Media Firm's HQ move shows how some businesses shun skyscrapers in the pandemic
Online marketing firm Prodege plans to relocate its headquarters within El Segundo, California, to a low-rise private office as health concerns in the pandemic shift demand from high-rise skyscrapers with enclosed elevators.
The company, which develops consumer rewards and other engagement programs through such platforms as Swagbucks, signed a six-year lease for 35,000 square feet in a one-story building at 2030 Maple Ave. owned by New York-based private real estate investor Atlas Capital Group. The space, which has a private entrance, is part of the South building at the 105,000-square-foot complex.
Prodege intends to move into the new office next August, relocating from its 24,000-square-foot space on the eighth floor of the 20-story Pacific Corporate Tower, know as PCT, owned by Starwood Capital Group at 100 N. Pacific Coast Highway, according to CoStar data.
"Prodege wanted to be in a low rise, one or two stories where they can have their own in and out access, and their own air conditioning," JLL Managing Director Steve Solomon, who represented Atlas Capital, told CoStar News. "It's their own building within a building because there will only be two other tenants in the project."
The accelerating demand for low- and mid-rise offices over high-rise towers comes as the coronavirus prompts executives to look for ways to protect their employees, clients, vendors and customers as they plan their gradual return to offices once the pandemic eases.
Technology, media and other content-producing companies have been migrating from corporate-style skyscrapers to low- and mid-rise creative office campuses for 15 or 20 years. However, the desire for buildings suited for social distancing protocols among companies trying to return workers to offices is accelerating the push, David Toomey, a broker with tenant representation specialist Cresa that represented Prodege in the lease, told CoStar News.
"Some tenants are concerned about being in buildings where they share common areas, such as ground-floor lobbies, elevators, corridors and rest rooms on shared floors," Toomey said. "The other concern is potential delays getting from the lobby of a high rise to a tenant's floor if elevator capacity needs to be limited due the the pandemic."
The new location provides Prodege with a private workspace that requires no elevator for travel, which brokers say is an increasingly desirable setup amid the pandemic. The Maple Street building, which has ceiling heights up to 20 feet, offers private entry for each tenant as well as exclusive restrooms and extensive windows and skylights that permit natural light and air flow throughout each suite.
The office space also comes with individually controlled HVAC systems private to each space.
The 507,850-square-foot PCT, built in the early 1980s and renovated in 1996, had a vacancy rate of 28% prior to the decision to relocate by Prodege, which signed a six-year lease at PCT in 2014 scheduled to expire in June 2021, according to CoStar.
Prodege is the second company to move from PCT into the one-story, 105,000-square-foot building with a mezzanine level at 2030 E. Maple St. GoGuardian, an educational technology firm, moved into about 35,000 square feet in August 2019 prior to the COVID-19 pandemic, which started in the U.S. in March, Solomon said.
Some companies are marketing their low- and mid-rise buildings as alternatives to skyscrapers in San Francisco, Los Angeles and other major office districts facing headwinds in the pandemic and economic downturn.
In Los Angeles, for example, tenants in downtown skyscrapers have plenty of low- to mid-rise office options elsewhere in the city as sublease and direct space increases in prime office hubs such as those in West L.A., said Ryan Patap, director of market analytics for CoStar Group in Los Angeles.
Low-rise buildings such creative offices converted from warehouses with direct access from the parking lot and lack of shared corridors, rest rooms and other common areas may be better suited for such companies, Toomey said.
Air filtration and circulation through multitenant high rises "is another area of big concern" for safety and health-minded companies, he added.
Warehouse conversions often have rolling doors and operable window which allow circulation of fresh air, creating an "indoor-outdoor experience" relished by tech and media companies, Toomey added.
Solomon said the low-rise layout at 2030 Maple that allows tenants to park in front of their space has been a big draw.
"We're representing one of the few buildings that has had good activity in this pandemic climate," Solomon said. "We definitely think safety is the main reason why we've been able to to get this deal done and to have good interest."
Solomon said JLL is in preliminary talks with two other tenants to lease the remaining 35,000 square feet at 2030 Maple. If those deals aren't signed, within a few weeks Atlas Capital will move forward with its planned build-out of a 25,000-square-foot speculative office suite.
"The largest spec suite I've ever seen is 10,000 square feet," Solomon said. "Normally I'd tell a landlord not to build one over 5,000 feet, but this type of suite, which has a lot of ceiling height and nearby outdoor areas for dining and a gym, helps tenants that want to move in quickly."
For the Record
JLL’s Steve Solomon and Kristen Bowman represented the landlord, Atlas Capital Group, in the lease, while David Toomey at Cresa represented the tenant.