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SD office buildings, new and old, are undergoing major changes

When it comes to office buildings, what is old will be new again, and what is new should feature considerable amenities to attract and keep tenants.

The changing face of San Diego's office development market was discussed at an NAIOP-sponsored session at the Marriott Del Mar on Thursday.

Paul Twardowski, senior managing director Hines -- which developed the 400,000-square-foot, fully occupied La Jolla Commons II office building -- said his firm is still exploring how La Jolla Commons III will look.

"We are looking at 225,000 square feet of office, a 264-room hotel or some combination of these," Twardowski said. "Normally these uses would on top of each other, but we're exploring putting them side by side."

Twardowski said Hines -- which was at the forefront of Leadership in Energy & Environmental Design-certified office towers in San Diego with La Jolla Commons I in the mid-2000s and the new La Jolla Commons II -- has seen its buildings become more energy-efficient each time.

"La Jolla Commons II is 25 percent larger than the first building and it uses the same amount of electricity," Twardowski said.

Steve Pomerenke, Alexandria Real Estate Equities (NYSE: ARE) vice president of design and construction, spoke about the challenges his firm faced over the past two years when it redeveloped the 440,000-square-foot building at 10300 Campus Pointe Drive in the University Towne Centre area.

"The building was 900 feet long and 250 feet wide," Pomerenke said. "Our first impression was: is this a building or is it a battleship?"

Pomerenke added that another problem with the building was it had a second-story entrance which difficult to find.

"We were wondering about how many ways are there to deal with the skin of the building," Pomerente said. "What we did was [strip] it off and put in glass, and it has made all the difference."

Pomerenke said Alexandria was also able to boost Campus Pointe's visibility by bringing Brian Malarkey's Green Acre organic restaurant into the property.

The restaurant, which has some of its produce is grown on site, has already had numerous events from meetings to bar mitzvahs and will have its first wedding in July.

Pomerenke added that Campus Pointe also has a new fitness center that also offers physical therapy.

The changes to the building seemed to have worked: When Alexandria paid $113.5 million for Campus Pointe in December 2010, it was 40-percent leased; four years later, it is fully leased.

Michael McNerney, a Lowe Enterprises senior vice president, said office buildings don't only have to have lots of amenities, they need a feel that brings people in.

McNerney recalled seeing office buildings in Seattle that looked more like hotel lobbbies, with lots of seating, rather than an office lobby most people ignore.

"Why shouldn't your workplace be as comfortable as your home or a hotel," McNerney said.

Dennis Cruzan, president of Cruzan, said while the amenities worked very well at Campus Pointe, there is a danger that too many amenities could price tenants out of a project.

McNerney countered that tenants in new buildings are generally more concerned about the costs of their employees than rents.

"Occupancy costs pale in comparison to the costs of employees," McNerney said.

Cruzan meanwhile is in the process of planning its redevelopment of the former 175,000-square-foot Carlsbad Floral International Trade Center building, located at 5600 Avenida Encinas in Carlsbad.

Cruzan has teamed up with architect Cory Sistrunk, president of San Francisco-based Rapt Studio, on transforming the office building. The project has been dubbed "Make" by Cruzan and Sistrunk.

"We have to ask ourselves: what's the next trend in office?" Sistrunk said.

Sistrunk said the project will be defined by its proximity to the beach, outdoor amphitheaters and inviting interiors.

"You want to make people want to come to your office, rather than a place they wish to leave," Sistrunk said.

Lowe Enterprises -- which is involved in office, retail and mixed-use development -- is co-masterplanning, with IDEA Partners, the initial project for the IDEA (Innovation+Design+Education+ Arts) District on a block adjacent to San Diego City College in the East Village.

The inaugural development calls for 140 apartments, 100,000 square feet of office space and 20,000 square feet of retail.

Another firm working on the IDEA District concept is Lankford & Associates, which developed the 655 Broadway office tower.

Just south of City College, Lankford is helping masterplan five blocks that will comprise the Makers Quarter development in the East Village.

Plans call for 800,000 square feet of office along with retail, hotel uses, more than 1,200 units of multifamily housing and a 750,000-square-foot parking structure.

"This is going to create a whole new place …" Lankford said. "A major advantage with this project is it has many of the amenities within walking distance already."

Lankford said there is no particular timetable for the 2.9 million-square-foot plan.

"This is not a seven-year plan or a 12-year plan; we have the time to do things properly," he added.

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