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Los Angeles
Tuesday, Oct 4, 2022

Crossing Over

Rick Caruso is known as L.A.’s shopping mall master developer. But now he’s moving into new territory: the office market.

What’s more, the 56-year-old chief executive of Caruso Affiliated is bringing five-star hotel-style service to that sector. So a worker in his office building could get a deskside pedicure while other concierges fetch her groceries and plan her vacation. All would be free to her.

“What I’m focused on more than anything is hospitality,” he said. He already has concierges in his retail and residential properties. “It’s logical to next bring it to office.”

The just-opened Masonic Temple, his renovated office building in Glendale, is his incubator. The largest real estate firm in the world, downtown L.A.’s CBRE Group Inc., is the tenant leasing the majority of the space. Caruso is leaning on his adjacent Americana at Brand retail property, which already has concierges, to help provide service to the office workers.

Using an app with the logo of the temple’s arches, CBRE workers at the Masonic Temple can summon a concierge in a freshly pressed tailored suit to take care of their dry cleaning, fill their cars with gasoline, get lunch delivered as well as provide other services that Caruso said have never been offered before by an office landlord.

The temple, Caruso said, is the first of what will be many Caruso-owned office properties that offer such service. He’s already on the hunt for his next office pickup. Smart office landlords might try to duplicate the service, he said, but few if any have both the retail prowess and the service culture to pull it off.

“The service of people is a great art and it makes people’s lives a little bit better,” he said. “You can buy goods and services anywhere, but the experience and service at the Grove and the Americana make people want to be there.”

Sitting on a couch in the Masonic lobby in a blue suit as elegant and organized as one of his buildings, Caruso said, “It’s really the only way you can differentiate yourself. You can try on price, but that’s a race to the bottom.”

Opening day

There was a sparkle in Caruso’s eye from the moment he walked through the arched entrance at 234 S. Brand Blvd. and found Masonic alive with the energy of Jan. 4’s move-in day; 118 employees relocated from CBRE’s Universal City office.

“I’d been trying to buy it since we built the Americana,” he said of the nearby mall, which was completed in 2008, six years after the opening of the Grove, his open-air mall in L.A.’s Fairfax District.

Caruso Affiliated finally purchased the 54,000-square-foot temple in April along with two adjacent buildings and an adjoining vacant lot, the latter of which will soon be home to a Shake Shack restaurant.

In the pristine, white lobby of the Masonic, he surveyed his kingdom, shaking hands, giving orders and embracing four new members of the impeccably coifed concierge team assigned to the Masonic office.

While three concierges will be on site on an average day, more than a dozen were there for opening day, pulled from the Americana and Caruso’s residential property across the street, the Americana at Brand Luxury Apartments. The effect was such that CBRE’s employees could not touch a doorknob or an elevator button. Someone appeared at every moment, guiding them into elevators and out of coats and toward a Panera breakfast layout on a massive kitchen island.

“I don’t know if these are on the budget permanently, but they look great,” Caruso said to a concierge in the lobby, motioning to two arrangements of white peonies, white drooping orchids and white hydrangeas at the front desk.

Win win

“From a financial standpoint, the project is already one of our most successful,” Caruso said, declining to discuss rent.

The concierges for the Masonic are an expansion of Caruso Affiliated’s existing service because they provide a wider variety of services, he said. The service is free to CBRE’s employees, who only pay for any goods they buy. Tipping is optional.

The cost for the concierge service is included in the rent, much like it is at Caruso’s West L.A. residential property 8500 Burton Way. He said that property commands $10 a square foot a month in rent.

Using that figure, a 1,200-square-foot, one-bedroom apartment would rent for $12,000 a month. That’s more than double the average per-square-foot rent at other luxury properties in the submarket, according to data from CoStar Group Inc.

From Caruso’s perspective, working at an office with such service is like flying first class: it’s easy to get used to such treatment and it’s hard to go back to a cramped economy seat. This allows him to charge high rents, and also to raise them, like he did at his Burton Way property.

“What we’ve seen with our residential and retail properties is that people don’t want to leave,” he said. “It gives us an ability to increase rents greater than the market will allow.”

Workplace 360

The idea to build an innovative office in the temple came directly from the tenant. It was proposed by Lew Horne, president of the greater Los Angeles and Orange County region for CBRE, and his team.

Much of the four floors the firm occupies were modeled after CBRE’s downtown L.A. headquarters, the first of 30 CBRE offices built to fit its Workplace 360 initiative, which does away with assigned workspaces to encourage collaboration among departments. Designed by Gensler, the sleek and modern Masonic office is meant to serve as a calling card for the real estate services firm.

“Our clients want to see how we’re living, not just what we’re suggesting,” said Horne, who later pointed out that some of the original nails from 1926 were left in the concrete walls, sealed over by white paint. It’s CBRE’s first office in a historic building, he added.

According to Horne, construction began before the lease was even signed because there was a deep level of trust between landlord and tenant. CBRE occupies the fifth through eighth floors and will lease or sublease the yet-to-be-finished third and fourth floors of the building.

While he played a large part in dreaming up the office, Horne said the concierge concept was solely Caruso’s idea, and it was a big selling point.

“Rick defines service, and we’re a real estate services company,” Horne said. “If our employees feel like guests, it will translate to our clients.”

Caruso said he was thinking about his legacy as a developer when he decided to buy the historic building. But his favorite part of the development process was not the actual preservation of the building but opening day.

“Walking into today and seeing how happy the team is, the joy and the pride on everyone’s faces, that’s my favorite part,” he said. “I love the human spirit.”

Then he sprung up to request the removal of a floor mat in an elevator and explained, “If it’s not pretty, we don’t keep it.”


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