How Is the L.A. Tech Industry Changing?

Hank Elder is a managing director at NGKF.

LOS ANGELES—The tech industry in Los Angeles is growing, and it is driving real estate office absorption and investment. While technology in Los Angeles is nothing new, the startup industry is making a huge splash—and quickly becoming the startup capital of the world, according to Hank Elder , a managing director at Newmark Grubb Knight Frank . To find out how the industry is impacting the real estate market and its storied history in the L.A. market, we sat down with Elder for an exclusive interview. GlobeSt.com: Can you provide me with a quick background on the tech industry in Los Angeles? Hank Elder: Technology is simply innovation.  When Mulholland brought water to a desert called Los Angeles that was considered the most advanced technological achievement of its time.  With that said, we move to the creation of the aviation industry in the 20s and 30s as Playa Vista is the former Hughes Aircraft, and the Santa Monica airport was formerly Douglas Aircraft out of which amazing technological achievements were born. The defense industry comes chasing the aircraft innovations and navy yards during WWII, then comes a massive influx of engineers from the GI Bill putting USC, UCLA and Cal Tech on the map. Then RAND and JPL and NASA. The tilt-up technology for industrial buildings is created by a Los Angeles genius. Car and steel companies create innovative technologies to deliver materials that create the growth infrastructure for our freeways and high rises. In 1969 UCLA invents the underlying technology (packet switching) that becomes the Internet.  On a more personal front, my grandfather installs an IBM mini main frame in 1978. In 1995 the World Wide Web officially opens as the commercial portion of the then government-funded Internet.  Bill Gross and his Idea labs are at the forefront of innovation, iMall is right there. The New Media Forum organizes the first ever Internet Conference at the UCLA Anderson School in 1997. Internet World moves from San Jose to Los Angeles that year taking up the entire convention center with well over 100,000 attendees. JPL/NASA, RAND, UCLA, USC, Cal Tech, inventors of the Internet; let’s face it the history of Los Angeles is inextricably tied up with the history of technological innovation in the US. GlobeSt.com: How is Los Angeles growing from a tech/start-up perspective now, as opposed to other national markets? Elder: UCLA has an amazing startup seed and early stage program for its students. Expert DOJO of Santa Monica mentors and finds funding for diverse change agents.  Of course there are incredibly creative apps in Bitcoin, commerce, dating and money transfer as well. Many years ago when Bill Gates was asked where the next hot software was he stated that he could not know as it was most likely in a garage somewhere. L.A. is simply creating a better and larger garage, leveraging its in-place ability to encourage and fund innovative disruptive solutions.  Unlike most other cities, LA has plenty of real estate for development, wealth and unparalleled and accessible intellectual foundations (Caltech, UCLA/USC, RAND, JPL/NASA) creating an unstoppable machine for innovative and disruptive change solutions.  So, when that first radical and disruptive technological solution brought the water over 100 years ago, it created a technological movement that is only now realizing its true potential GlobeSt.com: You have been working with foreign investors on their tech start-up plans, how do you advise them? Elder: When new investors and companies arrive in L.A. I make sure they have access to the right resources so their business can be successful and also ensure they are setting up in the right area of town for their business. One of the hottest resources in the city right now is Expert DOJO who is driving much of the startup ecosystem in Santa Monica and beyond, and I often get them to check out the company’s strategy. This adds a lot of value for us as a firm. We then look at the right mix of flexibility, creativity and scalability depending on their plans. Our objective is to wrap the property needs around the business needs. Having a national network allows us to offer a one size fits all mentality, as doing the right job here opens us up to the same success around the country. In fact we recently used our West Coast network to help a Hong Kong-based firm aggregate competitor and office data to crunch into a useable format for their funding ask to expand into the US market. GlobeSt.com: How does NGKF’s platform support this industry here? Elder: NGKF has street coverage in Silicon Beach, El Segundo, and Downtown Los Angeles giving solid access to all the major Los Angeles tech markets in real time.  This gives us the capacity to react quickly to our clients’ changing strategic needs with trustworthy, organic knowledge. NGKF’s recent acquisition of Computerized Facility Integration (CFI) gives us the ability to code customized growth algorithms for our clients based on their specific corporate DNA and internal knowledge aggregation. This allows us to offer an even greater accuracy in budgeting and planning for their space acquisition and disposition. A control marker for each company is created and the sooner we are there the better the knowledge base aligns. This is a great way to ensure NGKF’s crucial capacity to scale our advisory services from start up to IPO and into the international arena. This true start to finish integration allows us to use our best technologies and organic knowledge to create a powerful platform for all our occupiers whether they employ 25 or 25,000 people. GlobeSt.com: What do you think the L.A. tech landscape will look like in five years? Elder: In the next five years the tech industry will continue to grow with Downtown L.A. becoming stronger as the infrastructure gets better and lease space tightens up on the Westside.  Markets such as Long Beach, Pasadena and Burbank will grow their own thriving markets and we will see our first few new tech billion dollar companies come to fruition. For the first time in history California’s economy is ranked as the 6th largest in the world.  That makes California a true juggernaut of opportunity, and a haven for investing and expansion.