Recycling Buildings Tangible Solutions To Meet The New Market Paradigm Moderator Panelist Panelist Panelist Shawn Gehle Carl Muhlstein Mark Rivers J.P. Spickler Gensler Jones Lang LaSalle Lowe Enterprises FOX Architects NAIOP. Do not distribute or reproduce without permission.
Shawn Gehle Design Director, Gensler Responsible for establishing the design direction on creative office and education projects within Gensler s Los Angeles office. Portfolio of work has been recognized with design awards by the American Institute of Architects (AIA) and American Institute of Graphic Arts (AIGA) Currently collaborating with UCLA s citylab on a 3-year project titled The Future of Office Work NAIOP. Do not distribute or reproduce without permission. 2
Carl Muhlstein Managing Director, Jones Lang LaSalle Former Vice Chairman at Cushman and Wakefield. Carl and his team at Jones Lang LaSalle advise clients on over 2,000,000 s.f. of agencies, land and building sales. Skilled at bridging design sensibility with compelling economics. Active in Los Angeles commercial real estate for over 25 years. NAIOP. Do not distribute or reproduce without permission. 3
Mark Rivers Managing Director, Lowe Enterprises Responsible for all Lowe Enterprises commercial office and multi-family operations in the Washington, DC region Focuses on acquisitions, development, asset management and property management. Current project Adaptive reuse of an 86,000 square foot office building to a 194-unit multifamily building in Montgomery County, MD and the redevelopment of a 308,000 SF office building in Arlington, VA. NAIOP. Do not distribute or reproduce without permission. 4
J.P. Spickler Principal, FOX Architects 30 years of experience encompassing over six million square feet of corporate commercial and institutional projects Registered architect in Washington, DC and is a Leadership in Energy and Environmental Design Accredited Professional (LEED AP) Professional member of the American Institute of Architects (AIA) and the Urban Land Institute (ULI) NAIOP. Do not distribute or reproduce without permission. 5
Hackable Buildings Buildings Prime for Recycling @ShawnGehle NAIOP. Do not distribute or reproduce without permission.
Overview @ShawnGehle NAIOP. Do not distribute or reproduce without permission. 7
Overview @ShawnGehle NAIOP. Do not distribute or reproduce without permission. 8
@ShawnGehle NAIOP. Do not distribute or reproduce without permission. 9
Overview @ShawnGehle NAIOP. Do not distribute or reproduce without permission. 10
Overview @ShawnGehle NAIOP. Do not distribute or reproduce without permission. 11
Overview @ShawnGehle NAIOP. Do not distribute or reproduce without permission. 12
Overview @ShawnGehle NAIOP. Do not distribute or reproduce without permission. 13
Overview @ShawnGehle NAIOP. Do not distribute or reproduce without permission. 14
@ShawnGehle NAIOP. Do not distribute or reproduce without permission. 15
Session Objectives What industries are CHANGING THE OFFICE MARKET What opportunities exist in RECYCLING BUILDINGS How to address TECHNICAL CHALLENGES when reusing existing buildings NAIOP. Do not distribute or reproduce without permission. 16
Carl Muhlstein Jones Lang LaSalle NAIOP. Do not distribute or reproduce without permission.
