Gamers at work: As esports goes corporate, LA offices are a training ground
Westside is developing into a hub for training and content production, with ultra-high speed internet a must
Pitch-black rooms with top-of-the-line, ergonomic chairs, ultra-fast internet and massive TVs.
It sounds like a gamer’s dream home, but it’s actually the Santa Monica headquarters and training ground of Team Liquid — one of the highest-earning esports teams in the world.
Team Liquid is part of a growing legion of competitive video gaming teams that are snatching up physical space across Greater Los Angeles and Orange County for training and content production. Together they make up ground zero of the gaming world, with developers, publishers, teams and arenas taking up around 3.1 million square feet of space in the area, according to CBRE.
There’s reason to expect gamers to expand their physical footprints. Pro teams — which collect revenue from tournament prize money, YouTube advertising, subscriptions and payments on streaming service Twitch, merchandise sales and other sponsorships — are expected to reel in $1.6 billion in worldwide revenue by 2024, according to gaming analytics firm Newzoo.
It’s little wonder the teams are setting up in real-world offices, cementing their status as corporate entities with space to grow their operations.
Unlike the pro sports leagues of the analog era that use stadiums, fields and ice rinks for training, a well-wired, climate-controlled office will do for gamers.
The trend comes at an apt time — the office market in Los Angeles continues to see stubbornly high vacancy rates, reaching 25 percent in the third quarter.
Gaming companies have provided a much-needed bright spot. Activision Blizzard, which publishes games including “Call of Duty,” took 175,348 square feet of space in Santa Monica and Playa Vista between July and September.
All about the brand
Away from the beach, esports and apparel organization 100 Thieves opened a gaming compound on Jefferson Boulevard in Culver City, the group said in a YouTube video last year.
Cash App sponsored the building by purchasing the name rights, just as brands do with football stadiums. Rocket Mortgage sponsored a training room stocked with seven gaming monitors equipped with microphones, headsets and chairs that cost $500 a pop.
In 2019, Team SoloMid, another major esports squad, said it planned to spend $13 million to build out its own Playa Vista facility.
“They needed practice rooms, training rooms, player-lounge spaces to recover,” said Ray Howden, a broker at Cresa who worked with the team on the deal. The team even wanted to “build out a high-end, Equinox-esque gym.”
Finding a space that could accommodate both heavy gym equipment and high-speed internet was no easy feat, Howden said. The team eventually had to add in structural support to the floors to handle the loads.
Such build-outs are costly, Howden and his partner Greg Lovett said. Tenant improvements often don’t cover the cost of building out and outfitting traditional office space, let alone meeting the needs of professional gamers.
“It’s a significant investment made on behalf of teams,” Howden said.
There are dividends. Team Liquid has won over $37 million in prize money from tournaments featuring games such as Riot Games’ team-based epic “League of Legends.” The squad now is preparing to renovate and build out a 15,000-square-foot facility in an office park owned by the Roberts Companies on Colorado Boulevard in Santa Monica.
The team moved into 9,000 square feet at the business park in 2018 and now plans to expand into adjacent buildings, according to Jared Forkner, Team Liquid’s workplace operations manager.
The build-out will involve more than light renovations: it needs to add ultra-high-speed internet, three screening rooms with ventilation, editing rooms and a production set, where Team Liquid players will shoot sponsored content and other videos.
Though the lease, which runs through 2025, includes a tenant improvement allowance, Forkner said it definitely won’t cover the entire build-out, which is expected to be completed in mid-February, depending on whether the team secures all of its necessary permits from the city.
“At the end of the day, these teams are leasing a shell office,” CBRE’s Patrick Amos said. “But it’s pairing it with things you might expect for the NBA or NFL-type team” combined with the needs of a high-tech firm.
Team Liquid’s facility will also need “scrim rooms” — where teams can practice in arena-like conditions — just like professional sports players.
Forkner credited gaming computer manufacturer Alienware and Dell for helping the team afford its build-out, but did not disclose how much the firms had contributed to the renovations. Liquid’s current training facility is sponsored by Alienware.
Liquid isn’t the only team that has rented office space across West Los Angeles, which runs from Malibu to Marina del Rey, with Santa Monica, Brentwood and Beverly Hills in between.
Rival Cloud9 signed a deal in 2019 to take around 20,000 square feet near the Santa Monica Airport. Team SoloMid, which also competes in “League of Legends,” built a custom 25,000-square-foot training facility in Playa Vista. Gen.G, an esports team founded in South Korea, also has around 13,000 square feet in Playa Vista, where Electronic Arts occupied space from 2003 until last year.
Other esports teams have pivoted to a different sort of office: a mansion. Akin to influencer houses such as the Hype House (once known for its resident TikTok star Charli D’Amelio), private residences were an early effort to bring gamers together to live, work and stream content from one luxurious L.A. pad.
FaZe Clan — a team and digital brand that signed an SPAC deal in October to go public with a roughly $1 billion valuation — moved into a single, 36,000-square-foot compound in Burbank last year, spending $80,000 a month on rent.
Now the team is shopping for space in Los Angeles, and nearing a deal to take 30,000 square feet in Hollywood, sources told The Real Deal.
It’s not clear if FaZe Clan, which declined to be interviewed for this story, plans to give up its residential compound in favor of office space.
Team Liquid has tried the gamer-house approach before, but deemed it unsustainable.
An office as training ground and headquarters provides “a healthier balance, not living and working in the same room,” Forkner said, adding the “age of the player house” was ending.
A honcho hub
There’s a reason that Team Liquid chose to move into Santa Monica: Riot Games is there.
Founded in Santa Monica, Riot is now expanding rapidly throughout the city. The video game developer recently subleased the entirety of Starwood Capital’s 131,000-square-foot Lantana Entertainment Media Campus at 3000 Olympic Blvd. — right around the corner from Team Liquid.
Other publishers and developers have also set up shop in Santa Monica, including Sony Interactive Entertainment and its subsidiary Santa Monica Studio — both of which make PlayStation games.
But gaming companies aren’t immune to the impacts of the pandemic on the office sector.
Though it signed new subleases this year, Activision Blizzard shrunk its space in Santa Monica in March after laying off 190 employees, exiting its nearly 215,000-square-foot headquarters at Boston Properties’ Santa Monica Business Park.
The firm is also facing federal and state investigations over alleged sexual harassment and discrimination against its female employees. The Wall Street Journal reported last month that Activision Blizzard CEO Bobby Kotick has been aware of sexual misconduct allegations within the company for years and failed to disclose alleged rapes and other incidents, including an out-of-court settlement, to the company’s board.
Still, Activision Blizzard didn’t move out of the area entirely: it subleased 90,000 square feet of space at 2701 Olympic Boulevard in September.
As Santa Monica has developed into a hub for gaming publishers and developers, it’s also becoming a home for venture capital and seed investors.
Griffin Gaming Capital, which has invested in indie game developers and gaming messaging platform Discord, has offices on Colorado Boulevard in Santa Monica. Bigger venture firms, like Upfront Ventures and Greycroft Partners, have also set up shop in the city.
Just as Netflix has planted a flag in Hollywood and tech continues to be drawn to Silicon Valley, it seems only natural that esports teams would want to be in Santa Monica to be close to the makers of the games they play.
“‘League of Legends is one of our title games,” Forkner said. “Having the team close to the studio — a 10-minute walk away — is incredibly important to us.”