Yahoo! just latest entertainment firm to move in
By CORTNEY FIELDING Special to the Daily Press
COLORADO AVE. — Add Yahoo! to the growing list of entertainment companies who have found a home in Santa Monica.
The Internet giant announced last week that it will join companies like HBO, MGM and CBS, when it moves to Colorado Center this summer.
The Santa Monica location will become Yahoo!’s entertainment hub as it turns its focus to developing more of its own web content, Yahoo! spokeswoman Joanna Stevens said. Colorado Center’s close proximity to other entertainment and “creative-type” businesses, both on its campus and throughout Los Angeles, made it an attractive area for the company.
“It’s a great environment for entertainment,” said Stevens. “Look at how many other companies are there.”
Yahoo! signed a 10-year lease for 229,728 square feet 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 in Santa Monica in recent years.
“I can’t think of anything within 100,000 square feet of that,” said CRESA Partners broker Jerry Porter, who represented Yahoo in the deal.
Yahoo!’s presence in the complex is second only to anti-virus company Symantec, which will vacate its space in 2008. Yahoo! has over 100,000 square feet more than the complex’s next largest tenant, Rubin Postaer, an advertising firm.
But to lessen the company’s financial impact and control expansion, Yahoo! won’t take over the entire leased space at once, according to Dennis Kaiser, an Equity Office representative. Instead, it will make the shift over a three-year period, beginning by moving into 64,671 square feet this August.
“Ultimately, they hope to take the space and grow into it,” said Santa Monica Economic Director Mariam Mack.
The concentration of media companies within the Colorado Center has increased substantially in recent years — HBO, CBS and Rubin Postaer all moved there within the last three years.
Matthew Miller, a broker for CRESNA Partners who closely tracks the area, said architecture is one of the biggest factors in drawing entertainment and creative type businesses to the Colorado Center.
“Yahoo! Center is exactly what the Westside business community wants,” he said.
The complex is comprised of six buildings designed in an open-air campus, which differs from the traditional contained office building.
Frank Campbell, Equity’s vice president of leasing, said creative businesses fit well in that model.
“It’s a highly sought after product type,” he said. “It has real knowledge worker appeal because there is plenty of open space.”
The Water Gardens, the office building next door, is built in a more traditional enclosed style and is largely made up of financial services and a law firm.
“They are almost identical on paper,” Miller said, “but in real life they couldn’t be more different.”
Miller said the Water Gardens is not experiencing the leasing success its neighbor enjoys.
“They are starting to fill up now, because there is no other open space left,” he said. “But they were the last to fill up in the last cycle, and they will be the last to fill up in this cycle.”
The Colorado Center is surrounded by other expanding media companies that have been moving into Santa Monica for more than a decade. MTV, Universal Music, Sony Music, Lucas Productions and Bruckheimer films are some of the big name companies situated within a half-mile.
In addition to the larger companies, many smaller production studios are filling up office space in the area. Last fall, the City Council approved a Lantana- Hines development on Olympic Boulevard, which includes two three-story entertainment buildings. A 64,105-square-foot production/post-production studio building and a separate three-story, 130,000-square-foot building is set to be constructed at 3131 Exposition Blvd. The two buildings will complete the Lantana Media Campus, which already is home to many entertainment businesses, including IMAX headquarters, Revolution Studios, Lawrence Gordon Productions and such shows as “Crime & Punishment” and “Curb Your Enthusiasm.”
“It’s clear this area is becoming a central hub for entertainment companies,” Miller said.
While the entertainment and media industries are growing in Santa Monica, he acknowledged the trend is not altogether new.
“About 15 years ago, the studios realized they didn’t have to have their offices right next to the lot,” he said. “They could move closer to the decision-makers.”
City officials don’t yet know how Yahoo!’s move will affect City Hall revenues, but Mack said any new employees working and spending money in Santa Monica should benefit Santa Monica.
“Basically, we are excited about anything that takes up space,” she said. “It’s a major catalyst for economic activity.”
While the company didn’t release any numbers, the space Yahoo! leased — most of which is currently unoccupied — can hold up to 1,000 employees.
Companies like Yahoo! have an influence on the amount of services the city can provide residents because sales tax revenue is likely to increase with more people spending money here, according to Santa Monica Economic Development analyst Gwen Pentecost.
“Things like Yahoo! really help our economy,” she said, referring to the hundreds of potential new employees that will be working and spending money in the city. “When offices are filled, our retail and restaurants also survive better.
“Those new employees will eat and shop here.”
While many of the jobs moving to Santa Monica will be transfers from Yahoo!’s headquarters in Sunnyvale, Calif., Stevens said not everyone will be able to transfer to Santa Monica. New positions also will be created if expansion goes as planned.
Yahoo! has about 200 employees already working in other Santa Monica offices and some of them will be among the first to move into the new offices. While all of Yahoo!’s entertainment offices will be located in Santa Monica, Stevens said the technical branches will remain in Sunnyvale.
City Councilman Kevin McKeown thinks Yahoo!’s presence will be an asset.
“Santa Monica is fulfilling its prophecy and becoming a town of yahoos,” he said.
Originally published in the Santa Monica Daily Press print edition on February 2, 2005. Read the original PDF.