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Monday Morning Quarterback
(Monday, September 11, 2023)
It’s Official: This summer was the hottest on record! That means searing temperatures not only put portions of our population at risk, but rising sea temps chipped away at Antarctic ice to compound worrisome issues in the future, like warming oceans that fuel hurricanes, and eroding coastlines. Persistent global warming from burning fossil fuels like coal and oil, along with the shorter-term impact from an early showing of an El Nino event, drove the thermometer higher from Texas to New York to Spain to China. August was 2.7 degrees Fahrenheit warmer than pre-industrial averages. The translated to a record string of days without a break above 110 degrees for Phoenix and hot and humid conditions above 100 degrees over many days in Texas, as well as a couple of hot spells in the Northeast. Extreme heat impacts the youngest and oldest in our population, people who are pregnant, and those with asthma or other underlying health conditions. It also traps pollution closer to the ground, which can aggravate respiratory conditions. The temperature data was issued last Wednesday by the U.N.’s World Meteorological Organization. WMO leans on temperature recordings from the European Union-funded Copernicus Climate Change Service (C3S) and five other international datasets for its climate-monitoring activities and its periodic State of the Climate reports. July was notably hot, bringing extreme heatwaves in several parts of the Northern Hemisphere, including the Southwest U.S., Mexico, Southern Europe, and China, where the all-China heat record was broken in Sanbao on July 16. In Europe, the hottest ever day in Catalunya, Spain, was recorded and highest-ever records of daily minimum temperature were broken in other parts of the country. This year overall, from January through August, is the second warmest on record behind 2016, when there was also a powerful warming El Niño. In the U.S. parts of Nevada, Colorado, and New Mexico tied their all-time high, while parts of Arizona and the Cayman Islands marked their highest ever nighttime temperatures. In other real estate investor news, let’s get under the hood…
Who Owns the Most Apartments in Los Angeles? In the radically evolving commercial real estate landscape amid rising uncertainty, multifamily assets appear to be among the best positioned to withstand any sharp post-pandemic declines. But it’s an uncertain time for Los Angeles County’s housing market and many of the 9.5 million residents within it. For one, multifamily investment activity has slowed to a crawl compared to the rapid pace of sales the past few years (prior to higher borrowing costs). In the city of L.A. specifically, investors are also dealing with the newly- implemented Measure ULA, which adds an additional 4 and 5.5 percent transfer tax on asset sales of at least $5 million and $10 million, respectively. Since then, apartment property sales over $5 million have plummeted. There are also the issues of rising homelessness, high inflation, record out-migration, and more new rent control and freezes. Commercial Observer looked at data provided by CoStar regarding the biggest multifamily real estate investment trusts (REITs), developers, equity funds and other apartment owners in L.A. County to see who’s sitting where in the housing landscape. The list is delineated by units owned:
1. Equity Residential — The Chicago-based REIT owns more than 13,000 units in Los Angeles County. The portfolio boasts a 3 percent vacancy rate, and spans more than 12.5 million square feet in 48 properties on almost 400 acres.
2. AvalonBay Communities —The REIT from Arlington, Va., owns 11,039 units in 33 properties that span 11.8 million square feet over 346 acres.
3. Essex Property Trust —Yet another REIT, and this one is from San Mateo, Calif., and not far from second place. Essex Property Trust owns and manages more than 9.9 million square feet of multifamily space in 48 properties on 206 acres in L.A. County, with a 4.3 percent vacancy rate.
4. G.H. Palmer Associates –Geoff Palmer’s Beverly Hills-based firm is the largest non-REIT on the list. G.H. Palmer Associates owns 20 properties in L.A. County with 9.8 million square feet of space over 345 acres.
5. Jamison Properties —The private, L.A.-based developer has long been turning underperforming offices into residential properties, and has a loaded pipeline of such projects throughout the city.
