While the commercial real estate market remains soft and most landlords can’t figure out what to do with all their vacant space, Larry Field is spending $15 million renovating two El Segundo industrial buildings without a single tenant signed on.
So what does the developer know that his rivals don’t?
Field has found a niche: building out creative offices for fast-growing companies that are priced out of media and tech hubs such as Santa Monica.
“I always go against the grain,” said Field, founder and chief executive of NSB Associates Inc. in Beverly Hills. “When everybody stops doing something, it’s time for you to do it.”
For the last year, tenants have leased up creative office space in Santa Monica and Venice, sharply boosting rental rates. Now, such companies are looking farther south along the San Diego (405) Freeway corridor.
Special effects company Rhythm & Hues Studios Inc. moved from near Culver City to El Segundo this year. And Time Warner Inc. recently took another creative office space developed by NSB. The stage was set over the last several years as video game developer Konami Digital Entertainment Inc. and a few other creative companies moved to El Segundo.
Field has experience in the field. Westside creative office space makes up about one-third of NSB’s 2.3 million-square-foot portfolio, including offices for architect Frank Gehry near Playa Vista and annex offices for Google Inc., next to its Binoculars office building in Venice.
“Creative tenants are coming south,” said Mike McRoskey, a managing director at Chicago-based Jones Lang LaSalle Inc., which is listing Field’s two El Segundo buildings at 2355 and 2383 Utah Ave. “Larry’s the first to see it happening and is taking a proactive move to capture it. There will be a lot of other landlords that do the same thing when they see the activity.”
Dreams of Field
Field already has had success with speculative creative office conversions. In 2007, he spent $8 million to buy two industrial buildings totaling 60,000 square feet on Alaska Avenue next to his latest project.
He learned a lesson there. Prospective tenants were shown the property before any work had been done and there were no takers because it was difficult to imagine the end result. So Field took the plunge and spent $4 million tearing out the drop ceiling, installing skylights and knocking out interior walls. Time Warner leased the entire building for offices and production facilities at $2.52 a square foot, according to industry sources.
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