Timing Is Everything in Attracting Asian Capital to LA
Asian developers are investing billions in transformative Downtown LA projects, including Shanghai-based Greenland USA’s $1B Metropolis; Beijing-based Oceanwide Holdings' $1B Fig Central; and Shenzhen, China-based Shenzhen Hazens Group’s $700M Hazens W Hotel and Residences—all in South Park.
Of these mega projects, only Shenzhen Hazens is going through the entitlement process, because the others are on sites entitled in the last real estate cycle. “We are the first large [Chinese] mixed-use project in Southern California to be going through the process,” says Shenzhen Nazens project director Sonnet Hui (snapped with moderator and Nixon Peabody partner Justin Thompson) at Bisnow’s Cash Infusion: Impact of Foreign Investment on SoCal Real Estate event last week at the Luxe Sunset Boulevard Hotel. Sonnet adds that the South Park BID and neighborhood businesses like Central City Association have been very supportive. “The biggest difference is this moment in time in LA. I think that if our project wins, there’s going to be a lot more projects to follow,” she says.
Swinterton Builders VP Ray Haj stresses that if LA wants to continue as a recipient of the boon foreign capital is bringing to the city, people involved in the city’s entitlement process need to be more flexible. “If they approach the process in the traditional way, it’s not going to work,” he says, pointing out that city employees need to get a better understanding of the cultural differences and how the process works in China. Most importantly, Ray says, “We need to build trust [with Asian investors], as Chinese culture is built on trust.”
The South Park BID views its job as the United Nations of development, said executive director Jessica Lali. She notes that the BID sets up meetings between developers and neighborhood groups, encourages neighborly behavior and works with the city and developers to ensure projects fit the neighborhood, and to design streetscapes, parks and open space. Fourteen projects are under construction in South Park, Jessica notes, and projects along the Figueroa Corridor are connecting neighborhoods and closing neighborhood barriers.
Moderator and Nixon Peabody partner Justin Thompson asked special counsel to Jose Huizar (District-17) Sara Hernandez if the city has gone out of its way to embrace foreign investors. “We see ourselves as a shepherd to getting projects through the process,” she says. Sara also noted that her team is working to get LA City key department heads to understand that “we don’t have a finite amount of time to build our skyline, so it's incumbent on us to get projects done. Our convention center can’t wait for the next real estate cycle to build hotels.”