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The World’s Skinniest Skyscraper. The world’s skinniest skyscraper is shaking up Midtown Manhattan in a big way. Located at 111 West 57th Street, the residential skyscraper cuts straight through the sky with an astounding height-to-width ratio of 24:1. Though some residents moved in last April, the full suite of amenities and additional units were still under construction until now, when JDS Development Group and Property Markets Group announced that the monumental building was finally completed. The tall, slender tower is surely the first thing passersby will see, but 111 West 57th Street is actually a two-part building: the original landmarked “Steinway Hall” (a Warren & Wetmore designed home to Steinway & Sons piano company) and the new high-rise by SHoP Architects (which some call “Steinway Tower”). Both house sprawling residences: There are 14 in the landmarked 1925 building and 46 full-floor and duplex residences within the tower. With the collaborative effort of developers JDS Development Group and Property Markets Group; SHoP Architects designing the exterior; and AD100 architects Studio Sofield taking on the interior architecture, 111 West 57th Street is like a monument to impressive design. In addition to holding the record for skinniest skyscraper, the building is also the second tallest residential building in the Western Hemisphere, reaching a whopping 1,428 feet high, including a 300-foot decorative steel crown. Imagine this building in L.A. during an earthquake. From afar, the new building looks almost futuristic, but the architects (both SHoP and Studio Sofield) wanted to reference Manhattan’s prewar Golden Age wherever they could. “I have my romantic memory of old New York,” Sofield says. On the exterior, each section of the building is paired with a layer of terracotta pilasters that don both the east and west facades of the tower, giving it that glamorous late-19th-century feel without overdoing it. “Reuse gives new life to historical fragments,” Sofield adds, explaining that, when possible, he would find ways to reimagine parts of Steinway Hall into the development. For example, the building’s lobby makes use of end-grain wood flooring that was “rescued from the original piano loading docks.” Other old-world details include an ornamental chandelier in the amenity space reproduced from an original design that once hung in Steinway Hall.
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Help Stop the Demolition of Marilyn Monroe’s Former Home. The house located at 12305 Fifth Helena Drive in L.A.’s Brentwood neighborhood, a 1920s Spanish hacienda-style structure, may soon be demolished by its new owner. Despite its modest scale and unpretentious nature, the 2,600-square-foot bungalow gained worldwide fame in 1962 as the location of Marilyn Monroe’s sudden death. The walled and gated property was also the only house ever owned by the legendary actress. In the six decades since her death, the half-acre estate has become one of the city’s most famous local landmarks. Monroe placed a plaque above the front door which read “Cursom Perificio” in Latin. Translation: “My Journey Ends Here.” But the house where the legendary Marilyn Monroe lived is now at risk. You can help! Owners have filed plans to build a new house on the site of Monroe's hacienda-style home, and it appears clearance for a demolition permit may already be in place. Identified in 2013 by the City's SurveyLA program as being potentially historic, the house is currently unprotected. If not too late and successful, this could allow the City and residents to consider if Monroe's house should be protected, spared from demolition, and ultimately designated as an HCM. This action can still allow the owners to update and even expand the house if desired but ensures its essential character, and Monroe's association, is maintained. You can write to the L.A. City Planning Department at Planning.LACity.org.
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Office Workers Returning To Century City. Office usage is struggling across LA, but there is at least one area where office workers are back at their pre-pandemic level: Century City, a postage stamp of a neighborhood with fewer than 20 office properties in less than a square mile. (Plus, it got a shoutout in this year's summer blockbuster, Barbie.) It may be small, especially in the broader context of Los Angeles' legendary sprawl, but its plentiful amenities, including a high-end mall with retail and food options, high walkability and parking, have helped it stand out in a rising sea of office availability. “A lot of it has to do with the environment – Century City is and feels safe, it’s clean,” Cushman & Wakefield Executive Director Scott Menkus says to anyone who will listen. Among new investments is the new office tower under construction at 1950 Avenue of the Stars (which Menkus represents), the renovation of the Fairmont Century Plaza hotel, the massive upgrade to the Westfield Century City mall, and construction of the new subway station. Through their conversations with landlords tracking card entry swipes in seven Century City buildings, Menkus says they have found that Monday-through-Thursday office attendance is back to pre-pandemic levels — an achievement when attendance estimates in other LA metro offices hover at only 50% of pre-pandemic levels, per Kastle Systems data. In addition, year-to-date leasing activity in Century City has totaled 591K SF, more than any other Westside submarket, according to a second-quarter report from Cushman & Wakefield. Class-A space is renting for an average of $6.44 per SF, more than the $6.06 average for Class-A space in Santa Monica, which has approximately the same inventory. Of course, the name recognition of Century City is also a strong motivator. Before it was a Westside office hub, Century City was associated with the studios at Fox, which still takes up a considerable amount of space within the neighborhood’s borders. In June and July of this year, foot traffic to 16 office buildings in Century City increased 22.5% year-over-year compared to the 10.8% increases seen in the same period citywide, according to data from Placer.ai.
