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Anytime advertising powerhouse TBWA/Chiat/Day builds a new headquarters, it makes news. Ever since founder Jay Chiat unleashed his vision for a virtual office on an unsuspecting world in 1994, the agency has linked its destiny as a creative entity to the environment in which its creativity takes place. Chiat/Day doesn't just build new offices: It reinvents itself every time it moves.

Chiat's notion of a virtual office represented a radical shift in the design theory of the white-collar workplace. He consigned the concept of private space to the scrap heap of office history -- desks, filing cabinets, family photos, and all. Instead, workers were given cell-phones, PowerBooks, and the freedom to be creative whenever and wherever the spirit moved them. In place of a traditional office, Chiat gave his employees a Frank Gehry-designed "clubhouse" in Venice Beach, California. Here they could hold meetings, exchange ideas, and come up with brilliant campaigns -- provided that they could find a place to sit. It was one of the boldest office experiments of the pre-Web era. And it drove a lot of people crazy.

If the Venice Beach office sent people on a journey to the frontiers of techno-nomadism, then Chiat/Day's new West Coast headquarters represents a return to community. Called Advertising City, the facility is located in a 120,000-square-foot former bathroom-fixture warehouse in the Playa del Rey section of Los Angeles. Instead of being a space where virtual workers get together for occasional face-to-face meetings, the new headquarters is a full-blown, self-contained village. Here the agency's nearly 500 LA-based workers "reside" in account-based neighborhoods and can easily walk down their own Main Street or to their own Central Park.

Designed by architect Clive Wilkinson, Advertising City is a logical progression in the company's ongoing experiment with ways to boost creativity. In every part of this workplace -- in the gatehouse shaped like a surfboard, in the 26-foot-high wood-slatted conference room, in the indoor hardwood basketball court that doubles both as a Tae-Bo workout space and as a dance floor for company parties -- the emphasis is on fun and a sense of play. "We're about two things: the quality of our work and the quality of our lives at work," says Laurie Coots, 42, chief marketing officer (North America). A desire to enhance both underlies principles at work in Advertising City.

Five hundred people isn't an office -- it's a community.

Instead of starting off by looking at specific office designs, Chiat/Day focused on big-picture issues: "What makes a ghetto, and what makes a neighborhood? What's the right mix of public space, play space, and private space? These were the questions that we were asking ourselves," explains Coots. Like an actual city, Chiat/Day's new office is divided into distinct neighborhoods. It's no accident, for example, that the "cliff dwellings" where the creatives work are located along Main Street: Creativity is at the heart of the firm's business. Each account team, meanwhile, is organized around a "project den" that acts as a kind of community hall.