SAN DIEGO—Using the outdoors as an office-building amenity is becoming all the rage in San Diego, most recently seen in Kearny Real Estate's upgrade of the 1966-built Union Bank building at 530 B St. downtown here—now renamed Five Thirty B. The firm is in the process of renovations that include a just-opened third-floor Sky Terrace featuring a wall-sized mural painted by a graffiti artist, plant beds, outdoor seating and upscale furnishings—and tenants were interested before the renovations were even completed, according to Elliot Weinstock, senior financial analyst for Los Angeles-based Kearny. GlobeSt.com spoke with Weinstock about the changes and how they're impacting tenants and the office market as a whole.

GlobeSt.com: What was your firm's goal when renovating the Union Bank building?

Weinstock: We intended to put $15 million into the renovation, which also included other capex items, and the spaces need to be redone. We wanted to modernize it. Union Bank owned it before we did, and they operated it as a bank operates real state. It wasn't leasing for the last year to year-and-a-half before we owned it, so it needed a lot of attention. We officed in the building, which attracted us to it. It had great bones, and a small- to mid-sized company can take a full floor and have a lobby presence with 9,000 square feet. The average user is 3,500 square feet, so we weren't expecting any huge tenants to come in. We wanted to liven it up; of the four office submarkets in Downtown San Diego, this is the least attractive, but the area along the B St. corridor is gaining steam, and we thought we could be a part of that.

GlobeSt.com: How are the upgrades attracting new tenants?

Weinstock: We bought the building in January, and we've signed a bunch of leases since then. The interesting thing about it is the improvements you could see weren't even done, so clearly people saw all this potential. We're having several tours a week, the brokerage community is very aware of the project, and it's funny—we have bankers and lawyers in the building, and everyone still wants to use that open, creative space. Even new tenants who are not yet tech driven for the most part but typical Downtown office users still like that amenity. We put in the Sky Terrace and outdoor amenities and expected to get the next Google in our building, but everyone wants it.

GlobeSt.com: How are these tenants using the space?

Weinstock: We just opened the Sky Terrace, and we're still figuring out if we need to get a coffee bar up there. People are going out there to have lunch, they're socializing and they're having small team meetings and discussions out there. We do envision it will grow in size. It's a great place to go outside in San Diego, where the weather is always the same. We also built a new conference center, a full training room and a board room on the 11^th floor that's open to all tenants free of charge. This is huge attraction because you can get away with not having a conference room for each user anymore.

GlobeSt.com: How do you think offices will continue to evolve as the sector changes?

Weinstock: We still see a downsizing of space. As law firms are getting rid of the library, people are getting closer together and working. We're looking at this new phenomenon of co-working and are exploring putting a co-working space in this building, so freelancers and smaller businesses that thrive in the presence of others have an eco-system, which they need to survive. As that continues, people will think a lot differently about office and their needs. There will be a move to collaborative spaces where they can go and meet other tenants that do similar things and grow from that. There's still a need for traditional office space in the market, but I think people are starting to think differently about how they look for space.