Tech-ing Root
The marble-clad lobby is as impressive as any in downtown Los Angeles, and the upper floors offer stunning views. But it’s the wiring that has proved to be the big selling point for 700 S. Flower St.
A score of telecommunications and Internet-related firms have flocked to the 33-story skyscraper in recent years to tap into its web of fiber-optic cables, which the tenants rely on for speedy and reliable transmission of information.
In contrast to the depressed downtown office market, the glass-skinned tower stands 85% full and commands a premium for its high-speed connections, said real estate broker Brad Feld.
“When you got the infrastructure in a building, there is a snowball effect, and they start congregating,” Feld said of the Internet and telecommunications companies.
From office towers in downtown Los Angeles to industrial parks in Valencia, Southern California’s new technology companies are taking root in a wide variety of settings, injecting new life into once-dormant real estate markets and spawning plans for major developments.
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In San Diego, wireless communications firms are gobbling up at least a million square feet of research, office and manufacturing space annually. Taiwanese computer parts distributors in the San Gabriel Valley are moving to the Inland Empire in search of cheaper space.
Landlords and real estate developers who once courted law firms and defense contractors as tenants have jumped on the high-tech bandwagon. Despite the delays and controversy surrounding the Playa Vista project south of Marina del Rey, the huge development is being touted as a center for multimedia and high-tech entertainment companies, including a state-of-the-art studio for DreamWorks SKG.
Throughout the Westside of Los Angeles, buildings are being marketed as perfect for high-tech Hollywood production companies and multimedia studios.
James E. Schneider even sees multimedia start-up firms as the key to realizing his dream of reviving the historic, but for now mostly vacant, Spring Street corridor in downtown Los Angeles. Vintage bank and office buildings would be rewired and renovated to house multimedia entrepreneurs and schools, said Schneider, who was a key player in transforming San Diego’s Gaslamp Quarter into a bustling entertainment and shopping area.
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Despite the boom, the new and expanding crop of high-tech firms face financial and competitive obstacles that can turn an overnight success into failure with the latest leap in technology. And few of the fast-growing start-up firms are willing to pay top dollar for the space once occupied by image-conscious law firms and more established technology companies.
“We are a start-up company. We are by no means a cash cow,” said Hans Eisenman, establishment executive at Earthlink Network, a fast-growing Internet service provider that recently moved into a former circuit board manufacturing plant in Pasadena. “We don’t have any art on the walls. It’s pretty industrial. It’s not IBM.”
A look at some of Southern California’s new high-tech centers:
San Gabriel Valley
The region has attracted a wide range of high-tech companies involved in everything from sexy Internet businesses to more mundane computer parts distribution.
Founded less than two years ago, CitySearch--which provides local information guides on the Internet--quickly outgrew its home in the San Gabriel foothill community of La Crescenta and moved into 20,000 square feet of office space on Colorado Boulevard in Pasadena.
Following the stripped-down style in vogue at high-tech firms, all CitySearch employees--including the top executives--work in a sprawling open space. Doors set atop filing cabinets act as desktops.
“We were not going to uproot the company to the Westside,” said Chief Financial Officer Brad Ramberg, referring to the area of choice for many high-tech start-ups. “We looked from downtown on east.”
A few miles southeast of Pasadena, industrial space in Industry and Walnut is suddenly in short supply--mostly as a result of the hundreds of computer parts distribution centers and assembly plants established by Taiwanese immigrants. Proximity to freeways, rail lines and a fast-growing Asian population are at the root of the area’s appeal, said industrial real estate broker Joseph Lin.
San Diego
Tom Stafford has one of the toughest jobs at Qualcomm, a designer and maker of wireless communications products. As vice president of facilities, Stafford must find about 1 million square feet of research, office and industrial space in the next year to house his company’s ever-expanding operations in the Sorrento Mesa and Torrey Pines areas north of downtown.
“We’ve outgrown everything right now,” said Stafford, whose company already occupies nearly 2 million square feet in the area.
Qualcomm is not the only local tech company on the prowl. Telecommunications firms General Instruments and Uniden, as well as chip maker Cirrus Logic, are also expanding in the same area, said Buck Ramsey, a broker for the real estate firm Cushman & Wakefield. Rental rates for new buildings have risen by 15% in the last two years, he said.
Westside
Droves of multimedia and high-tech Hollywood production companies have established themselves in an arc stretching from Brentwood--where video game designers work for a joint venture between Microsoft and DreamWorks--to Marina del Rey and Venice, where Digital Domain uses high-powered computers to create movie special effects.
“A lot of our industry has moved to the Westside,” said Alan Barnett, co-owner and visual effects supervisor for Sight Effects, a digital post-production company that left Hollywood for an old gas company building in Venice in 1990. Since then, the firm has expanded from a small suite to occupy nearly the entire two-story building.
A location close to the beach and an airy, warehouse-like space are big selling points for many multimedia firms, say real estate observers. But rents for converted warehouses in West Los Angeles and Santa Monica have risen 15% to 20% in recent years, according to Porter at Metrospace.
The jump in Westside rents--which already run about 75% higher than in downtown and are among the highest in Southern California--has forced some high-tech firms to start looking at nearby alternatives, such as Culver City and the South Bay. In El Segundo, broker John Ayoob is looking for companies that are being priced out of the Westside to fill his huge office complex, Pacific Corporate Towers.
Orange County
Start-ups and established high-tech firms have continued pushing south from Costa Mesa and John Wayne International Airport in search of available space. UC Irvine’s large pool of computer science students makes the South County area an attractive recruiting ground for many companies.
Irvine Co.’s giant Irvine Spectrum project at the intersection of the 405 and 5 freeways, has established itself as a major center for technology firms. More than half the 2,800 firms in the project are involved in the high-tech business, including such large players as AST Research and Western Digital.
Start-up companies, in turn, are drawn to the area by the presence of established players.
“They want to draw from the existing labor force,” said Esmail Adibi, director of the Center for Economic Research at Chapman University in Orange.
San Fernando, Santa Clarita Valleys
Research and industrial space is in short supply across the San Fernando Valley. In Chatsworth, aerospace and high-tech manufacturers have leased most of the suitable properties. In Burbank and at the eastern edge of the Valley, rapidly expanding entertainment companies are paying top dollar to rent new office space and are moving into renovated defense plants.
The resulting squeeze is pushing many firms north to office and industrial parks in Valencia and Santa Clarita.
“We are seeing a lot of San Fernando Valley companies looking at the expansion market to handle their growth needs,” said industrial real estate specialist Craig Peters at broker CB Commercial.
A handful of firms involved in computer-generated modeling and prototypes has congregated in an industrial park in Valencia near the Magic Mountain amusement park. Since moving to Valencia in 1989, 3-D Systems has grown to 80,000 square feet of space and is looking to expand even more. 3-D has watched as other modeling firms--such as Solid Concepts and Cicon--move into Valencia.
“When we moved here in 1989, there was good availability of space,” said 3-D President Charles Hull. “In the meantime, the park here has pretty much filled up.”
Jesus Sanchez covers the real estate industry for The Times. He can be reached via e-mail at Jesus.Sanchez@latimes.com.
