LOS ANGELES—When companies in the same industry gather in the same geographic market, it can breed innovation and growth. The concept is called industry clustering, and it is becoming the latest trend in the Los Angeles office market. There are benefits and challenges to companies gathering together. To find out the benefits of industry clustering and how it can both breed innovation and create a sense of sameness, we sat down with David Freitag, an associate of CBRE and an office expert for an exclusive interview.
GlobeSt.com: What is industry clustering?
David Freitag: In the most basic of terms, industry clustering is the desire of companies to be around their peers, competitors and talent pool. In general, it is perceived to enhance a company's credibility within a given industry segment. A few good examples would be the desire of top law firms to be in Downtown LA or Century City, the density of ad agencies in Playa Vista, or even the content/media company hub that is Hollywood.
GlobeSt.com: What are the advantages of industry clustering, and how does it help attract talent?
Freitag: Nothing sparks innovation more than having your competitors across the street. From a recruiting standpoint, it benefits these interconnected companies to be able to pull from the same talent pool. The employees, on the other hand, are attracted to a vibrant environment that blends both competition and community.
GlobeSt.com: Industry clustering creates “sameness,” but don't companies want to standout and create a unique company culture to attract employees?
Freitag: Therein lies the challenge that has surfaced here in L.A. companies want to be by their peers, yet it may come at the cost of being outwardly indistinguishable. Because of this, companies are now creating roles like “Head of People” and “Head of Culture” to help engage their employee base in unique and organic ways. Having a foosball table or unlimited snacks just doesn't cut it anymore.
GlobeSt.com: Is this movement specific to certain industries?
Freitag: The biggest effect of this movement is felt in industries where employee retention rates are the lowest. For example, a few of the most well known tech and media companies average about a year per employee. This is not to say that they are bad work environments; there is just so much competition in tech for top talent that turn over is high.
GlobeSt.com: How does this trend fit in with other office trends that have emerged to attract employees, like creative office? What does it say about office trends generally?
Freitag: Over the last few years, the term “creative office” has almost become cliché. There are now elements companies feel they must adopt: wide open floor plans, benching, large collaboration areas, etc. The truth is that no two companies' culture and values are the same, thus no two offices should be either. Your company culture should organically influence your workspace and geographic location, and not solely rely on industry clustering. As of recent, the most exciting example of companies breaking apart from the cluster would be Hyperloop One or Warner Music planting their flag in the Arts District of Downtown LA, an area not traditionally associated with tech or entertainment. Or take CBRE. We recently moved our LA North headquarters into a 1920's former Masonic Temple and the feedback from employees and clients about this one-of-a-kind-building and location has been overwhelming. It's part of our firm's Workplace360 strategy that now includes more than 30 offices worldwide.
LOS ANGELES—When companies in the same industry gather in the same geographic market, it can breed innovation and growth. The concept is called industry clustering, and it is becoming the latest trend in the Los Angeles office market. There are benefits and challenges to companies gathering together. To find out the benefits of industry clustering and how it can both breed innovation and create a sense of sameness, we sat down with David Freitag, an associate of CBRE and an office expert for an exclusive interview.
GlobeSt.com: What is industry clustering?
David Freitag: In the most basic of terms, industry clustering is the desire of companies to be around their peers, competitors and talent pool. In general, it is perceived to enhance a company's credibility within a given industry segment. A few good examples would be the desire of top law firms to be in Downtown LA or Century City, the density of ad agencies in Playa Vista, or even the content/media company hub that is Hollywood.
GlobeSt.com: What are the advantages of industry clustering, and how does it help attract talent?
Freitag: Nothing sparks innovation more than having your competitors across the street. From a recruiting standpoint, it benefits these interconnected companies to be able to pull from the same talent pool. The employees, on the other hand, are attracted to a vibrant environment that blends both competition and community.
GlobeSt.com: Industry clustering creates “sameness,” but don't companies want to standout and create a unique company culture to attract employees?
Freitag: Therein lies the challenge that has surfaced here in L.A. companies want to be by their peers, yet it may come at the cost of being outwardly indistinguishable. Because of this, companies are now creating roles like “Head of People” and “Head of Culture” to help engage their employee base in unique and organic ways. Having a foosball table or unlimited snacks just doesn't cut it anymore.
GlobeSt.com: Is this movement specific to certain industries?
Freitag: The biggest effect of this movement is felt in industries where employee retention rates are the lowest. For example, a few of the most well known tech and media companies average about a year per employee. This is not to say that they are bad work environments; there is just so much competition in tech for top talent that turn over is high.
GlobeSt.com: How does this trend fit in with other office trends that have emerged to attract employees, like creative office? What does it say about office trends generally?
Freitag: Over the last few years, the term “creative office” has almost become cliché. There are now elements companies feel they must adopt: wide open floor plans, benching, large collaboration areas, etc. The truth is that no two companies' culture and values are the same, thus no two offices should be either. Your company culture should organically influence your workspace and geographic location, and not solely rely on industry clustering. As of recent, the most exciting example of companies breaking apart from the cluster would be Hyperloop One or
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