SAN DIEGO—San Diego may be one of the later markets to embrace creative office, but this trend is gaining momentum among users here, Parallel Capital Partners' CEO Matt Root tells GlobeSt.com exclusively. We spoke with Root following the recently completed $22-million sales of One Technology Place—a 10-building, 152,730-square-foot office complex on 11.76 acres at 10905-10949 Technology Place in the Rancho Bernardo submarket here—about the strength of the creative-office trend in this market and lender appetite for this type of space.

GlobeSt.com: How strong is the creative-office trend in San Diego?

Root: San Diego definitely came late to the party, but it is gaining a fair amount of momentum. It's really an education process. With creative office, you have to do it on a spec basis because tenants can't see it, and a drawing or rendering doesn't do it. If you think about it, most offices are made up of fluorescent lights, cube farms and white walls, and creative space has changed the way we think about office space. One of the key elements in creating optimum office environments is design—it impacts performance, employee engagement and innovation. The most creative workplace environments allow tenants to collaborate and socialize, which enhances the employee experience and ultimately the tenants' performance at the property.

GlobeSt.com: What are the elements of successful creative-office space here?

Root: The space should reflect a company's culture and be a point of pride for hiring the best team members. Depending on how it's designed, it can offer a host of benefits. For example, shuffleboard, ping pong, color or interesting structures help stir up employees' creative juices. It's breaking down office norms and adding elements that inspire creativity. This trend has taken traction not just with traditional office users, but also with lab tenants. If you think about the stereotypical scientist, you might think of a very traditional person who doesn't think outside the box, but you show them a creative lab build out and they get it. I have a tenant in Sorrento Valley, and it took a while to convince him—he thought a lab is a lab, but office is more creative. Now he says, “Thank you for the inspiration. We're attracting and retaining people, and our venture-capital guys love it.” It's a way to separate themselves from the traditional lab/office. You have to show them the vision. In the markets we've focused on for creative space, it has been very well received. Owners will also get a premium on their rental rates for this space. Once you've got your tenants' attention with creative space and they have to have it, they will pay a premium for it.

GlobeSt.com: Which San Diego submarkets are the strongest for this trend?

Root: Sorrento Mesa is a tech center for San Diego, so it's a natural place to start a lot of forward-thinking development. There's tech and lab in Sorrento Valley, and we're starting to see it in UTC, which is more of a traditional office market. Also, in Rancho Bernardo there are a lot of engineers and tech companies like Sony and Hewlett-Packard. There's a lot of gray matter on that I-15 corridor that embraces the creative culture.

GlobeSt.com: Where are the users of this space coming from?

Root: We're staring to see the life sciences companies as well as tech interested in creative space, which is a new trend. More traditional officer users are embracing creative space more now. We did a deal with a large landscape architect, and it makes sense. We're seeing a migration from the tech tenant to the traditional tenant who wants collaborative, open office build outs.

GlobeSt.com: What is the lender appetite like for this type of space here?

Root: Lenders are very open to it. There's a tremendous amount of capital pursuing this type of real estate, and there's a lot of pent-up demand. The new trend from a debt and equity perspective is the desire to have additional exposure to creative office. It took off in San Francisco and went crazy in New York, and lenders here really like it a lot.