Power LA 2023

La La Land Is Quiet … Too Quiet

By September 19, 2023 5:55 AM

Hollywood and its entertainment machine regularly echo through Commercial Observer’s list of most powerful real estate players in the Los Angeles area.

But, today, the treasured soundstages and historic studios that have long defined Los Angeles are empty. The effects of the ongoing labor disputes between actors, writers and massive conglomerate-sized production companies — such as Disney, Warner Bros. and Comcast — are raising new questions about the longevity of demand, especially considering the unprecedented surge in studio development projects currently in the pipeline.

Thus, although Labor Day has passed, it’s still the Summer of Strikes in Los Angeles.

And it’s not just show business: Hotel workers, thousands of city and county workers, and more have mobilized picket lines this year. But the empty soundstages and picketing celebrities will surely be the most identifiable story of 2023 locally.

Of course, on top of that, offices and some major shopping centers are extraordinarily quiet, too — and that’s without any sort of labor strike. The effects of rising interest rates, a new transfer tax in L.A. for pricier deals, and all the other headwinds are hitting L.A. as hard and sometimes harder than anywhere else in the country.

There are anchor tenants ditching office towers, as well as institutional property owners handing the keys for landmark high-rises over to lenders. In fact, Southern California has seen the sharpest declines in office values in the nation this year. The few towers that are sold are traded for major losses. And some of the most troubled assets in L.A. have quickly become the go-to examples around the country to epitomize the generational decline.

Thankfully for the industry, behind the scenes, Southern California remains the biggest and busiest industrial market in the nation. Amid the aforementioned slowdown, it appears industrial is the safest bet among the major asset classes. 

Rather than decline, the market for logistics and warehousing space is plateauing, or “normalizing” as CEOs like to put it. But, indeed, the biggest commercial real estate deals in the region moneywise are industrial sales and financings. That’s why the easiest honorees to select for the Power L.A. list this year were the likes of Rexford and Prologis, which are still expanding via nine-, 10-, and even 11-figure investments.

Otherwise, amid the economic sea change, this list showcases the durability of housing and the biggest multifamily landlords much more than in past years. With a serious lack of hope for any resolution to the housing crisis, there’s no question apartment landlords have stability others pine for.

That’s why Irvine Company, Equity Residential and AvalonBay — the biggest multifamily landlords in Southern California — are highlighted this year.

But perhaps the honoree most emblematic of the state of the market today is prominent developer and landlord Jamison Group. The private, L.A.-based firm has been converting underperforming office space into residential properties since well before the pandemic and the new era of remote work. Seems pretty advantageous now, doesn’t it?

Reporting by Greg Cornfield. Additional reporting by Tom Acitelli, Rebecca Baird-Remba, Andrew Coen, Cathy Cunningham, Chava Courarie, Max Gross, Mark Hallum, Abigail Nehring, Brian Pascus and Nicholas Rizzi.