How Do You Define An Emerging Neighborhood?
LOS ANGELES—From Downtown L.A. to Hollywood, Downtown Long Beach, Koreatown and El Segundo and the South Bay, developers are reimagining L.A. neighborhoods. But what is important to figure out, according to speakers at RealShare Los Angeles, is how to tell when a market is emerging.
From a condo developer perspective, Arden Hearing, managing director of Trumark Urban, said that he follows smart apartment developers. “For us, it is unique in how you define an emerging market.” Hearing said it is “going where people have proven that they want to rent.”
Henry Finkelstein, a partner at Greenberg Glusker, said to “follow the New York model.” But lately, he said, he has been focused on entering suburbs.
Bob Champion, president and CEO of Champion Development, explained that everybody talks about walkability when talking about projects they want to do. But it is important to look at all the ingredients, he said.
Champion pointed to things like if you see pedestrians and actually see people on the street walking—“that is an indication.” He says if you see new restaurants, new bars opening, or something cultural, like art galleries etc., “it leads you to believe that there is a commitment to a community that can lead to development opportunities. Those are indicators of a place where there might be demand.”
From real estate supply demand fundamentals, Champion believes that “we are very early in the game.” But he warns that people still have to be watchful and careful and do their due diligence.
As part of that due diligence, panelist Hearing stressed the importance of maintaining diverse neighborhoods. “It is our responsibility and obligation to create vibrant and diverse neighborhoods,” he said. “We have to protect the diversity of housing …it is the right thing to do and we have to get ahead of it and have ambitious goals.” Los Angeles, he added, “has to get ahead of the curve and support the affordable housing community.”
When discussing rent pricing matching the cost of a mortgage, Champion pointed out that rents in the class A upper tier, at times, will be higher priced than buying for someone that can afford a down payment. As a result, he said, developers, like him, have compensated with smaller units, as one example.
His company is also being selective in deciding what they are going to build. “We are doing smaller projects now and are putting them in areas that aren’t peak rents, but where we are really providing a value proposition for someone.”
Champion also pointed out that there is a large profile of renter who want to rent, who don’t want to own. But he also pointed out that that view point is changing. “As the Millennials are aging and having families, they are moving out of the renter mode.”