RightScale stays downtown with biggest lease in years

The four-year-old cloud computing company’s CEO said Tuesday that the staff has cause to be upbeat, thanks to his inking the largest new lease of office space in the downtown area in more than six years, providing space to bring on new hires.

RightScale has just leased new corporate headquarters — the entire 26,336 square feet of the current Santa Barbara Business & Technology Center at 402 E. Gutierrez St.

The facility is nearly twice the size of the company’s current office. The rapidly growing company has been headquartered at 136 W. Canon Perdido St. since early 2009.

By square footage, this is not only the largest new office lease in downtown Santa Barbara in more than six years, but also one of the 20 largest new office leases on Santa Barbara County’s South Coast since 2006.

Acquiring more office space to accommodate a growing workforce and client base are good signs as the region recovers from the Great Recession.

“We essentially just outgrew our space,” said Michael Crandell, chief executive officer of the business, which manages cloud-computing infrastructure for companies around the world.

The client list is literally an A to Z affair — ranging from The Associated Press to games developer Zygna.
Financial terms of the transaction with owners Laguna Industrial Partners were not disclosed. RightScale hopes to occupy the new space by mid-summer.

“It will help facilitate growth needs for the foreseeable future,” said Mr. Crandell of his crew, whom he affectionately calls “cloudies.”

The high-tech workforce of 150 people develops software that allows companies to use remote servers for big computing tasks. Mr. Crandell estimated about a quarter of the workforce is remote, but it was essential that teams meet regularly face-to-face to grow the product line and figure out other business goals and objectives.

To fund growth, the company has raised nearly $50 million in venture capital since it was launched in 2007.

Company higher-ups were adamant that the firm stay in downtown Santa Barbara, close to its talent base, vendors and amenities.

“Downtown SB rocks!” he said, referring to nearby restaurants and the beach, where the fit-minded like to take a run — or surf a wave or two — during their lunch hours.

Michael Martz and Steve Hayes of Hayes Commercial Group were retained by RightScale to conduct a comprehensive search for a larger office space to facilitate its rapid growth. Both men termed the lease a “very significant development” on the business front, keeping a small portion of Santa Barbara’s downtown workforce intact.

“The emphasis was on Santa Barbara to allow RightScale to maintain its corporate headquarters in the downtown business district,” said Mr. Martz, a partner at Hayes. “However, with limited options of spaces 25,000 square feet or larger, we had to get creative and consider securing multiple downtown buildings within close proximity as well as expanding the search to Carpinteria and Goleta.”

Until now, the Santa Barbara Business & Technology Center has been the master tenant at 402 E. Gutierrez St., which served as an “incubator” office building, offering short-term leases for multiple spaces typically occupied by small organizations and start-ups.

“In the search for large downtown office spaces, we became aware that the ownership of 402 E. Gutierrez was open to leasing to a single tenant,” said Steve Hayes, a partner at Hayes. “The silver lining for the small tenants who will be displaced is that the recent downturn in the economy has created numerous choices for small office tenants to consider. There will be a trickle-down effect that will allow lots of small spaces to be leased up very quickly.”

That was confirmed by Jeff Bermant, founder and CEO of startup Virtual World Computing and a current tenant, who is taking his 12-person staff to a Goleta office park he helped develop.

“VCW is happily moving along,” said Mr. Bermant, referring to efforts to grow market share of the company’s Cocoon software, an online service that fosters Internet privacy and security.

“We already have 7,000 users and we’re heading to a free product shortly.”

Mr. Bermant has hopes that his own firm will be another Silicon Beach success story on the order of RightScale.