#CreativeOffice and #SCurveLA The risk in relocating your business is not in being different or innovative. The risk is remaining static and predictable. October 8, 2013 Carl Muhlstein Managing Director Jones Lang LaSalle +1 213 239 6055 Carl.Muhlstein@am.jll.com @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 18
#SCurveLA @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 19
Catering to a national phenomena @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 20
Muhlstein Team Redevelopment Projects Project: Address: Size: Notes: Website: The Burbank Studios 3000 W Alameda Avenue Burbank, CA 91523 960,000 s.f. on 35 acres; entitled for 1.7 million s.f. Offices. Soundstages. Production. www.theburbankstudios.com @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 21
Muhlstein Team Redevelopment Projects Project: Address: Size: Notes: Sunset Media Center 6255 Sunset Boulevard Los Angeles, CA 90028 320,000 s.f. A vertical creative campus transforming Hollywood @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 22
Muhlstein Team Redevelopment Projects Project: Address: Size: Notes: Website: Columbia Square 6121 W. Sunset Blvd. Hollywood, CA 90028 350,000 s.f. in new buildings plus 100,000 s.f. historic office and studio space under renovation Mixed use development under construction. Pre-leasing for 2015 www.columbiasquare.com @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 23
Muhlstein Team Redevelopment Projects Project: Address: Size: Notes: Formosa South at The Lot 1041 North Formosa Avenue West Hollywood, CA 90046 95,000 r.s.f. under construction Now ready for TIs @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 24
Muhlstein Team Redevelopment Projects Project: Address: Size: Notes: 1640 S Sepulveda 1640 S Sepulveda Los Angeles, CA 90025 143,553 s.f. Unparalleled freeway access, large floor plates and private terraces @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 25
Muhlstein Team Redevelopment Projects Project: Address: Size: Notes: 700 Corporate Pointe 700 Corporate Pointe Culver City, CA 90230 277,000 s.f. entitled Reimagined by Gensler @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 26
Muhlstein Team Redevelopment Projects Project: Address: Size: Notes: Website: The Reserve 13031 West Jefferson Boulevard Los Angeles, CA 90066 380,000 s.f. The Westside s hottest creative office redevelopment www.thereservela.com @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 27
Entertainment real estate supply and demand A system and not a place Image credit: Gensler @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 28
What is happening with real estate? Ten or so years ago there were no smart phones Twenty or so years before that we didn t have the Web Who knows what workplace strategies will exist twenty years from now? But the need for the Box remains. Profound changes as leases roll in the next 5 years Faster pace Distributed teams Lifestyle at work Lean and mean @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 29
#CRE must address Before you look at the bones Diversification Smoldering FIRE tenants New digital economy Urbanism Work, Live, Play Performance Placemaking and the Third Place Community Change Agent @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 30
Placemaking We shape our buildings; thereafter, they shape us Take back to raw, then add. Authenticity Raw materials Steel Concrete Glass Warmth Environment Timeless Seeing the light @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 31
The new traditional workspace Change Agent Space Introduces the Culture @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 32
The new traditional workspace Surprise Details Defy the Status Quo @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 33
Let s get physical Large vs. small floor plates High-rise; low-rise Engaging public space and activating the ground floor Resurrection of the coffee shop Residual value of TIs Headroom Glass-line is king Infrastructure Parking, Parking, Parking @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 34
Same floorplate, different floorplan Sun Microsystems Facebook New 435,000 SF Facebook campus in Menlo Park @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 35
Let s get financial Rent isn t everything (250 150 100 SF) Curating the right tenant mix Dealing with competitor noise Co-working and incubator tenant opportunities @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 36
Oil the catcher s mitt @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 37
Changing where and how people work @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 38
Creative office considerations Tenant Issues - No two creative base buildings are alike - Overall cost of occupancy - Term - Image, signage and compatibility - Culture and branding - Parking - Expansion, shrinkage and scalability - Definition of FMR and measurement - Power and connectivity - Presenting credit issues Landlord Issues - Warm, cold, arctic shell - Infrastructure, HVAC, LEED - Options and expansion rights - Exit and cancellation rights - Method of measurement - Additional services - Restoration - Interpreting credit issues - Initial price per square foot - Exit value per square foot @CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 39
@CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 40
@CarlMuhlstein NAIOP. Do not distribute or reproduce without permission. 41
Mark Rivers Lowe Enterprises NAIOP. Do not distribute or reproduce without permission.
