Caverly: Creative is More Than a Look

LOS ANGELES-When describing the creative-office trend, many real estate professionals will talk about how the offices look: exposed ceilings, open space, multiple interchangeable workstations and meeting areas. But creative office is not just how a space looks, but how it functions, says Martin Caverly, CEO of EVOQ Properties, a leading force in the creative-space movement in Downtown L.A.

Caverly tells GlobeSt.com exclusively that he believes in DTLA, and that his firm is focused on bringing the live/work/play environment to this high-vacancy office submarket in the form of creative space. Since the company re-emerged from the bankruptcy it declared two years ago recapitalized and with a new management team, it has been “making a bet on Downtown L.A.,” says Caverly. “A lot of it stems from a Westsider like myself being able to take a train to a Laker game. The subway is finally going down Wilshire farther and farther. There's a generation of people who like being down here and taking advantage of the bars and restaurants and living in the really cool older buildings.”

Now that the capital markets have returned and the real estate market has rebounded, Caverly says he felt the firm's first work was “identifying those assets we wanted to hold onto—the core assets and those we thought were best. We were never a distressed seller. We pragmatically went through the portfolio and said, 'This fits into our strategy and this doesn't.' ”

Not really developers, EVOQ defines itself as more of an investment-management firm, although it does like redevelopment of its existing portfolio. “We had a lot of stuff outside the core of L.A., and we disposed of that. The next step was working within the doughnut hole of L.A., and we most recently sold off the South Park land to a Mack Urban partnership. It makes more sense for use to take that capital and invest it in projects like Alameda Square, which is adjacent to the Arts District and try to create an innovation hub down there.”

Alameda Square is focused on the fashion and apparel business, but also tech companies, Caverly says. “We're trying to create an environment down there that offers all the amenities people need: parking, bars, restaurants. We're repurposing these great old buildings, some of which haven't been leased in 50 years. There's a tremendous demand for this stuff today, and it falls into the creative-office rubric.”

Caverly says a lot of people are unclear on what creative office really is. “The look and feel of creative office is not the whole story. It's really about collaboration and efficiency of process. The CEO can sit next to the manufacturing and design people all on one floor. True creative office makes your business more efficient.”

Another reason Caverly is so bullish on creative space and DTLA is that this is what Millennials want. “The big trend today is that obviously the Millennial generation doesn't want to commute. Office buildings need to be close to where these kids want to live, and it has to walkable or bikeable, and close to public transportation is good. On the Westside, you still have to get in your car to go places, but in Downtown L.A., you don't have to get in your car from Monday through Friday depending on where you live.”

Caverly spoke at the IMN Forum on Opportunity and Private Fund Investing in Laguna Beach yesterday, and he made a major prediction about DTLA: “You will see a major tech company come in and make a big bed—we're talking 400,000 square feet—in Downtown L.A. because they have to be near Hollywood.”