March 31, 2011

Howard Hughes' Hercules Campus Revitalized by Ratkovich

The former campus of Hughes Aircraft Company is a tangible link to the one of the most romantic and enterprising corners of Los Angeles' history. Developer Wayne Ratkovich, however, has removed the parcel from redevelopment purgatory in the hopes of turning its existing structures and proximity to Playa Vista into a hub for technology and creative companies. Ratkovich details the plans to renovate what will become the Hercules Campus in the following TPR interview, which is supplemented by a speech given by former Hughes Aircraft Company President Ken Richardson, who testifies to the historic significance of the site.

Wayne Ratkovich

You have been citybuilding for decades here in L.A., and you have recently acquired a site that has worldwide recognition, the old Howard Hughes Complex, now called the Hercules Campus. What attracted you to this project? What do you envision being developed?

The project intrigued us for a number of reasons. All eleven buildings have sat for 25 years or more with very little attention paid to them. The only activity that occurred in the buildings over that period of time was filming-and not an insignificant amount of filming. Eighty-five percent of Avatar was filmed in one of the buildings. Nothing really significant was done to the buildings. Occasionally a roof was repaired or replaced. But for the most part, these buildings have been neglected for 25 years-no one really wanted to take them on.

That gives us reason to think about opportunities. We like looking for something that is not evident to others or something that is in a state of chaos that we can do something about. In this case, we had eleven buildings and 28 acres of land on the Westside of Los Angeles, with an opportunity to buy them at a very attractive price. We believe we can convert these buildings into the kind of facilities that are in demand today by the creative industries, using what is called creative space (for lack of a better term). Creative space is for companies that don't want conventional office space. They would prefer space that is unique, imaginative, and tailored to a workforce that is more interested in the overall working environment than in how pretty, lovely, modern, and new the building is. There is an opportunity here to create great space for companies that are in the entertainment, media, and technology fields. We have a lot of land, so we can provide a lot of parking. That should make it a very attractive place for companies to do business.

Talk a little bit more about the environment you are trying to create there, given the bone structure of the eleven buildings, especially, the most famous of which, where the Spruce Goose was built. What can you do, or not do, with those buildings?

The whole concept is to create the Hercules Campus, named after the famous airplane. The campus has three sections. The West Campus is the home of the great building, the place where the Hercules airplane was built. That building is affectionately called "The Goose"-it picked up the name from the airplane. Then we have the South Campus, which is a composite of four buildings. We are going to combine two of those buildings into one, so it will total three buildings. Then we have the East Campus, which consists of three buildings. We tie them all together into a campus environment, with indoor and outdoor spaces, which works really well with the park spaces that Playa Vista has already provided. This will be a wonderful environment for working. One could go outside and sit at a table with a computer and work just as well outside as inside. The landscaping and the overall environment will make a gorgeous place to work.

You came out of commercial real estate decades ago-and you know how tough the market is now for commercial real estate. What makes this niche work well while the rest of the market seems in great distress?

We are particularly fortunate that we are on the Westside of Los Angeles, a city in which a very strong part of the economy includes entertainment and entertainment-related industries. As best we can determine (and we put in a lot of effort toward this determination), creative office space, the kind of office space that is available to the industries we appeal to, is relatively modest. Modest, by today's standards, means a ten percent vacancy factor. There is not a surplus of space, and there is growth in the categories of media, entertainment, and technology. That is our target.

What team did you put together for the Hercules Campus?

We have a great team. It starts with the architect, Levin and Associates. Brenda Levin and I have worked together on projects for 30 years. She is fabulous at dealing with historic structures. She knows the opportunities and the constraints. That knowledge, coupled with her considerable skills as an architect and an overall site planner, gives us a great framework to work in.

The companion to Brenda Levin will be ARUP, who we brought in because of the enormous engineering requirements we will have with this project. Virtually everything will be needed for this project-structural, electrical, mechanical, code, fire, safety, and, because we appeal to the entertainment world, acoustical considerations. ARUP brings a world-class organization, with all of those skills, and gives Brenda a great foundation for her work.

Landscape architecture will be by EPT Design out of Pasadena. They have done a great deal of work for us. We will look at drought tolerant planting everywhere we can use it. We have some gorgeous trees to work with. There is a growth of sycamores on the East parcel.

For the entertainment industry, to the extent that we are going to get into designing spaces for film and television production, we are bringing in Gensler because they have done a lot of work with the studios here in Los Angeles. We also have a very gifted lady named Marni Burns of the Seed Agency, who has been doing all of our branding and marketing work, which is now being put together, including our website. Our leasing agent is CB Richard Ellis. Jeff Pion leads that team, along with Deron White and Michelle Esquivel.

You have received global attention. Who has been nibbling at taking the space?

There is very clear attention coming from the fields I just mentioned-media, entertainment, and technology. Raleigh Studios is doing the management of entertainment, specifically The Goose. We do have productions and we do have tenants in place right now in The Goose, including Disney and Industrial Light Magic. Those are short-term occupancies, but we are also negotiating with another major film for production within The Goose. Raleigh will continue to do that kind of work, and we hope to expand the number of productions we can do at any one time. The entertainment industry and advertising are the areas showing interest.

As you noted, the Hercules Campus is adjacent to the Playa Vista project. What has been created there on the Westside that can grow in conjunction with the Hercules Campus? What will be the environment for your tenants and those people living and working on the Westside as a result of those two projects coming to fruition?

