Caruso: Now Is the Time to Build
A much improved economy and low vacancies are driving LA's current building boom. And according to the city's top developers, who'll speak at Bisnow's Construction & Development and the Battle of Prop 13 event tomorrow, there's no end in sight.
Caruso Affiliated EVP Matt Middlebrook, a panelist at our event which starts 8 am at the Millennium Biltmore Hotel, told us yesterday that it's an opportune time to move forward on projects in the company's market sectors—retail, residential and hospitality—where he notes that focus on a high level of amenities and service is a growing trend. For example, the company plans to launch construction before year-end on The Miramar Beach Resort & Bungalows, its long-awaited project in Montecito. "The economic downturn made luxury hotel development challenging, but the market's finally turned in our favor."
Next month, Caruso will submit plans to the City of LA for entitlements for Palisades Village (above), the company's redo of Swarthmore Avenue in downtown Pacific Palisades (we caught up with Rick Caruso a few months back to tell us all about the project). Citing a goodly amount of community support, Matt says the street-front retail project will bring a long underutilized boulevard back to life. The company's also looking at a new luxury residential project at the intersection of San Vicente and La Cienega, across from Caruso's 8500 Burton Way. The project's land-use application will be submitted this week.
Another panelist, Goodman Birtcher regional director Lang Cottrell, right, with the development and marketing teams for the 1.6M SF Goodman Logistics Center Rancho Cucamonga, tells us the company will wrap up construction by April. The project's two cross-dock facilities contain 1M and 550 SF. Lang says demand in the market continues to be strong, especially from strong corporate users in the area, electronics and other retailers—while the supply of buildings in this size in the IE West is limited.
The company's in preliminary discussions with potential tenants for the spec project; Lee & Associates is handling leasing. In July, Goodman Birtcher will complete a 640k SF facility in Fontana. Additionally, the company received full entitlements in December for its 200-acre Eastvale project with grading and infrastructure to begin in April. Located off I-15 at Cantu-Galleano Ranch Road, the mixed-use development will consist of industrial space, medical office, hotel and retail. The company has an additional 1.3M SF of infill projects in the pipeline in Santa Fe Springs and Compton.
On the multifamily side, another of our panelists, Related California EVP Gino Canori (with son William, skiing in Aspen), points to enviable sales velocity at the company's Ocean Avenue South. The project, which includes The Waverly (65 units) and The Seychelle (93 units), opened last June and is about 70% sold. (Gino expects it to be fully sold by year-end.) He's similarly pleased with the leasing activity at The Emerson, which opened in November in DTLA's cultural core—right next to The Broad museum opening in September. The 271-unit luxury apartment tower blends hotel-style services and amenities with state-of-the-art design.
The Emerson boasts the full-service restaurant Vespaio by Italian chef Agostino Sciandri, which Gino says will have room-service capability. In addition, Related just completed entitlements and will begin construction in Q1 2016 on a 116-unit luxury rental project in the heart of Hollywood. The company's also in the entitlement process for a project in Marina del Rey, and has additional projects in the pipeline in Santa Monica, Orange County and San Diego. Gino notes there's an abundance of product coming on line in LA, Glendale and San Francisco. That said, California makes it so difficult and time-consuming to get projects entitled that developers will be hard-pressed to ever build too much.
If you thought the measles vaccination debate was heated, just wait until our debate over changing Prop 13. Taking the "pro" side of the issue will be Kirk Stark, Barrall Family Professor of Tax Law and Policy at UCLA School of Law. Kirk (with dad Jack) thinks it's likely that Prop 13 will be amended at some point in the coming years. In the nearly four decades since the measure was passed, the property tax burden has shifted away from land and more toward structures—the exact opposite of an efficient tax system, he says. With regard to commercial and industrial property, the consequence has been to discourage new business investment. Here's everything you need to know about Prop 13.
Although he grew up in Indiana, Kirk admires the grass-roots support behind Prop 13 and loves to show his students old news clips of the months leading up to the measure's adoption in June 1978. (He also likes to show the cameo of Prop 13's chief sponsor, Howard Jarvis, in the movie Airplane, above.) On the other hand, he thinks there's an increasing willingness to update Prop 13 to help California be a more pro-business state. Hear from Kirk and more at our Construction & Development and the Battle of Prop 13 event tomorrow at 8am tomorrow at the Millennium Biltmore Hotel. It's not too late to sign up now.