What’s Going Up Less, Spreading Out More? Corporate Workplace

From the upper floors of an Irvine high-rise, Bruce Hallett and his partners in the law firm Brobeck Phleger & Harrison LLP layered themselves in old-line prestige. But their power suits, leather chairs and oak desks clashed with the blue-jeans-and-T-shirt culture of their high-tech clientele.

So Hallett made a bold decision. He moved the practice to a low-rise industrial building in the Irvine Spectrum, the heart of Southern California’s high-tech corridor. Suddenly, an open-neck collar replaced the firm’s buttoned-down image. And Brobeck’s lawyers, who now greet clients in polo shirts and chinos, convey a message as different as the new surroundings.

“It’s not as imposing,” said Hallett, the Irvine managing partner of the San Francisco-based law firm. Or as expensive. Hallett will shave $3.2 million in rent and parking over the next decade.

Across the region, a growing number of businesses that once associated prestige with the tallest towers in urban skylines find themselves no longer wedded to signature buildings. Reflecting a shift in corporate mind-sets, some traditional high-rise tenants like Brobeck Phleger have begun relocating to shorter structures that were largely ignored in the past.

Other companies making similar moves include AirTouch Cellular, which is merging its offices--now contained mostly in an Irvine tower--into a complex of two- and three-story buildings in the same city next year. Bankers Mutual recently has moved from a Newport Beach tower into an Irvine office park. And E! Entertainment soon will leave a vertical monument in Los Angeles, where it occupies 15 floors, and settle into a luxury low-rise building next door.

“At any time, we typically have 100 people in elevators or waiting for elevators,” said Bill Keenan, the network’s chief financial officer, describing in an interview last year an essential reason for the company’s planned departure.

As the workplace turns increasingly informal, employers are looking for office buildings that are as flat as their organizational structure.

“We’re seeing a greater acceptance of low-rise developments by a greater number of companies today than in the past,” said Richard Cannon, chairman of the Economic Development Corp. of Los Angeles County.

Indeed, such buildings have become the dominant form of office development in the Southland. In Orange County, nearly 11 million square feet of buildings five stories or less have been erected, or are under construction, in the past two years. That compares with only 3.5 million square feet in taller structures. The Irvine Co., by far the county’s largest developer, has 30 low-rise buildings under construction and plans to erect 170 more in its giant Spectrum business park in the coming years.

In Los Angeles County, 6.9 million square feet of buildings five stories or less were completed, under construction or proposed over the past two years. By comparison, only 3.7 million square feet in taller buildings were built or planned, according to CB Richard Ellis Inc., the nation’s largest real estate company.

Eventually, land costs will force developers to build taller, and more densely, analysts said. But for now, low-rise buildings are enjoying surging popularity.

With entertainment, technology and other fast-growing industries emerging as drivers of the regional economy, more companies are seeking expandable spaces in horizontal buildings that offer large, flexible floor plans. An estimated 80% of Staubach Cos. clients consider smaller buildings when they’re looking for space, said Robert Chavez, president of the Los Angeles office of the Dallas-based leasing firm.

Campus-style, low-rise buildings carry such wide appeal that they give employers an edge in a tight labor market, analysts said. As the workday stretches well beyond 9 to 5, they’re easy to access around the clock. The offices also can be easily structured to allow teams of employees to work together. Often, the buildings are closer to where workers live, requiring a shorter commute.

In Orange County, the suddenly resurgent market has been boosted by low-rise offices or flex buildings, structures that can be used for offices or industrial needs. The trend has grown so prevalent that some research firms may change the way statistics are kept, combining rather than separating some building types.

While Orange County office lease rates have jumped to their highest point ever, $2.03 per square foot in the second quarter, the first two high-rise buildings in 10 years are due to be completed by December, according to Grubb & Ellis Inc. But many companies’ relocation to shorter buildings is helping to prevent lease rates from rising even more.

Moreover, companies leased 835,000 square feet less than they did a year ago in Orange County, roughly the equivalent of a 33-story tower. That decline has caused the vacancy rate to edge higher to 9.3%, Grubb & Ellis said.

To be sure, many executives still prefer a traditional Main Street address. Ernst & Young announced in June a plan to merge its Orange County offices under one roof next year, occupying most of a 10-story Irvine building. When considering other sites, the firm’s low-rise choice advanced to the semi-final round. But company officials said being contained in one building, instead of several, would improve efficiency.

“If we looked at both alternatives, you can be sure many other tenants are doing the same thing,” said Stephen Duffy, who heads the real estate accounting subsidiary E&Y; Kenneth Leventhal Real Estate Group in Newport Beach. “The high-rise owners are feeling the competition from quality low-rise office buildings that exist in the marketplace. No doubt about it.”

Brobeck’s new office--where some of Orange County’s biggest Internet-related companies are advised--stands in stark contrast to others in the legal field.

A limestone and quartzite stairway highlights an open-floor design that makes two stories seem like one. Tan, copper and arrowroot have replaced black, mahogany and gray as the dominant colors. Walls are adorned with bold strokes of artwork, some with bright yellows and greens, instead of the usual muted abstract paintings.

The new dress code and the move, which followed a similar relocation by the firm’s Palo Alto office, has proved popular among clients such as Broadcom, GeoCities, Buy.com, PairGain and Tickets.com.

Scott Purcell, president of Irvine-based www.com and one of Brobeck’s clients, used to tease the firm’s lawyers incessantly about their designer suits and leather-soled shoes. Seeing them in casual wear makes them part of a “more real and attractive firm,” he said.

“A stuffy, pretentious lawyer is not somebody we want to do business with,” Purcell said.

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Office Building Cultures

LOW-RISE (5 stories or lower)

* Horizontal structure reflects flatter hierarchy. Easier to collaborate when all workers are on same floor.

* Space is more flexible, easier to reconfigure.

* Elevator rarely needed--allows direct access to company.

* Leases run about 15% to 25% cheaper.

HIGH-RISE (10 stories or higher)

* Traditional building follows traditional corporate structure--CEO on top floor, workers below.

* Floor plan restricted.

* Elevator required to teach company--acts as barrier.

* Usually requires a subsidized parking garage.

* Leases run about 15% to 25% higher.