In 1998, just as the entertainment industry started to rein in much of its office expansion, M. David Paul & Associates was knee-deep in its latest development the 650,000-square-foot Media Studios North at the former site of the Lockheed Skunk Works plant in Burbank. Entertainment had been fueling much of the office leasing activity in Burbank, but when the industry retrenched, it cast a big shadow over the real estate market. But there was no slowdown at Media Studios North. The first two phases of the project leased quickly, and the firm is now breaking ground on the third phase. The fourth will begin in about six months. M. David Paul, company founder and general partner, has been in the business for more than 30 years. In college, he tried engineering and later law, but neither suited him. What he really liked was the idea of building things and seeing people benefit from the fruits of those labors. Since starting the company in 1973, Paul has developed 2.5 million square feet of space and renovated another 1 million. His latest project involves the purchase of a five-acre parcel in Burbank for a speculative project known Media Center Gardens. Question: What made you confident that Media Studios North would lease successfully, despite the slowdown in entertainment-industry expansion? Answer: By then we had already filled up the first building, and we were well on our way to leasing the second building. It was a concern when entertainment companies kind of pulled in their vision for new space, but we found there were a lot of other kinds of companies that were still expanding. And they loved the environment we were developing out there, which is not only a garden office park but had all covered parking, great workout facilities, entertainment facilities, putting greens, volleyball courts, commissary, jogging trails, flowers, gardens and shade trees. Q: What about the third and fourth phases of that project? How concerned are you about demand leveling off? A: We have a number of tenants who have expressed interest in the project. There is very little space available in Burbank. We think that with our quality of product, we will be standing alone with less competition than we’ve seen in prior cycles. We’re going ahead with the third and fourth phases on a speculative basis. We will have phase three open in December of this year, and phase four will be open by the end of the second quarter of 2001 with the most incredible gardens and feature areas. Q: What kinds of features are you planning? A: We’re still playing with all of that, but we have a very artsy bridge over a water course. It will be quite spectacular. We’re adding a basketball court and a paddleball court. Q: Business hours seem to be shifting from the traditional 9-to-5 work week to a 24/7 schedule. Did those changes influence the way you built Media Studios North? A: We’ve always felt that people spend more waking hours at work than they do at home, and now, with the variety of hours, we think it’s more likely than ever that will continue. So we have a private health club that’s for tenants only with showers and lockers. You have the ability to get exercise, to relax or sit under a tree and read. There’s no question that there’s a market for having amenities like that. We had the opportunity to do those things because we had about 19 acres. Usually we are doing infill work where we have room for just one building and one garage. Q: The previous developers were unable to secure a tenant for Media Center Gardens after trying for several years. Does that concern you? A: It’s a large enough project that previously had been designed to go in one phase, which is a lot of space to put into the market at one time. We have broken it up into two phases. We will have two buildings when we’re finished, one of about 235,000 square feet and one of about 350,000 square feet. Q: What will the rental rates be at Media Center Gardens? And do you think it will be more difficult to attract non-entertainment companies at those rents? A: They will be higher than what we’ve been charging out at (Media Studios North), but they will be in line with what we charge across the freeway. (The company also owns Central Park at Toluca Lake in the Media District.) We’re between $2.40 and $2.50 (per square foot) plus parking (at Media Studios North). And the new Gardens project will probably be about (40 cents more per month). Q: How did your company get started? A: When we started in September 1967, we were called Wilshire Center Development Co., and we were going to specialize in the development of the Mid-Wilshire area along Sixth Street between Vermont and Western avenues. We developed two projects and then we decided that the end was coming to Mid-Wilshire as we knew it. That was 1973. We could just feel a change coming. People were starting to go to the suburbs. The area wasn’t connected well to freeways and we just thought we would try to be at the front end of the move instead of the back end. At that point I bought out my partner and we developed the building at Third Street and Wilshire Boulevard in Santa Monica and have been here ever since. Q: What has been your strategy in building the company? A: When we moved here we made it a point to start specializing in trying to build the nicest office product in what I would call smaller, defined communities. I think we’re pretty much infill developers. We’re not the kind of company that goes into Irvine or the far end of the Conejo Valley and starts building stuff in competition with other people. We’re much more comfortable with finding an infill project in an established community and building the best that can be built there. Q: Isn’t it tempting to go where the new frontier is? A: I’d much rather be an infill developer. We think there’s less competition. And there’s an opportunity to do something different than the masses. Q: You’ve been doing this for over 30 years. What is the biggest change you’ve seen in the industry? A: When I started, the industry was made up almost exclusively of small developers. Today you have a lot of REITs controlled by the marketplace of stocks and bonds, making it much harder for them to speculate on uncommitted space and leaving us as one of the few with enough vision or craziness to attempt such a feat. Because of that, today there is hardly any available space in Glendale or Burbank or the Westside of Los Angeles, and there’s very little being put up on the horizon. So the choices today are fewer than they’ve been since I’ve been in this business. SPOTLIGHT M. David Paul Title: General partner Organization: M. David Paul & Associates Born: Idaho, 1937 Education: Bachelor’s degree in finance from Cal State Long Beach, one year of law school at UCLA Personal: Married, two adult daughters, one granddaughter
M. DAVID PAUL–despite a slowdown in entertainment industry leasing, developer m. david paul Still has big plans for the former site of the skunk works