Recycling Buildings From a Developer s Perspective Why are we recycling buildings? Advantages and Challenges Big Issues What We ve Learned NAIOP. Do not distribute or reproduce without permission. 43
Recycling Buildings From a Developer s Perspective NAIOP. Do not distribute or reproduce without permission. 44
Recycling Buildings From a Developer s Perspective NAIOP. Do not distribute or reproduce without permission. 45
Why Are We Recycling Buildings 46% of U.S. office inventory is over 30 years old. Location Opportunistic level returns with mitigated risk Unique building characteristics NAIOP. Do not distribute or reproduce without permission. 46
D Buildings in A Locations Desire for proximity to lifestyle amenities - Blurred lines between live, work and play Mix of Uses; retail, entertainment, residential, office, arts, recreation Public transportation Green space Employment centers Urban lifestyle / Amenitizing suburban office parks NAIOP. Do not distribute or reproduce without permission. 47
Advantages (Risk Mitigation) Location Cash flow during pre-development Hedging Go/No Go Very low subsurface risks environmental, water, and geotech. Faster to market One-third shorter schedule Approvals Demolition Excavation Structural Work Infrastructure NAIOP. Do not distribute or reproduce without permission. 48
Adaptive Reuse Office to Apartment AFTER BEFORE NAIOP. Do not distribute or reproduce without permission. 49
Adaptive Reuse Office to Apartment AFTER BEFORE NAIOP. Do not distribute or reproduce without permission. 50
Adaptive Reuse Office to Apartment 45 Yr. old, 5-story, 86,000 SF office building Adding seven floors - New Steel structure atop existing concrete structure Yielding 194 apartments Converting two below-grade levels to parking 15 month construction schedule Large windows and high ceilings 114 of 100 points toward community benefits Relocated Core Structural load - Residential vs. Office 10X increase in NOI NAIOP. Do not distribute or reproduce without permission. 51
Big Issues and Challenges Need Good Bones Structure, Façade, Parking, GFA, Ceiling Height Understanding the property: Structural evaluation, Zoning, Infrastructure Faster Pace Need to make decisions & selections sooner Existing Leases: Terminations, Demo Clauses, Month-tomonth; and Quiet Enjoyment Market Perception & Marketing NAIOP. Do not distribute or reproduce without permission. 52
Office Rental to Office Condo Redevelopment BEFORE AFTER NAIOP. Do not distribute or reproduce without permission. 53
Office Rental to Office Condo Redevelopment Redevelopment and expansion of office building Conversion from rental building to office condominiums TDR s & Special Exception 15 months from purchase to sale Vacating and retaining tenants Proof Step Make em believe 3x equity multiple in 15 months NAIOP. Do not distribute or reproduce without permission. 54
Recycling a Neighborhood NAIOP. Do not distribute or reproduce without permission. 55
Recycling a Neighborhood NAIOP. Do not distribute or reproduce without permission. 56
Recycling a Neighborhood NAIOP. Do not distribute or reproduce without permission. 57
East Village Los Angeles, California NAIOP. Do not distribute or reproduce without permission. 58
1400 Crystal Drive Office Redevelopment Arlington, VA NAIOP. Do not distribute or reproduce without permission. 59
1400 Crystal Drive Office Redevelopment Arlington, VA NAIOP. Do not distribute or reproduce without permission. 60
1400 Crystal Drive Office Redevelopment Arlington, VA Added 26,000 SF 18 month construction schedule More corner offices New everything LEED Gold $120/SF investment = $14/SF in rent First Class A building in 25 years Over 50% of work Design/Build NAIOP. Do not distribute or reproduce without permission. 61
What We ve Learned Using less contingency Shorter Schedule Less vulnerable to market changes Less Entitlement Risk More easily capitalized Everyone likes the story: Equity Investors Neighbors Lenders Politicians Users/Tenants Municipalities/agencies NAIOP. Do not distribute or reproduce without permission. 62
J.P. Spickler FOX Architects NAIOP. Do not distribute or reproduce without permission.
