Sweet words to live by for corporate real estate developers wheeling and dealing in the last days of the 20th century. After a frightening downturn in the Los Angeles real estate market five years ago, when high-priced buildings on even higher-priced land went begging for tenants, the city has once again become a builders’ market.
Burbank was transformed from sleepy suburb to media mecca. Santa Monica is emerging as Hollywood West. And if DreamWorks execs get their way, Playa del Rey will be known for more than great burgers at the Shack.
Among the developers and builders behind the boom are veterans Jerome Snyder and M. David Paul and relative newcomer Mac Chandler. Like it or not, their ideas about what corporate clients want, and what entertainment companies need, have shaped offices and neighborhoods throughout Los Angeles County.
Putting miracle in Miracle Mile
Snyder, founder of Los Angeles-based J.H. Snyder Co., is the name behind sites including Wilshire Courtyard, the Water Garden and Wilshire Place. Tenants include Spelling Entertainment, Daily Variety, the Screen Actors Guild, Mark Goodson Prods., Motown Records and E! Entertainment television.
Snyder started it all in the 1980s, when he saw promise in Prudential Insurance’s former West Coast headquarters on Wilshire Boulevard and turned it into Museum Square. The renovation changed the tenor of the area, and industry watchers say Snyder helped put the miracle into the Miracle Mile with his rehab of the 10-story, 600,000-square-foot building.
“That was a big step,” Snyder says. “You hope you’re right when you take a chance like that. I’m very proud of that project and what it represents.”
Brooklyn-born Snyder, 67, moved to California in 1945. He has been proud of his work from the day he bought a truck, loaded it with tools and started building home additions.
“I was 19 years old when I started my own company,” Snyder says. “I got a truck and started doing some remodeling work. My father was a general contractor, and I knew something of the business because I worked with him when I was younger.”
He did a year at UCLA, and then got back to work.
“I started doing custom homes and little jobs,” he says. “My business grew by word of mouth. I went under the name of Snyder & Son — everyone thought there was a father out there somewhere, but I was this kid, working alone.”
By the time he was 22, he was building custom homes in Long Beach. He built a 96-unit development in Garden Grove, in the pre-Disney days. By the time he was 25, he made his way into the pages of Fortune magazine.
“I never had a doubt at that time that I would succeed,” Snyder says, and laughs. “Now, I’m smarter. I have a doubt.”
The 96 houses became 150, and the 150 became 1,000. Soon, Snyder’s company was a major player in the residential development market. In the late 1970s, Snyder saw an opportunity and listened to his instincts.
“About 1978, we bought the old Prudential headquarters building, which is now Museum Square,” he says. “Along with it, we bought the land across the street, which is how we got into offices.”
So did a lot of builders.
“It’s not that these developers are geniuses, it’s that they build good product and they build where the entertainment companies want to go,” says Les Small, president of Entertainment Realty Corp. in Century City. “Given the general conditions of the market, however, they did well.”
Snyder was the first to see the possibilities.
“If there’s a visionary in that group, it’s probably Jerry Snyder. He built Museum Square and turned that whole area around,” Small says. “Jerry put that up when no one saw a market there. He said, ‘Gee, this is 15 minutes from Beverly Hills, and we can fix this up.’ And he did it before there was a market to speak of. Now there are a lot of people chasing those sites.”
Snyder’s next project, the Water Garden in Santa Monica, didn’t go as smoothly. Original plans called for three six-story office buildings and one five-story building, surrounded by a 17-acre park with tree-lined paths. At its heart was the 1.4-acre artificial lake, filled with fish and lilies.
Hurt by the recessionary ’90s, Snyder was forced to scale back the $450 million project. He lost some of the land to foreclosure, then acquired some partners and bought it back when his fortunes — and the market — turned around. Tenants hurt by the foundering project sued Snyder and some of the partners in the development, claiming their leases were based on false promises.
Water under the bridge, industry watchers say.
“Ultimately, the project was very successful, once the building was up and the lake was filled,” Small says. “It wasn’t easy, but he waited out the hard times.”
