which would add an additional $14 a square foot to Zayo’s costs, bringing its monthly rent to total roughly $717,000, or about $29 a square foot. That’s roughly $86 million over a 10-year term.

Zayo will take space in One Wilshire alongside co-location competitor CoreSite, a longtime building occupant that says it hosts more than 60 cloud and IT service providers within its 149,000 square feet. CoreSite also leases 425,000 square feet space at the Terminal Annex building at 900 N. Alameda St., where the company says it hosts more than 350 network, cloud, and IT providers.

Rising’s Gittleman said few office investors have the skills and resources to convert entire buildings to data centers, meaning downtown’s existing data centers will remain valuable. The company’s West Seven Center, purchased last year for $210 million, has 9 megawatts available of its 22-megawatt supply.

Gittleman said he expects rates to rise as supply tightens across downtown, given the growing importance of the market.

“You could have a Ferrari, but if you pinch the fuel line, you’re not going to get the performance out of it,” he said. “That’s the effect of being far away from a data center.”

Artificial Intelligence and Office Space

There is a lot of talk about Artificial Intelligence (AI) today and many articles that have been written proclaiming its impending effect on our economy. For example, Tony Room of Recode wrote about Treasury Secretary Steven Mnuchin claim that robots are at least 50 years away. This article follows a theme about AI centered around its potential impact on manufacturing and other blue-collar industries. But as technology is constantly advancing, it’s important to understand virtually no industry is safe from disruption. In fact, recently, Pedro Nicolaci da Costa of Business Insider wrote an article which focused not on the impact that AI will have on blue collar jobs, rather it focused on AI and white collar jobs.

In Downtown, Street Artists Find a Surprising New Patron: Developers

In Downtown, Street Artists Find a Surprising New Patron: Developers

DTLA - Say hello to Downtown’s newest Instagram bait: A mural at Eighth and Hope streets, on the back of the mixed-use complex The Bloc, pairs a splashy set of angel wings with the words, “You are a goddess living in a city of angels.” It has appeared hundreds of times on social media, tagged with #DTLA.

Art Deco Los Angeles

The architectural treasures scattered throughout the city are no skyscrapers, but they still soar.

California’s broad landscape suggests endless possibility, a chance to realize your dreams. You can backpack in the Klamath National Forest within Siskiyou County. You can find a slice of Denmark in the Santa Ynez Valley. Or you can immerse yourself in the glittery landscape of the Hollywood hills, the place that has applied a practicality to its dreams by making an industry of them.

Sweetgreen Finally Lands in Downtown LA

By Eddie Kim | Downtown News

Sweetgreen has earned a huge following in the fast-casual dining world for serving up custom salads and grain bowls using local produce, with an eye for chef-y flavor combinations and seasonal treats.

Lucky for those who live and work in the Financial District, Downtown L.A.’s first Sweetgreen is headed to Fifth Street right across from the Central Library.

The location will be opening in the summer in the former home of the popular Thai restaurant Esaan and an adjacent Coffee Bean & Tea Leaf, at 601 W. Fifth Street in the street-retail portion of the newly renovated CalEdison office structure.

The Sweetgreen will fill about 2,300 square feet of space to serve up creations like the Pesto Portabello bowl with warm quinoa or the Spicy Sabzi salad with spinach and roast tofu.

“We are thrilled to welcome Sweetgreen to The CalEdison DTLA as they expand their presence in the Los Angeles market.” said Tyson Strutzenberg, chief operating officer of CalEdison owner Rising Realty Partners. “We were able to connect a brand that focuses on passion and purpose with a historic location in one of the most desirable areas in the city.”

Rising Realty is continuing work on the CalEdison, including restoring outdoor patios to the 1931 structure and modernizing office spaces.