Some of the usual suspects of the Southern California commercial real estate crowd chatted over breakfast burritos and coffee at a Hilton hotel in Little Tokyo on Wednesday, perhaps in hopes of getting some deals done in what panelists would later describe as another hard year.
\nThree chief executives of family-owned businesses, among others, sat on the panel at Bisnow\u2019s first Los Angeles event of the year: Nadine Watt of Watt Capital Partners, Mike Lowe of Lowe Enterprise, and Christopher Rising of Rising Realty Partners.
\nAll three said this year won\u2019t be easy, with no white knight to save the day, or downtown. Institutional capital, even if it hasn\u2019t written off Los Angeles, is in wait-and-see mode, Lowe said.
\nRising was a hit for his mix of humor and straight talk.
\n\u201cAt our height we were the second largest landlord behind Brookfield in downtown L.A., and we\u2019re still around \u2014 they\u2019re not,\u201d Rising said, alluding to his efforts to hold on to One California Plaza as opposed to the hundreds of millions of dollars worth of downtown office towers Brookfield has defaulted upon in an exit being made mostly via lenders or receivers.Brookfield has multiple offerings throughout downtown\u2019s Financial District that account for about a fifth of Class A office space.
\nThat elicited some laughs, but Rising then commanded attention with a serious assessment of current events. The son of the late Nelson Rising, who was very involved in California politics, said \u201cthere is a broken trust with Wall Street,\u201d and it stems from Measure ULA. That\u2019s the City of Los Angeles\u2019 property-transfer tax that\u2019s also known as the mansion tax despite the fact that it hits the commercial as well as residential sectors with a 4 percent levy on deals of more than $5 million, and 5.5 percent on deals priced at more than $10 million.
\nWall Street believes elected officials specifically went after corporate profit, Rising said, with Measure ULA, which drew rumbings of reform this week before being kicked to committee by the city council.
\n\u201cWe\u2019ve got to rebuild trust,\u201d Rising said. \u201cI would like to see our mayor and our city council get on an airplane and go down where all the private equity firms are and say, \u2018we\u2019re open for business\u2019 \u2026 I don\u2019t think that will happen \u2026 I\u2019d be happy to \u2026 make introductions.\u201d<\/p>\n
Rising, who co-owns One California Plaza, the office tower on Bunker Hill that\u2019s now in the hands of a receiver after a $300 million default, wants workers back at their desks, particularly government employees downtown. He shared a conversation he said he had with Mayor Karen Bass a couple years ago, where he asked her what it would take to get people back in the office. Her response, he said, was that her staff comes in but she can\u2019t force other city personnel to do so.
\nRising called the mayor\u2019s response \u201cinappropriate,\u201d and that he told her she could change department heads, but she wouldn\u2019t.
\nHis goal wasn\u2019t to attack her but something\u2019s gotta give. \u201cOur elected officials are so hostile to the business environment,\u201d he said. <\/p>\n
David and Daniel Mirharooni purchased a pair of adjacent properties in Beverly Hills\u2019 Golden Triangle for about $25 million, or around $1,500 per square foot, from Anderson Real Estate, founded by late billionaire and Los Angeles businessman John Anderson, whose name adorns the business school at the UCLA. Newmark\u2019s Jay Luchs and Gavin Ketchum brokered the off-market transaction.
\nThe deal was for 202 North Canon Drive, a one-story home to Rodeo Realty, and 208 North Canon Drive, which can be used for office or retail \u2014 the two buildings amount to about 16,400 square feet.
\nIt\u2019s a pricey trade, and a notable one. The Mirharoonis have made other Beverly Hills buys, where commercial deals are untouched by the mansion tax. They own a Mastro\u2019s on Canon, and recently purchased retail on South Robertson Boulevard for almost $8 million, or $985 per square foot. But why did Anderson sell? It still owns 9720 Wilshire, a stunning office tower in Beverly Hills\u2019 Golden Triangle.<\/p>\n
Olympic gold medalist and 10-time world champion boxer Oscar De La Hoya defaulted on a $27 million commercial mortgage-backed securities loan connected to an office building at 626 Wilshire Boulevard in the Financial District of downtown LA. The \u201cGolden Boy\u201d looks tarnished on this deal, with about $23 million in date and foreclosure looming.<\/p>\n
Creditors reached a bankruptcy-exit agreement over Oceanwide Plaza downtown, according to Bloomberg. That clears the way for a possible sale of the undone towers covered in graffiti. A potential investor is in talks to buy the property, but the deal hinges on resolving the bankruptcy, Bloomberg reported, citing people with knowledge of the matter.<\/p>\n
\u201cOffensive\u201d: Measure ULA oversight committee lashes out at Raman\u2019s bid for exemptions
\nGolden Triangle properties fetch $1,500 psf
\nOscar De La Hoya defaults on downtown office loan, faces foreclosure<\/p>\n
The Los Angeles commercial real estate market is facing a challenging year, with institutional capital in wait-and-see mode and a broken trust with Wall Street due to Measure ULA. However, there are still opportunities for growth and investment, as seen in the recent purchase of properties in Beverly Hills\u2019 Golden Triangle. The city needs to rebuild trust with the business community and create a more favorable environment for investment.<\/p>\n
Q: What is Measure ULA?
\nA: Measure ULA is the City of Los Angeles\u2019 property-transfer tax, also known as the mansion tax, which hits both commercial and residential sectors with a 4 percent levy on deals of more than $5 million, and 5.5 percent on deals priced at more than $10 million.
\nQ: Who are the key players in the Los Angeles commercial real estate market?
\nA: The key players include family-owned businesses such as Watt Capital Partners, Lowe Enterprise, and Rising Realty Partners, as well as institutional investors and private equity firms.
\nQ: What are the challenges facing the Los Angeles commercial real estate market?
\nA: The market is facing a challenging year due to institutional capital being in wait-and-see mode, a broken trust with Wall Street, and a hostile business environment created by elected officials.<\/p>\n","protected":false},"excerpt":{"rendered":"
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