From the way lenders are acting, hard times are over, Snyder believes. “A few years ago, I went to New York to borrow money to build in L.A. and they laughed at me” he says. “Not any more. We’re doing seven projects right now. The entertainment business has been so exciting in the last few years — it’s one of the major reasons L.A. is back and healthy.”
Snyder hopes to prove it with his ongoing projects , including Media Center, a four-acre, $135 million complex planned for the heart of Burbank’s Media District, which will yield a 585,000-square-foot office complex and 1,800 underground parking spaces.
Snyder, who jokes that his wife calls him “a land rapist,” doesn’t see an end to his labors.
“When will I stop?” he asked. “I’ll stop when they put me in a box.”
Cashing in on showbiz boom
M. David Paul is another corporate builder singing “Hooray for Hollywood” these days. He’s got Disney’s new 200,000-square-foot Skunk Works building successfully completed on the former Burbank Airport site of Lockheed Martin Corp.’s infamous Building 90, rumored to be where the aerospace company designed the U-2 spy plane and the Stealth bomber. MTV occupies a wing of the renovated Tenet Healthcare Corp. building in Santa Monica.
Paul, 54, was born in Twin Falls, Idaho. His parents moved to California when he was an infant. After graduating from Cal State Long Beach and attending a year of law school at UCLA, Paul found his way into the construction field.
“I left UCLA law school and ran the campus recruiting center for UCLA,” he says. “I took the job there to try and figure out what I wanted to be. I was meeting with the IBMs and the Xeroxes of the world in order to prepare students to interview and get jobs, and I decided my career was going to be in construction and real estate. From there I took on a few jobs, and then started my own firm.”
First came the Wilshire Center Development Co. in 1967.
“I bought out my partner in 1973 and changed the name to M. David Paul & Associates,” he says. “In the early ’70s, I added Krismar Construction Co., named after my daughters, Kristin and Marcy.”
Paul says his company focuses on making office buildings pleasant to work in.
“Starting way back, I’ve always gone to great lengths to make the finished product very accessible and in human scale,” he says. ” That means using more landscaping than the competition. Our projects are nice to be around on the outside. When you’re sitting on the grounds, you don’t feel overwhelmed.”
Similar thought goes into the insides of the buildings.
“The lobbies are more fun than the old corporate lobbies with their granite and marble. Our lobbies are friendly and warm,” he says. “You feel like you can stay right there, where as the older-style lobby makes you feel like you’d better move on.”
Central Park at Toluca Lake in Burbank is such a building, Paul says. At 14 stories, it’s a low-rise. Its brick exterior uses 13 different colors and shapes of brick, and has almost an acre of park-like grounds around it, with trees and lawns.
“It’s important that we also remember the people who live here and try to design things that are comfortable to the community, and are easy for people to be close to and around,” he says. “Many of the office buildings in the city don’t qualify. Landscaping is one of the best ways to soften a hard-shell finish and make it comfortable.”
For the 1.5-acre site in Burbank, Paul went with underground parking.
“We dug a five-level underground parking garage, and above, we made an all-grass lot,” he says. “It’s not your typical plaza, with a couple of spindly trees. We actually bought 50-year-old mature trees from the Hotel Bel Air when they were remodeling. We bought a ginkgo tree from another property and transplanted it. It’s just beautiful.
“It costs more, but people stay longer.”
Similar thought is going into the Santa Monica project, which houses MTV.
“We’re putting in palm trees, so it evokes Southern California’s sunny, palmy weather,” Paul says. “The lobby was very institutional — it had granite floors, famous art work hanging on the walls — and we’re changing it to a hipper look. There’s metal cladding on some of the beams, we’ve torn out some of the ceilings, put in special light fixtures, we’re taking out some granite, doing some new plastering, adding some unusual wall treatments.”
The structure allowed increased interactivity among company employees, according to Linda Alexander, communications VP for MTV. “We went from having four different locations to being all under one roof,” she says. “It’s hard when you’re detached from the rest of the people you’re working with.”
Location, parking and ambiance make the building comfortable, and fun.
“It’s four stories, has underground parking and is close to the 10 and 405 freeways,” Alexander says. “The space is wide open and light, with lots of windows. It’s conducive to creativity and team-building.”