Habitat 67. If you own apartment building(s), you have to appreciate Habitat 67. One of the most architecturally stunning apartment buildings in the world, it is located in Montreal, Canada. It’s called “Habitat 67” (or simply “Habitat”). Its located at Cite duHavre, on the Saint Lawrence River. It was designed by Israeli-Canadian architect Moshe Safdie. It originated in his master's thesis at the School of Architecture at McGill University and then built for Expo 67, the World’s Fair held from April to October 1967. Its address is 2600 Avenue Pierre-Dupuy, next to the Marc-Drouin Quay. Habitat 67 is considered an architectural landmark and one of the most recognized buildings in Montreal. The original plans called for 1,200 homes at a cost of $45 million. However, Safdie could only secure funding for a much-reduced construction. This smaller development (about $22.4 million) was financed by the federal government. It is now owned by its tenants, who formed a limited partnership that purchased the building from the Canada Mortgage and Housing Corporation in 1985. Habitat 67's interlocking forms, connected walkways and landscaped terraces were key in achieving Safdie's goal of a private and natural environment within the limits of a dense urban space. Habitat 67 comprises 354 identical, prefabricated concrete forms arranged in various combinations, divided into three pyramids, reaching up to 12 residential stories, with a parking level, and a building services level. Together these units created 146 residences of varying sizes and configurations, each formed from one to eight linked concrete units. Each unit is connected to at least one private landscaped garden terrace, built on the roof of the level below. Each apartment has a molded plastic bathroom and a modular kitchen. The development was designed to integrate the benefits of suburban homes (namely gardens, fresh air, privacy, and multi-leveled environments) with the economics and density of a modern urban apartment building. It was believed to illustrate the new lifestyle people would live in increasingly crowded cities around the world. Safdie, in fact, actually lives at Habitat 67 part of the year. Safdie owns Blake Gopnik’s childhood penthouse apartment (units 1011 and 1012) as his Montreal pied-a-terre.
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Melbourne Man Charged With Arson Hiding Ducklings In His Underwear. A 31-year-old homeless man was arrested last Sunday night in Melbourne, Australia, after 12 fires were reported across the Frankston neighborhood over the weekend. The small fires included blazes in a loading dock, behind a school, in a shop car park, outside a real estate agent’s office and in several bins. But what makes this story unique is that after the arrest, police searched the man and found two live ducklings in his underwear. The man has been charged with animal cruelty, reckless conduct endangering serious injury, four counts of lighting an open-air fire, possessing a weapon and negligently dealing with proceeds of crime. He was remanded to face Frankston magistrates court on Monday. When asked why he was hiding the ducks, he responded, “I thought I could pick up chicks.” But what is amazing is that the baby ducklings were only eggs when he first placed them in his pants! Just kidding!
Driver With Bull In Passenger Seat Pulled Over By Nebraska Police. Just when you think you’ve seen and heard everything, you hear this. A Nebraska man was pulled over by police last Wednesday for driving with the biggest front-seat passenger imaginable: a fully-grown Watusi bull. Norfolk Police responded to a call about a bull riding shotgun with the man on Route 275 eastbound at around 10:00 a.m., according to News Channel Nebraska. The man (identified as Lee Meyer of Neligh, Nebraska) was driving with a bull named “Howdy Doody.” What was Meyer doing? Lee Meyer was taking Howdy Doody for a ride around the hood when police performed a routine traffic stop: "You’re not going to run across that every day," Police Captain Chad Reiman tells PEOPLE Authorities performed a routine traffic stop and saw a yellow barrier on the side of the car to keep the bull inside. “The officer wrote him some warnings,” Reiman continued. The car's roof on the passenger side had been removed so the animal could fit. "It's a solid car, so I went on and purchased up and beefed up the frame that was under it and the suspension, the tires and floor and cut the top off, and we were good to go," Meyer reassured last Thursday night. The car is a retired police cruiser from the Nebraska village of Arnold. The 9-year-old bull, which is half-Longhorn and half-Watusi, weighs 2,200 pounds. Apparently Howdy Doody is a regular attraction at parades and fairs throughout the Cornhusker State. In 2019, Meyer made headlines when he drove Howdy Doody down a parade route in town, according to the Antelope County News. Video of Meyer’s float (number 53 and with a license plate titled “Boy & Dog”) was captured by the newspaper.
