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Stretching Creativity to Its Limits

Two of the San Fernando Valley’s most ambitious creative office projects are set to come online in the next few weeks just a block apart in a neighborhood few associate with cutting edge companies – Van Nuys. And when they do, they may finally answer an age-old question: If you build it, will they come? In essence, what the landlords want to know is whether coveted new media and entertainment companies will migrate from Hollywood and the Westside in exchange for the Central Valley’s freeway proximity – and savings of more than $2.50 a square foot. The Ranch at 14801 Califa St. and The Press at 14931 Califa St. are prototypical examples of adaptive reuse: old manufacturing plants and distribution warehouses stripped to their concrete floors, brick walls and exposed ceilings – with upgraded infrastructure and Internet connectivity, and large windows and skylights cut in. The results are wide-open floor plans, natural light and authentic building materials that creative tenants crave. Each property also offers generous parking ratios and independent air-conditioning control, both important points for creative tenants whose employees come and go frequently and are expected to work long hours and weekends. The owners of The Ranch hired premier creative firm Shubin + Donaldson Architects Inc. of Culver City for the redesign of two, 18,500-square-foot industrial buildings. They’ve spent $1.85 million so far and expect to invest more on amenities. John P. Webster, principal at Elbar Investments L.P., whose family owns the property and is developing the project, said that a few years ago he became aware that post-production and computer gaming companies were looking for creative office space in the Central Valley. “At that time, the only option available to these types of companies in the area was traditional office space, which presented numerous operational obstacles specific to these types of users,” he said. “We looked at our site and felt that we had a very unique opportunity to create a functional and creative campus in which these companies could thrive.” The Mat West Co., developers of The Press, are spending even more on their project: $16 million to revamp a 53,000-square-foot building and construct a three-story parking structure with landscaped entryway. The two Van Nuys projects are not the first local creative office remakes. For example, a couple of Burbank developments – The Mariposa Station at 700-708 Mariposa St. and Burbank Empire Business Hub, 2405 W. Empire Ave. – were remodeled and quickly leased a year ago. But The Ranch and The Press are among the pioneers in the Central Valley. The properties sit in a section of Van Nuys that is undergoing reclassification as part of Sherman Oaks, and the landlords hope to capitalize on the more upscale name. But with residential on one side and block after block of gritty, low-rise industrial buildings on the other, neither project boasts a pedestrian-friendly, coffeehouse-dotted neighborhood similar to what employees enjoy in Santa Monica or Downtown Los Angeles. Still, the broker leasing the property, Kevin Fenenbock, senior vice president at Colliers International’s North Los Angeles office, is betting that companies will overlook that when contemplating the potential savings. According to Colliers’ data, average asking rates in the Central Valley submarket in the fourth quarter were $2.13 a square foot. By contrast, Santa Monica’s average asking rate in the quarter hit $4.75 a square foot, according to data compiled by Jones Lang LaSalle Inc. “We’re seeing an incredible amount of activity, mainly from companies getting priced out of the Westside,” Fenenbock said. Hidden amenities One bonus that might not be immediately obvious at The Ranch is the property’s third-generation family ownership. Brothers-in-law Webster and Barry Pyle work in Elbar Investment’s longtime office on Van Nuys Boulevard and personally manage the property. Their 11.5-acre industrial site is the remnant of a 60-acre horse farm and orange grove purchased by their great-aunt and -uncle, Eleanor and Barney Ruben, in the mid-1940s. “My dad, Dan, went to Van Nuys High School. He remembers picking lettuce and cabbages there as a teenager,” Webster said. The Rubens developed single-family homes on much of the acreage in the 1950s and ’60s, reserving one parcel for an industrial park. As their small manufacturing tenants grew, the site was built out to accommodate them. Currently, 13 buildings ranging from 2,200 to 28,000 square feet occupy the land. Webster and Pyle are proud of the role their family has played in supporting Valley companies. “We’re in the business of keeping tenants,” Webster said, ticking off several companies that have leased space at the site for decades, including Bill’s Hamburgers, a small Oxnard Street stand that has been in business for half a century. The most successful tenant was shampoo maker Redken Laboratories, founded by actress Paula Kent and her hairdresser, Jheri Redding. Its products were made on site from the early 1960s until Redken outgrew the space, was acquired by L’Oreal in 1993 and moved to Manhattan. Webster and Pyle submitted an application for a change of use permit for a portion of the property in late 2013. It was approved six months later and construction began last spring. The remodel is being financed through the company’s cash flow and a pre-existing loan from City National Bank. Making headway The first tenant at The Ranch is not a media or entertainment firm. It’s architectural engineering firm Stantec Consulting Services, which plans to move 55 employees into 10,000 square feet there later this month. “As designers of our own office space, this location also gave us creative freedom to develop an open floor plan and collaborative workstations,” Dean Palumbo, Stantec’s Western U.S. senior vice president, wrote in an email. “Additionally, we service clients in the infrastructure, energy and resources, and building sectors throughout L.A. and North America, so this geographic location was an ideal addition.” Just down the street, a new, three-story parking structure rises over The Press, another construction project with a long, colorful San Fernando Valley history. George J. Uyesugi, chief executive of developer Mat West, said in an email that the property formerly housed the printing presses and corporate offices of the Los Angeles Daily News. In 1990, when the newspaper moved to Woodland Hills, the Mat West Co. purchased the property from the newspaper’s then owner, Cooke Media Group. From 1996 to 2011, J. Paul Getty Trust leased most of the building as warehouse space in support of the Getty museums in Brentwood and Malibu. Mat West also had an office in the building, but has moved offsite nearby during the remodel. The project, which Uyesugi said is being funded by corporate cash reserves, broke ground shortly after winning approval from the city in March last year. The company undertook the conversion after taking note of changing market conditions in the Central Valley. “We recognized there is a unique market opportunity for modern, creative office space in the Sherman Oaks /Van Nuys area,” he said. With a scheduled completion date of March 1, The Press is hoping to lure entertainment companies that want space priced cheaper than in the Ventura Boulevard office market. Open question What is going on in Van Nuys is not going unnoticed. The Ranch was featured in a slide show at a meeting of the AIR Commercial Real Estate Association at Downtown Los Angeles’ exclusive Jonathan Club last month. Architect Russell Shubin spoke about his firm’s current adaptive reuse projects and used The Ranch as an example, putting it front and center before 250 prominent Southern California real estate brokers and bankers. Shubin said creative office space appeals to companies that depend on employee collaboration and need lots of bright, comfortable space for impromptu meetings and brain-storming sessions. “The lines are blurred and the space takes on a residential feel that we call ‘homing from work,’” he said during his presentation. Marques L. Williams, transaction advisor in the media and technology practice at real estate consultancy DTZ in Los Angeles, is impressed with the renderings of The Ranch. “The buildings have good bones and they’re doing it correctly,” he said. But he has some doubts. “It’s not totally crazy to think that somebody might consider going to Van Nuys – if they’ve got the right product and a compelling argument. But you’re not getting a Westside tenant,” he said. “You’ll get a second- or third-tier, post-production or back office client who’s otherwise considering North Hollywood, Burbank or Studio City. And it will take major incentives to get that first creative client to step in.” Whether either project attracts its ideal tenant mix remains an open question. But with a Central Valley vacancy rate approaching 9 percent, it’s pretty certain that the space won’t sit empty for long. And whatever the outcome, Williams gives the developers credit for risk taking. “It’s really blazing a new trail to build a spec creative project in Van Nuys,” he said. “Getting a name-brand company to commit to an untapped market is tough.”

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