Dick Ziman, Nelson Rising and the Future of LA Real Estate
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The LA scene is booming, but this run-up is much different than the surge of a decade ago. Two of the city's most legendary developers led off Bisnow's Future of Real Estate: Design, Innovation & Tech, and told us how the business has changed.
Nelson Rising (here being interviewed by Shangri-La Construction CEO Andy Meyers) told attendees the community outreach game has completely changed. In working with Maguire Thomas on the transformative Playa Vista project, Nelson says he held more than 200 meetings with the community. He explained to the community that the project was about New Urbanism, which mixes office, retail and recreational uses in the same neighborhood. He says environmental activists were happy because they understood it would reduce traffic.
Mission Bay in San Francisco, which Nelson worked on as CEO of Catellus, was in a similar vein. The company entitled 6M SF of commercial, 6,000 residential units and retail, and won unanimous approval because it was a mixed-use walking community served by Muni and Caltrain. Nelson says his son, Rising Realty president Chris Rising, was a big advocate of turning the PacMutual complex into a creative office environment. They ended up having DTLA's first creative office space with an open-floor plan. One big advantage: the space per employee goes down, so the price/SF can go up.
Our other keynote speaker was Rexford Industrial CEO Dick Ziman (snapped here being interviewed by Allen Matkins' Tony Natsis). The two met in 1986, when Tony, then a third-year law firm associate, worked on a $350k lease with him. Dick told Tony that the arrival of patient equity makes today's current run-up different from the run from '04 to '07, which was driven by Wall Street and home loans. Institutional Chinese investors have a 100-year vision.
Dick says he bought his first industrial building at the age of 26, using the 10-10-10 and 10 rule: $10/SF, 10% down, 10% interest loan and 10-year maturity. The beauty of industrial is that it isn't as management-intensive as office, he says. You don't have the TI and downtime issues, or the parking and massive AC requirements. On the venerable question of private versus public, Dick says if you want to grow big and fast in perpetuity, the public company vehicle is the best, providing access to the most inexpensive form of debt and equity.
Some 275 joined us for the event, held in the afternoon at the Pacific Design Center in West Hollywood.
Here's Dick with CBRE managing director Eric Hasserjian.
Some of LA's top commercial real estate pros stayed for cocktails and hors d’oeuvres.We snapped JLL's Carl Muhlstein, CIM Group's Bree Long and City Build Advisors' John Given.