David Sacks' new real estate venture aims to give Pasadena its startup mojo back
Caltech's Cahill Center for Astronomy and Astrophysics in Pasadena
The LA startup ecosystem has been on a roll of late. A major factor in this rising tide has been the newfound density of startups and investors in the city’s beachfront Westside neighborhood. The rise can be traced back, in part, to the emergence of a half dozen accelerators and co-working spaces beginning in 2011, and the resulting community that grew out of so many entrepreneurs working in close proximity.
But while the Westside may get the bulk of the headlines – and the terrible nicknames – it’s Pasadena that churns out the much of the elite technical talent in the area. The hillside city east of LA was the site of LA’s most prolific startup community in the late 90s and early aughts. But the region has since lost that distinction. It’s still home to the venerable Caltech University, the Art Center College of Design, the Jet Propulsion Laboratory – a federally funded robotics and aerospace research facility – and Bill Gross’s prolific IdeaLab technology incubator. But despite these cornerstone institutions, Pasadena’s startup community has received a fraction of the attention of LA’s Westside in recent years, and surely attracts less incoming talent from elsewhere in the country.
This is may begin to change thanks to an ambitious real estate project in the area backed by a Silicon Valley titan. David Sacks, who was the founder and CEO of Yammer (acquired by Microsoft for $1.2 billion), and the first COO at Paypal (acquired by eBay for $1.5 billion), has partnered with local developer Rising Realty Partners (RRP) to purchase and renovate a 60,771 square foot, three building complex – a 9-story office tower and two adjacent two-story buildings – in the historic Old Pasadena district.
Sacks and Rising acquired the property on the southwest corner of Raymond Avenue and Holly Street, which was previously known as Old Pasadena Plaza, for $10.4 million. They plan to put several million dollars more into redeveloping the site into a premium technology hub. The yet-to-be-named project is expected to open next summer.
“I see this as a significant opportunity to build on the clustering of tech companies that is underway in Pasadena by offering Silicon Valley-style creative space and amenities,” Sacks said in a statement announcing the project.
The plans call for open-format creative office space with exposed brick walls and ceilings – prices between $2.35 to $2.50 per square foot will mirror those elsewhere in the local market and soundly beat those closer to the beach. The site will also house a co-working facility, with individual desks available for rent. Most attractive of all, the project includes plans for what Rising calls, “a site-wide fiber backbone, fault-tolerant network redundancy, multiple ISP's for carrier diversity, and on-premises rack space...elements [that will] aid in providing tenants fiber-to-the-suite speeds provisioned in as little as 24 hours.” The plan calls for WiFi coverage in all public spaces, including in Memorial Park across the street from the project site.
The LA Times reports that a mutual friend introduced Sacks to Pasadena residents Nelson and Christopher Rising, the father-son development team behind Rising Realty Partners. RRP is a part of the INNOVATE PASADENA business advocacy group. This isn’t RRP’s only prominent LA-area project, as the firm is also renovating the 460,000 square foot PacMutual office complex in downtown LA. But it’s the Old Pasadena Plaza project that has the best potential to challenge LA’s WestSide for the crown of the region’s most attractive startup community.
Sacks' will be both an investor and co-developer in the Pasadena project. He may not have much real estate experience, but he has proven himself an angel investor with the golden touch, making early bets on Facebook, Twitter, Uber, SpaceX, Palantir, and AirBnB, among other startups. But Sacks won’t have to manage construction crews or obtain city permits. In addition to cash, he’ll mostly be expected to lend the project an air of credibility and help add those critical startup aesthetic touches. Rising knows real estate, but the firm has has never had to convince hundreds of engineers to spend 90 hours a week in the office. Sach’s experience at Yammer and PayPal should make sure that the Pasadena project’s startup cred goes beyond a few strategically-placed ping pong tables.
“Having David on our team brings a depth of knowledge few in the world can match,” RRP Chairman and CEO Nelson Rising says. “He knows intrinsically what works in the creative and technical fields. His guidance will not only help as we revamp the project, but his eye for the next great tech startup will be invaluable as we attract new tenants.”
The Old Pasadena Project is unlikely to attract SnapChat, Cornerstone OnDemand, or the beach cities’ dozens of earlier stage ventures to relocate to Pasadena. But with Sacks’ involvement and some deft execution, the Rising project may help attract the next generation of aspiring entrepreneurs to the area, as well as keep a larger number of graduating Caltech engineers from fleeing to Silicon Valley.
At 25 miles and a 45 to 90 minute drive from the beach, Pasadena is in another world from the Westside. But the area offers beautiful scenery and has a similar walkable retail area and underrated night life that should appeal young companies. Compared to the beach cities, Pasadena is more accessible from popular residential neighborhoods like the Hollywood Hills, Burbank, Valencia, and even downtown LA. The area is also accessible via the Gold Line rail from downtown and will eventually benefit from a new rail line extension project underway that will connect downtown to Santa Monica.
Sacks and the Risings hope that their Old Pasadena Plaza renovation will help return the Pasadena startup community to its former glory. Of course, it will take more than 60,000 square feet and some lightning fast WiFi to foster the next generation of unicorn companies. But before Pasadena births unicorns, it will need to attract the best and brightest entrepreneurs.
The involvement of one of Silicon Valley’s most successful founders and investors should go a long way toward making Pasadena cool again.