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Vendors Expo Returns! Our world-famous, super-duper "Vendors Expo" returns on Thursday night, September 14, 2022. The Vendor Expo opens starting at 6:30 pm. We'll have 40+ of the finest vendors featuring real estate products and services you will want to utilize as a successful investor. Stick around after and enjoy our guest speaker. Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, CA 90034. FREE Admission. Metered and free street parking. Please RSVP at www.LARealEstateInvestors.com.
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“Wholesaling” When it comes to wholesaling, there is only one guy you need to learn from. His name is Cliff Gager. Cliff has not only wholesaled hundreds of properties, he has written books about wholesaling and traveled the country preaching the virtues of wholesaling. Cliff will be our special guest speaker at our September general meeting. Don’t miss Cliff’s presentation. And come early (6:30 pm) and enjoy our Vendors Expo. Thursday night, September 14, 2023, 6:30 to 9:30 pm. Plus, come early and enjoy our Vendors Expo. Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, 90034 (Culver City adjacent). FREE Admission. Metered and free street parking. RSVP: www.LARealEstateInvestors.com.
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Basic Training Boot Camp. Saturday, September 30, 2023, 9:00 am to 6:00 pm, will be our semi-annual Basic Training Boot Camp. Everything you ever wanted to know about real estate investing but were afraid to ask. Iman Cultural Center, South Hall, 3376 Motor Avenue (between National and Palms), Los Angeles, 90034.The cost of the Boot Camp is $149.00 per person if paid before September 23, 2023. After September 23, the price jumps to $1 million per person. So don’t wait to register. (Gold Members and former Boot Campers can attend for FREE, but still need to register.) You can register at LARealEstateInvestors.com.
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4th Annual Los Angeles Real Estate Grand Expo. Our 4th Annual Grand Expo returns on Saturday, October 21, 2022, 9:00 am to 6:00 pm. This year we’re taking over the entire Iman Cultural Center – it’s all ours for the whole day! The north hall, the south hall, and the parking lot in the middle (with tents and food trucks). One entire day celebrating real estate investing. The theme of this year’s Grand Expo is “Hedge Inflation – Buy Real Estate.” There will be 14 national speakers in breakout sessions, and over 70+ vendors in the North Exhibition Hall. Keynote speaker will be Steve Price, executive Vice-President of Auction.com, the number #1 provider of foreclosure properties in the United States. The Grand Expo is a joint production of the Los Angeles County Real Estate Investors Association, Sam’s Real Estate Club, Ventura County Real Estate Investors Association, and Realty 411. Best of all, the Grand Expo is FREE to attend. Street parking is free and metered. Valet parking will also be available. But please RSVP at www.LAGrandExpo.com.
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“LARealEstateInvestors.com” Podcast. Are you enjoying our weekly podcast, "LARealEstateInvestors.com" (named after our domain) hosted by our very own Bill Gross? Bill has been a Realtor, broker and real estate investor forever! No one is more experienced in local Southern California real estate than Bill Gross. Each week, Bill interviews real estate professionals sharing their insights and advice for real estate investors. Every Tuesday live at 3:00 pm, and anytime thereafter on YouTube, Facebook, and Google.
This Week. Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy. There has been scuttlebutt that the Fed is planning on one more rate hike in November. For economic data, the most highly anticipated report will be the Consumer Price Index (CPI) on Wednesday. CPI is a widely followed monthly inflation indicator that looks at the price changes for a broad range of goods and services. Retail Sales will come out on Thursday. Since consumer spending accounts for over two-thirds of U.S. economic activity, the retail sales data is a key measure of the health of the economy. Import Prices will be released on Friday.
Weekly Changes:
10-Year Treasuries: Rose 050 bps
Dow Jones Average: Fell 300 points
NASDAQ: Fell 200 points
Calendar:
Wednesday (9/13): Consumer Price Index
Thursday (9/14): Retail Sales
Friday (9/15): Import Prices
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For further information, comments, and questions
Lloyd Segal
President
Los Angeles County Real Estate Investors Association, LLC
www.LARealEstateInvestors.com
This email address is being protected from spambots. You need JavaScript enabled to view it.
310-409-8310
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