“Creative space is the most overused term,” said Jeffrey M. Worthe, president of Worthe Real Estate Group, on the Development, Leasing and Market Experts panel at Allen Matkins' annual View From the Top conference in Beverly Hills. The panel was stacked with developers and investors—Sam Caven of Starwood Capital Group; Derek K. Hunter, Jr., president of Hunter Properties; Christopher Rising, president of Rising Realty Partners; Scott Strafford, principal and co-founder of Strada Investment Group—who all discussed major West Coast markets where they were building “meaningful office” properties.

Rising, who is known for breathing life back into Downtown Los Angeles' historic office stock, echoed the overuse of the term “creative,” and said that they try to create spaces that work with people's lifestyles. “I think creative is overused, but there is a fundamental fact that your employees are working 24-7, so an office has to be more. I think that there needs to be space to break out and have a different experience. It is about collaboration. You need different types of spaces throughout a day,” he said.

Worthe is taking a similar approach. He has three entitled properties in Santa Monica, which is a notoriously difficult area to build. “That community is very organized, and committed to stopping development; so, entitlements take a long time. We are finding building office buildings is becoming more difficult, and that means the value of those buildings are only going to increase. What happens to markets when you can't build meaningful office buildings anymore?”

Other panelists got into the nuance of building infrastructure that can accommodate changing office dynamics. Strafford said that as more people fit into a smaller office footprint, parking becomes a crucial issue. “We are finding that 4 per 1000 is not enough parking. “You need more like 5000 to 6000. I think in those markets finding a property that is over parked is a real value-add angle,” he said. Caven agreed with the new requirements, saying that developers need to look at building fundamentals. “You need to make sure that you have enough bathrooms, and that your elevators can handle more people per floor,” he said.

Each of the developers is focused on a different market on the West Coast, and each had a different attraction to that specific market; however, there were commonalities. The panelists favored areas with an abundance of amenities and near public transit, as well as affordability. “We spend a lot of time looking at affordability of the employees that have to work in our buildings,” added Caven. “In places like San Francisco, we see employees spending half of their disposable income on housing. That is what led us to Portland. “We think affordability will drive a lot of the talent there and companies will follow that talent.”

Housing was also important for Rising, who said that the terrible commute across town in Los Angeles would make the centrality of DTLA very attractive as the city grows in density. “Because most of the housing is East, it makes DTLA even more compelling over time,” he said. “If people can put their office close to where they want to live, they will do it more times than not.”

Instant Insights /

It's “Meaningful Office” Now, Not Creative

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