Jones Lang LaSalle shows that over the last 20 years, the Los Angeles Westside had much more volatile rents than Downtown Los Angeles. JLL claims that the Westside has startup tenants, while Downtown Los Angeles has more established tenants. The gap between the two widens in booms and narrows in busts. A 30% spread of Westside rents over Downtown rents predicts recession, according to JLL. You can enlarge the chart by clicking on it.
Developers are starting construction of a new retain center that will increase the restaurant selection near Washington and National, close to ( but no so easy a walk) to the Hayden Tract. The Hayden Tract is a popular creative office district in Culver City. You can read more of about this development n the article below.
Economist Robert Shiller conceded Tuesday, June 25, 2013, on Bloomberg News that its a good time to be a flipper and that housing prices will probably rise for the next year. However, he does not think the rise is prices is a long run trend. Rather, he sees it as a short term phenomenon that cannot be compared to the long run up in prices that began in 1998.
Just to put the recent rise in the 30 year mortgage to 4.1% into perspective–it is still at a 100 year low except for recent times.
Snapchat just snapped up $80 million of venture capital funding on a $800 million dollar valuation. Snapchat is a 10 employee firm located in a 2,600 square foot bungalow house at 523 Ocean Front Walk, Venice. This house was previously rented to for retail stores looking to tap into the Venice boardwalk trendy retail scene. This office location is right out central casting for a Los Angeles startup. It is what the world would want to believe where every startup in Los Angeles works. However, as most commercial real estate people knows–this is an oddity. However, it may attract some startups to Los Angeles instead of other competitive locations, when a startup can move not only to a beach house in Venice but also achieve some level of success.
One of the only opportunities to buy homes for rent may be coming to an end. HIstorically low interest rates, a firm rental market, and a collapse in home prices, allowed investors to buy single family homes not only below fair value but also at cap rates that were as good or better than those available in multifamily properties. In the last year, prices in many of the best markets have increased significantly. The increased supply of rental homes has caused rents for rental homes to stagnate. Now interest rates are on the rise. Already in Los Angeles, the ability to buy rental homes at apartment cap rates is gone. Other areas of the country may be in the 7th inning. Soon private equity and investors will start their exit from this value play. That does not mean that homes sales and home prices will stop rising. The article below reviews that discussion.
Hatch Beauty has leased the upper third and fourth floor at a creative office building located at 10951 Pico Boulevard. The five year lease is for 10,300 square feet. The Hatch Beauty Agency is a marketing and design company that focuses on the beauty care industry. Hatch Beauty Agency was formerly located in Santa Monica and shows how creative companies are leaving Santa Monica for more affordable creative offices on other parts of the Westside.
In 2000, PMI Properties, the landlord, converted 10951 Pico Boulevard to a creative office building. Former tenants included California Assemblyman and Chicago 7 activist, Tom Hayden and web video gaming jaggernaut, Machinima. Machinima was founded by Allen DeBevoise, who founded the company in 185 foot suite at 10951 Pico. Current tenants include online social site Bebo and social E-commerce website Little Black Bag.
During the pre-leasing process, PMI Properties was represented by Dave Wilson and James Wilson from Lee & Associates. Hatch Beauty was represented by Travis Landrum from Industry Partners.
The Los Angeles Time article below discusses the current movement of young people back into the City as renters in smaller living spaces. The article argues that Millennials are burdened by student debt and the memory of the housing collapse and therefore more likely than past generations to remain renters versus home buyers. Many academics claim a movement of Millennials to urban areas. A 2011 survey for the National Assn. of Realtors showed that — despite headlines about the new urban-ism — fewer than 20% of adults prefer to live in cities, while twice that percentage still favor single-family homes in the suburbs.
More Millennials than ever before are moving to the cities and renting. As they grow older and start families, they may be more likely to buy homes and move to suburbs for better schools. As confidence is restored and housing prices recover–Millennials will desire to own versus rent. But renting and urban living will probably be more accepted by the Millennial generation than several of the previous generations before them, Read the full article below. .
Urban economists have traced the growth of Cities to the success of breakout hit companies. One example was Microsoft’s relocation to Seattle and how that move resulted in the growth of prosperity of Seattle. A breakout hit company attracts other companies, employees, venture capitalists to the area. The hit company scales and hires more people and consumes more office space. Service firms, lawyers, busboys, and other workers are hired to accommodate this growth. The new wealthy employees break off and form new firms within the area and hire even more people.
Now Snapchat may be the West side hit company that the LA Tech community has waited for in hopeful anticipation. It user growth exceeds that of Instagram’s. Read below.
We added some desks, ping pong table, and coffee bar to one of our executive suites and received the following letter from some of our tenants that protests some of the features of the “new open office” environment.
Many people and companies, especially outside the tech sector, have not yet embraced the open office work environment espoused for new offices in the LA Times article below:
LA Times Article:
A new wave of shared workplaces rolls through Silicon Beach
Office buildings are being reconfigured with open spaces where founders and employees of start-ups can mingle in a setting with a creative vibe. Pingpong, anyone?
Pingpong tables, employees in sandals, software code scrawled on the walls, a bounce house in the lobby.
No, it’s not a Silicon Valley tech company. Rather, it’s a scene from one of several new tech-focused office buildings in Southern California where dozens of start-ups are setting up shop and sharing the work space.