Yahoo offers a variety of Internet services
MID CITY — The company that boasts one of the most frequented sites on the Internet recently revealed why it’s important to have its headquarters in Santa Monica.
Representatives from Yahoo explained to an audience of 50 local business leaders last week that the local pool of employee talent and proximate location to other media-related businesses are what prompted the Internet giant to expand its presence in Santa Monica starting in August.
Yahoo signed a 10-year lease to occupy 229,728 square feet of office space in the Colorado Center, which will be renamed Yahoo Center. The $100 million deal with complex owner Equity Office is the largest and most expensive for Santa Monica in recent years.
Roger Van Overbeek, a corporate real estate broker for Yahoo, told members of the Westside Economic Collaborative (WEC) — a nonprofit regional economic development group — the expanded Santa Monica location will become Yahoo’s media hub as the company focuses on developing content for its Web sites. To do this, Van Overbeek said Yahoo will continue to seek partnerships in the local media and entertainment industry.
“Media content is such a force for Yahoo,” Van Overbeek said. “We can accomplish so much more with partnering.”
The company’s presence at its new business complex is second only to anti-virus company Symantec, which will vacate its space in 2008. After that, Yahoo will have more than 100,000 square feet more than the next largest tenant, Rubin Postaer.
Matthew Miller, a broker for CRESNA Partners who closely tracks the area, said architecture is one of the biggest factors drawing entertainment and creative-type businesses to the Colorado Center. The open-air campus features outside walkways and a plaza with a fountain amid green landscaping. Also on site is valet parking, a health and fitness center, lap pool, specialty retail shops, professional childcare facility, coffee shop, food court and general food services. There is a 3.5-acre park with basketball, tennis and rac-quetball courts, playground and pond.
Yahoo already has three smaller offices in Santa Monica with a total of 200 employees. However, the company’s new center is intended for the growth of its media division, which handles Yahoo’s news, finances, sports and online entertainment services. As many as 700 employees may be added to the payroll in the next few years.
“We’re on a pace of hiring people that is just unbelievable,” Van Overbeek said.
The concentration of media companies within Colorado Center has increased in recent years. While Yahoo is the latest, HBO, CBS and Rubin Postaer all moved there within the last three years.
Colorado Center is surrounded by other media companies that have been moving and expanding for more than a decade. MTV, Universal Music, Sony Music, Revolution Studios, Lucas Productions and Bruckheimer Films are some of the bigger companies within a half mile.
Yahoo will make the shift into its site over a three-year period, beginning by moving into 64,671 square feet in August, before the school year starts. Many of the employee transfers, who are parents, will be moving their families from Sunnyvale, Calif.
Created in 1994 and now grossing $3.6 billion in annual revenues — with other major offices in Oregon, Northern California, New York and India — Yahoo’s free news Web site is viewed by more than 26 million worldwide each month. Van Overbeek said the majority of Yahoo’s revenue is driven by display advertising paid for on the company’s Web sites. In addition, Yahoo also obtains revenue from the premium services it provides to consumers, such as up-to-date stock information and money conversion capabilities. Yahoo is also ranked No. 1 in the music downloading services it provides.
When determining the location for its new hub, Yahoo wanted to be located in an area that could draw the best and brightest talent. Yahoo also wanted to be close to their contact partners in the media industry. In terms of an office site, Van Overbeek said Yahoo wanted to be in a large building that would allow for partial occupancy at first, with a high-identity space to support the company’s brand.
Santa Monica was chosen over Century City, Playa Vista, Westwood and West Los Angeles. WEC representative Libby Williams helped Yahoo narrow its search by providing taxing, demographic and permitting information for Santa Monica and surrounding communities.
Van Overbeek didn’t comment on the costs, but other sources close to the project have said several tens of millions of dollars may be involved with the relocation project.
Van Overbeek said Yahoo made no tax incentive agreement to help close the deal.
“We understand that cities run on taxes,” he said.
Once they had decided where they wanted to be, Williams arranged a meeting between Yahoo representatives and Santa Monica city staff.
“We’ve been on a tight schedule, to make sure our parents are down here before school starts,” Van Overbeek said. “Every day is important. The (WEC) has helped us expedite the permitting process.”
Gwen Pentecost, who works in City Hall’s economic development department, said Yahoo’s presence will bolster the economy, since its employees will be working and spending money in the city. She said when offices are filled, local retail and restaurant operations also fare better.
Pentecost said companies like Yahoo have an influence on the amount of services the city can give residents by adding to the city’s tax base.
Richard Solomon, WEC’s chair, said he is delighted to have been part of an organization that helped land a major business player in the community.
“There are lots of competing business interests between westside cities, but it’s good when we can come together and help businesses find what they need,” he said.
Originally published in the Santa Monica Daily Press print edition on May 3, 2005. Read the original PDF.