Developer Robert Herscu is betting big on single-tenant office buildings.
The Australian businessman, CEO of HQ Development Group, is set to open yet another Los Angeles area office property geared towards a single creative or tech tenant who wants their own quirky flagship building, he told The Real Deal.
The property, which consists of three adjoining former warehouses at 720 N. Cahuenga Boulevard in the Hollywood Media District, has already been renovated top to bottom by architecture firm Shubin + Donaldson, which rejiggered it to include exterior courtyards, mezzanines, a library and screening room, open offices, kitchens, meeting rooms and a yoga studio.
Herscu hopes the revamp of the 1950s-era prop warehouse is a recipe for attracting a top-tier tech tenant.
“They call them the compounds,” he said of the types of casual offices he likes to build. “People want to bring their dogs, plug in their electric cars, come into an environment that feels like their home rather than going to a high-rise and getting in an elevator with a bunch of suits.”
A rendering of 720 N. Cahuenga Boulevard
The 40,000-square-foot building will be the eighth such property Herscu has bought and renovated since he launched his creative office venture, dubbed HQ Creative Space, in 2014, using mostly his own capital plus investment from friends and family.
The developer said he targets old prop warehouses and industrial buildings in West Los Angeles, Hollywood, West Hollywood and Culver City with historic elements that can be preserved to enhance the character of the office space.
At 720 N. Cahuenga, Shubin + Donaldson managed to keep the warehouses’ 30-foot bow-trussed ceilings and used materials such as wood, steel, concrete and metal to maintain the industrial flavor.
Meanwhile, the building has all the modern conveniences one might expect from a mansion in Beverly Hills, including a Creston system, which allows employees to control the lighting, music and heat from their iPads, and a large-scale water feature.
A rendering of 720 N. Cahuenga Boulevard
Landscape architect Jay Griffith, who has designed gardens for the likes of Brad Pitt and Jennifer Aniston, Cameron Diaz and Cuba Gooding, Jr., designed the outdoor areas.
It’s an expensive undertaking but Herscu, a longtime entrepreneur whose previous projects include running the largest independent shopping mall gift card company in the U.S., said the business plan makes sense.
“No one is spending what we’re spending,” he said. “We’re putting $300 a foot into renovation costs and achieving unprecedented rents as a result. We’re beating our pro formas by 25 to 40 percent. Whenever we go into a new market, we set a new record nine out of 10 times.”
HQ bought the Cahuenga building for $6.5 million in 2014, records show. Herscu expects rents to top $4.25 a foot, well over the average county-wide asking rent of $2.65.
A rendering of 720 N. Cahuenga Boulevard
That’s not chump change for tenants but Herscu has succeeded in drawing a handful of high-profile tech and creative companies to his buildings.
Lin Pictures, the movie production company that produced “The Lego Movie” in 2014, rents 15,450 square feet at HQ’s Seward House, at 729 Seward Street. Media company Mashable lease 10,900 square feet at an HQ building in Culver City, at 9950 Jefferson Blvd. And surfer Kelly Slater’s company Outerknown is in another building at 9300 Jefferson Blvd, where it leases 7,500 square feet.
The tenants, Herscu said, are less concerned about the price and more with their ability to attract top talent with a unique work environment.
“When you’re talking about this kind of building, rent becomes an ancillary conversation,” he said.