Michael Hackman on Creative Office Saving the Day

The company’s office portfolio has a well-established reputation on its own as one of the early pioneers in creative office space by investing in older buildings that have “better uses down the road,” Hackman told Commercial Observer. More recently, Hackman has talked about how creative office space has been moving away from high-rise buildings and toward more sprawling campuses.

“We were offering the right type of product — which is a single-story campus,” Hackman said. “I think that type of product will continue to be very successful. […] There was a significant push towards that anyway, and I think COVID nudged it along.

“Owners that have high-rise office space, as a traditional asset class, are going to have a lot of near-term pain.”

HCP’s endeavors in office made headlines when the firm purchased redevelopment rights from Hudson Pacific Properties and Combined Properties for The Culver Steps, a mixed-use property adjacent to The Culver Studios. Amazon Studios is both the anchor tenant at the studios and also occupies all 75,000 square feet at Culver Steps.

Now, tech and media firms occupy about 15 percent of the office inventory in Greater L.A. and Orange County, according to CBRE (CBRE). Traditional media firms alone occupy more than 10 million square feet, including 1.9 million square feet going to streaming companies in the past two years alone.

HCP’s office portfolio is bolstered by the fact that a portion is designed and occupied by accompanying streaming companies. But it also attracts other kinds of premier creative tenants. 

Hackman’s 2021 run so far includes scoring a lease with Beyond Meat, one of the fastest-growing, plant-based food companies in the country, which signed a 12-year lease to move its headquarters into 280,000 square feet in Hackman’s prized redevelopment in El Segundo — perhaps the fastest-growing submarket in Southern California. HCP converted the former Northrop Grumman industrial property into a creative office campus, and the Beyond Meat deal was the largest lease of the first quarter in L.A. County, at a time when the market is starving for action.

CBRE’s Jeff Pion, who helped facilitate the Beyond Meat deal with Grafton Tanquary III and John Ayoob, told CO it’s “a quintessential adaptive reuse project.”

“That’s a good example of [Hackman] looking at an interesting piece of real estate and figuring out how to reposition it for the creative office market,” Pion said.

With its office portfolio, HCP manages more than 35 million square feet of space spread over more than 400 properties in 41 states.

“Long term, I think people do want to work together and collaborate together,” Hackman said of the current COVID-spawned remote work phenomenon. “I think that’s a really important component of being successful.”