The first phase of Playa Vista is up and established, representing a very attractive urban living environment. Phase I has matured sufficiently so that it is today it is a very pleasant working environment. Phase II of Playa Visa was recently approved. That will be a combination of retail and office space. Lincoln has been chosen as the developer of that, and that will bring some very exciting retail and mixed use adjacent to the Hercules Campus. Then, of course, there is our property, with roughly 500,000 square feet in eleven buildings, which will bring a lot of interesting companies to Playa Vista. Tishman has reacquired some of the land, and they will be continuing their development in the area. Between office, retail, and residential, it will be a very interesting and lovely place to live and work.


What are you doing or considering with respect to energy and sustainability as you design and build-out the Hercules Campus?

We have a mild, coastal climate, which we will take full advantage of. We have charged the ARUP folks with coming up for systems that allow us to use as much natural air as we possibly can. We are starting with the idea of taking advantage of the existing environment, then looking at building materials and systems that are energy efficient, and then we will go to solar energy and fuel cell energy. The goal is to combine all of those things. Ultimately we would like to take the entire campus off the grid.

Can you elaborate on the fuel cell portion of that portfolio, which has been a deep interest to you?

Bloom Energy is a company that brings a world-changing technology to our times. We have recently installed five of what Bloom Energy calls "Bloom Boxes" at our project in Alhambra. Our annual electrical bill in Alhambra is $2.5 million. With the installation of these five Bloom Boxes, we will take $700,000 off that tab on an annual basis. We are, essentially, taking $7000,000 worth of energy off the grid. We will grow that to another five boxes in Alhambra. CalTech has just announced the installation of ten Bloom Boxes and has ordered ten more. In addition to CalTech, the prior users of Bloom Energy tell you a little bit about the acceptance of the concept: their first customer was Google, then EBay and WalMart, and Coca Cola. Bloom is making its presence known, and we are taking full advantage of it.

If we talk a year from now about the campus, what will we talk about? What will have changed?

In terms of our campus, our first longer-term tenants (i.e., not film shoots) will have moved in. Our first tenants, I would guess, would be two or three of the companies we are now negotiating with. They would be moved in. We would be under construction for two or three more spaces for tenants that will have surfaced between now and then.

The Goose will have film production going on. We will be, at the same time, probably nearing the end of construction in The Goose. That construction will permit more than one production to occur inside The Goose. Right now we are limited, for acoustical reasons, to one production. When we get through with the work, a year from now, we will be able to have several productions in there. That will include sound stages as well as production offices.

A year from now, the business will be evident, two or three years from now, it will be full-bore.

Remarks by Ken Richardson, former president of Hughes Aircraft Company, at a recent Hughes Employee Alumni Event on the Hercules Campus. The event was hosted by The Ratkovich Company.

This magnificent occasion is because of what we are dedicating here. It is a piece of history. Ancient buildings measure much of history. Think about the Treasury Building in Petra, Jordan (1300 BC), the Parthenon in Athens (500 BC), and the Coliseum in Rome (80 AD). Those are still there. Three magnificent buildings were built in the early 1600s, starting with the Blue Mosque in Istanbul, the Taj Mahal in India, and the Nijo Shogun Palace in Kyoto. Those are marvelous places that mark history. We have some in this country as well. The ones I would pick are the 21 California missions and Fort Ticonderoga-at opposite ends of the country.

We are here to celebrate another building, far more youthful than those, but this was a magic place. For example, Howard Hughes used to come in that back door, run up these stairs, and go into a small office to avoid confrontations in the formal office in Building 1. I well understand why he must have done that. Katharine Hepburn prepared for her flight training with Howard Hughes. Howard himself came up and sat in the cockpit of a Convair 240. He was testing the thrust reversers in these propeller engines because a failure in one of those had caused him an almost fatal crash in the XF-11. He tested them all day, and the only time he stopped was to have a glass of milk and a sandwich, which he had brought from home-Howard Hughes did that!

Those of us who are old timers remember some other things. You came in the front entrance, past the celery sheds. Why were they called celery sheds? This used to be a farming community. Those were converted to a paint shop during World War II. You can also remember things like flooding. This whole place was built on wetlands. And we celebrated because sometimes it would rain so hard that our bosses would say to go home because otherwise your cars will be flooded out. The tragedy of it is that one time, one of our employees got in a Volkswagen, drove out, and upon reaching Jefferson, there was a flood stream coming by and the Volkswagen actually floated, went down a storm drain, and we never saw that employee again.

This is also a famous place because it is the largest wood building in the world. The Japanese would contest that because there is a place in Nara that might be bigger-used to be-but it burned down. The large flying boat was built in this place. There is a photograph, which is amazing (and in my book, by the way), you can see the wing, which goes almost the entire span of the hangar, with eight engines in the cells on top. That is an absolutely incredible picture. That was the largest airplane ever built, and by the way, it did fly once. The largest helicopter ever built was also constructed here. I got to see that fly in 1952. Unfortunately it had some design problems, so it never went into production, and, also, the war ended.

But this is such an important plant because this is the birthplace of a national treasure. You folks were part of that national treasure. We did some astounding things. This company, after 14 years of having fun building toy airplanes (four of them) was converted by Ramo Wooldridge and the help of the government, into the number one electronics military firm in the world. We started there in 1946, and in 1953, Howard Hughes, in effect, got chucked out, so he didn't have anything to do with us after that. We were donated to the Howard Hughes Medical Institute, which is a marvelous place as well.


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