Southern California’s commercial real estate landscape is undergoing a quiet upheaval.

There are many things to worry about in Greater Los Angeles due to catastrophic fires, plummeting Hollywood production, billion-dollar budget issues and a ceaseless housing crisis. Once tied to booms and blockbusters, Southern California’s capital now flows more selectively — into housing, logistics hubs and well-positioned retail — as Downtown L.A.’s office market finally emerges from a post-pandemic trough. Thus, this year’s Power SoCal list is based less on wild optimism and more on sober pragmatism.

But a flashy specter looms large over every project: the 2028 Summer Olympics. With fewer than 1,400 days until the torch blazes into SoFi Stadium, the region feels the clock ticking. Casey Wasserman, L.A.’s Olympics chairman, has turned the $7 billion Summer Games into a private-sector infrastructure marathon, as no public tax dollars will pay for the venues (if he hits his marks).

This has already reshaped private investment and policy. Hotel owners, from REITs to boutique operators, are upgrading portfolios, and lenders are eyeing transit corridors for redevelopment opportunities.

The Olympics also provide a deadline for the region to further address its housing shortage. It seems almost every honoree on the Power List this year cites California’s wider housing crisis as the market’s most urgent driver, as landlords and companies complain that a lack of affordability has created a flight risk.

Big-name developers are responding with homebuilding, and capital is flowing into multi-family projects, including many big conversions. For one, Related California is “moving beyond downtown” to provide a couple dozen housing projects, including a $3 billion, 3,000-unit project in Orange County that will take the place of a former shopping center. 

Meanwhile, Jamison is converting empty downtown offices into housing, calling such deals “just a very fancy” tenant improvement to ease the shortage, and even Caruso — known mostly for its nation-leading malls — is adding more housing to the docket under CEO Corinne Verdery. That includes dozens of new residential units at Rosewood Miramar Beach in Montecito and a luxury apartment development in Calabasas.

Selective retail strategies are thriving in Southern California, too. Investors are shelling out for grocery-anchored centers and street-facing main street shops that serve local needs. Blackstone recently paid $4 billion for a grocery REIT, and Regency Centers put up $357 million for five O.C. grocery-anchored centers as more “necessity-driven” retail hubs command premium prices. 

Southern California’s industrial machine is still printing money despite pressures caused by unprecedented changes to global trade. Developers continue to bet billions on logistics parks, inventory facilities and manufacturing plants. CBRE brokers Darla Longo, Barbara Perrier and Val Achtemeier closed 99 deals totaling $8.6 billion over the past year — most of them warehouse and logistics properties.

All of these moves occur under daunting macro headwinds. Many stakeholders mention high interest rates first and last, while construction costs soar and unpredictable policy shifts pin investors to the sidelines. But Los Angeles’ top players are digging in. 

Southern California is still betting on its fundamentals: population growth, tourism and a magnetic quality (some call it “the weather”) that creates investor demand of every kind. 

The region has been knocked down, the identity of L.A. has been questioned. But the decision-makers and the industry’s most influential dealmakers are ready for all the new tests coming their way.  —Gregory Cornfield