December 14, 2017
By Dennis Kaiser
Connect Westside Los Angeles brought together more than 300 commercial real estate professionals at the Luxe Sunset for a full afternoon of CRE conversations and networking. Three deep-dive panel discussions featured some of the region’s top industry leaders who shared insights on trends shaping the market. The engaging discussions ranged from a conversation among Power Players about what’s driving the market, to the challenges facing office developers, to the outlook for financing in 2018.
Connect Media will be recapping each panel in the coming days, but here are a few key takeaways from yesterday’s conference.
Westside Power Players
CBRE’s Lewis Horne points out that the Westside of Los Angeles is firing on all cylinders, primarily because of the talent found there. Los Angeles has also claimed the No. 1 investment target for foreign capital for two straight years. It remains one of the hottest markets in the U.S. and world for investors, a fact borne out by record prices.
Equity Office’s Lisa Picard notes it is an interesting time as there’s pressure on businesses to change quickly as a result of technology. That makes it tough on business planning, since many growth companies stretch to conceive a five-year plan. That means CRE must factor in three elements to accommodate today’s office occupiers 1- Fast, 2- Flexible (i.e. move with the company) and 3- Fun in order to attract and retain talent.
Truamerica Multifamily’s Robert Hart says housing affordability is a challenge, and homelessness has become an issue in Los Angeles because the city simply doesn’t have enough housing. He thinks this can be addressed via higher density.
NKF’s Jay Luchs says retail is facing some bigger challenges to accommodate shifts in the way consumers shop today. That correction has opened up some opportunities. In fact, he’s noticed the sophistication level of LA’s retail market escalate over the past four years because of what’s transpired with the Internet, and the effect of social media channels like Instagram and the Kardashians. As a result, if you are in retail, companies have to be near that activity.
Opportunities in Office: Development, Design, and Investment
Lincoln Property Company’s Kent Handleman notes that political constraints are the primary barriers to new development in Los Angeles, since demand remains high.
Cresa’s Matthew Miller says there is demand for new office product, especially the right projects. That includes those with the right design, with plenty of parking and in the right location. He says transit is the big differentiator.
Boston Properties’ Jon Lange noted that it is not just tenants who are willing to pay a premium for the right office space in the right location. Investors are also chasing similar types of properties.
Eastdil Secured’s Stephen Somer noted that the Westside market is moving away from the commodity real estate office product, and more towards what tenants want, which tends to be more creative office environments.
2018 Financial Outlook
City National Bank’s Paige Serden points out that traditional construction lenders are shifting to other markets outside of California to find opportunities that include infill niches in major MSA’s.
George Smith Partners’ Gary M. Tenzer notes many companies recognize now is the time to get money out of investments, and it is a good time to be a borrower if you are able to find product to buy.
Invesco Real Estate’s Charlie Rose says in 2018 he envisions continuing to trade spread for higher barriers to entry, quality assets and markets.
CapitalSource’s Tom Whitesell notes he sees similar levels of investment next year as in 2017, as he doesn’t see any big change in any big way, nor does he see a bubble developing.
For comments, questions or concerns, please contact Dennis Kaiser