Paul is hoping for the same success with Skunk Works. The four-story building, built in 1969 with large floors of 50,000 square feet each, has lost its formidable high-security look and now fits the needs of an entertainment company.
But don’t send for a brochure.
“We’ve never made a brochure,” Paul says. “We just make deals.”
Joining family business
New on the deal-making scene is Mac Chandler, son of well-regarded builder Dan Chandler. Chandler Partners, located in Burbank since 1981, has extensive experience in Burbank’s thriving Media District.
Projects include the 55,000-square-foot Toluca Lake Corporate Center, the 406,000-square-foot Studio Plaza and Warner Bros. Records’ 54,000-square-foot building. The buildings were fully leased within six months and the entertainment industry’s steady growth has helped maintain a 96% occupancy rate. Tenants include Columbia Pictures, Warner Bros., Disney and Matchframe Video.
Unlike Snyder and Paul, who founded their own companies and shepherded them through hard times, Mac Chandler joined his father’s established firm as a vice president in 1995. He was deliberate about education choices, as well as the jobs he took before joining his father’s company.
“I grew up in the business,” Chandler says. “I started out working on construction sites when I was 16, as pickup labor, as a framer.”
Chandler’s degrees include an MBA in real estate finance from USC, which he completed in 1993. He also has a masters degree in real estate development, an undergraduate degree in urban planning and public administration and a certificate in programming and data processing from USC’s school of engineering.
“I knew that ultimately, I wanted to become a developer,” Chandler says. “It’s a unique field, and you have to have a working knowledge of so many disciplines, like construction, entitlements, corporate financing.” Along the way to the executive suite, Chandler worked as an assistant project manager, preparing construction bids, doing feasibility studies so developers could know whether a city’s zoning regulations would favor a proposed project, and managing a $100 million investment portfolio of distressed real estate.
“My goal was to work in as many disciplines as possible, so when I became a developer, I had that background,” he says.
He’s used that background to help oversee Media Center Plaza, Chandler Partners’ project in Burbank.
“In this particular project, we’re providing the amenities that entertainment companies are looking for,” he says. “They want large floor plates. In the mid-’80s, floor plates were 20,000 square feet; now companies are looking for 40,000 square feet and more. It’s very different.”
High ceilings for more natural light and floor plans that put entire divisions on a single floor cater to ’90s-style management that includes teams and work groups.
“This isn’t something you can do to an older building, but if you build it from the ground up, you can provide that,” he says.
Low-rise buildings that offer easy access to parking and underground parking that allows outside space to be landscaped are new demands.
“If you think about it, you don’t want it to take you 20 minutes to get down on an elevator and out to your car every time you need to leave the office,” Chandler says.
Gone are the days of intimidating buildings that make visitors feel unwelcome.
“Entertainment companies like light and airy designs — Mediterranean styles,” he says. “Our Media Center Plaza has a series of pop-outs — French doors — on the ground floor for retail and restaurants. It’s a way of bringing the amenities not just to the tenants, but to the community as a whole.”
All this growth has made for intense competition.
“We’ve seen the demand grow in Burbank over the last five years, to where it’s gotten intensely competitive,” Chandler says.
Brentwood-based Rick Caruso, whose Caruso Affiliated Holdings built several highly successful retail centers that blend entertainment and shopping, sees the move to easy-use buildings as a natural evolution. His most recent large project in Thousand Oaks includes Disney’s first foray into regional markets with a Club Disney.
“Ever since we’ve been building retail centers we’ve relied on what works in Europe, which is open plazas with pedestrian areas, fountains and water — people places,” Caruso says. “The corporate builders are taking that theme and using it in a different application.”
So how long can the building boom last?
“That’s the $64,000 question, actually,” Les Small says. “The developers will do fine, assuming the market is firming up and they can raise their rents.”
But if the market flattens?
“Then there’s trouble coming,” he says. “You have to wonder, with the Orion/MGM merger, and the layoffs there, and the Turner/Time Warner merger and the layoffs incumbent in that. How long can this last?”