Recycling Buildings: Tangible Solution to Meet the New Market Paradigm NAIOP. Do not distribute or reproduce without permission. 64
Zoning (Outside-In) BEFORE NAIOP. Do not distribute or reproduce without permission. 65
Urban Planning Policies and Zoning Legislation NAIOP. Do not distribute or reproduce without permission. 66
Maximizing Density NAIOP. Do not distribute or reproduce without permission. 67
Define Building Envelope BEFORE NAIOP. Do not distribute or reproduce without permission. 68
Feasibility Process (Inside-Out) EXISTING STRUCTURE VERTICAL TRANSPORTATION FIRE-LIFE SAFETY / MEP ENGINEERING FACADE NAIOP. Do not distribute or reproduce without permission. 69
Key Technical Drivers: Structure BEFORE NAIOP. Do not distribute or reproduce without permission. 70
Structure NAIOP. Do not distribute or reproduce without permission. 71
Structure BEFORE NAIOP. Do not distribute or reproduce without permission. 72
Structure NAIOP. Do not distribute or reproduce without permission. 73
Build-to-Suite Opportunities BEFORE NAIOP. Do not distribute or reproduce without permission. 74
Key Design Drivers: Facade NAIOP. Do not distribute or reproduce without permission. 75
Key Design Drivers: Facade NAIOP. Do not distribute or reproduce without permission. 76
Key Design Drivers: Facade NAIOP. Do not distribute or reproduce without permission. 77
Key Technical Drivers: MEP Systems INTERIOR WET STACKS 26"x30" EXTEND FROM THE 2ND TO THE 14TH FLOOR TYP. EXTERIOR SHAFTS 20"x17" EXTEND FROM THE 2ND TO THE 14TH FLOOR ALL CORE CHASES AND SHAFTS SHOWN EXTEND FROM FROM THE 2ND TO THE 14TH FLOOR CORE PLUMBING CHASE 5' 7" x 1' 2" 1' 6" x 3' 0" KNOCKOUT PANEL CORE MECH. SHAFT. 13' 7" x 8' 5" CORE PLUMBING CHASE 10' 7" x 1' 0" CORE PLUMBING CHASE 13' 4" x 1' 4" EXTERIOR SHAFTS 20"x17" EXTEND FROM THE 2ND TO THE 14TH FLOOR PERIMTER MECH. SHAFTS CONT. ON THE NORTH, SOUTH AND WEST FACE BELOW THE 4TH FLOOR BUT DO NOT REQ. A SLAB CUT AS SLAB CONDITIONS VARY ON FLOOR 2 AND 3. REFER TO AXON FOR ADDITIONAL INFO. CORE MECH. SHAFT. 15' 8" x 7' 6" EXTERIOR SHAFTS 20"x17" EXTEND FROM THE 2ND TO THE 14TH FLOOR EXTERIOR SHAFTS 20"x17" EXTEND FROM THE 4TH TO THE 14TH FLOOR TYP. U.N.O. CORNER EXTERIOR SHAFTS 20"x16" EXTEND FROM THE 4TH TO THE 14TH FLOOR TYP. U.N.O. EXTERIOR SHAFTS 20"x17" EXTEND FROM THE 2ND TO THE 14TH FLOOR NAIOP. Do not distribute or reproduce without permission. 78
HVAC Systems NAIOP. Do not distribute or reproduce without permission. 79
Vertical Risers and DOAS NAIOP. Do not distribute or reproduce without permission. 80
Key Technical Drivers: Vertical Transportation, Fire & Life-Safety BEFORE NAIOP. Do not distribute or reproduce without permission. 81
Design Drivers: Public Spaces and the Ground Plane NAIOP. Do not distribute or reproduce without permission. 82
Design Drivers: Public Spaces and the Ground Plane BEFORE NAIOP. Do not distribute or reproduce without permission. 83
Key Design Drivers: Amenities / Roofs NAIOP. Do not distribute or reproduce without permission. 84
Key Drivers: Construction Coordination NAIOP. Do not distribute or reproduce without permission. 85
Q&A This is your opportunity to make this session exactly what you need it to be Ask the question. Please note that this session is being recorded, so before speaking, please either proceed to a standing microphone or raise your hand and wait until a mic runner reaches you. Thank you! NAIOP. Do not distribute or reproduce without permission. 86
Thank You! Shawn Gehle Moderator Design Director Gensler 213-327-3600 shawn_gehle@gensler.com Carl Muhlstein Panelist Managing Director Jones Lang LaSalle 213-239-6055 carl.muhlstein@am.jll.com Mark Rivers Panelist Managing Director Lowe Enterprises 202-496-2917 mrivers@loweenterprises.com J.P. Spickler Panelist Principal FOX Architects 202.659.0929 jspickler@fox-architects.com NAIOP. Do not distribute or reproduce without permission. 87