Westside L.A. Conference Recap: Millennials, Tech-Tainment, Patient Capital & Recession

By Dennis Kaiser

Connect Westside Los Angeles was held yesterday and drew a crowd of more than 250 real estate professionals to hear from a mix of CRE leaders who discussed the biggest Westside market trends, deals and growth opportunities. The event kicked off with a 2020 forecast by CBRE’s Spencer Levy, and included panels on development, financing and the Westside market overview.

Levy framed the afternoon of discussions by noting how similar today’s CRE issues are to those faced over the past 50 years. Yet the future will be significantly shaped by Millennials as they emerge as the No. 1 age cohort over the coming two-plus decades. Demand for more flexible spaces — such as Airbnb or co-working spaces — will increase, though they likely won’t erode value, he predicts. Levy highlighted five factors that he sees creating “awesome office cities.” Those include talent and specifically the access to it, infrastructure, foreign capital, ease of doing business, and live-work-play environments.

The most important factor, notes Levy, is having access to the talent needed to service the business a company wants to be in. That factor is followed in importance by the need for authentic areas in a city where people want to live, work and play. He pointed out districts where this “new city” character is emerging are everywhere. He cited such places as the Arts District in Downtown Los Angeles, the Fulton Market District in Chicago and even in Charlotte, NC where high-rise tower work environments are giving way to smaller industrial buildings in far-flung sections of the city.

Construction Town: New Projects, TOD Development, Construction Costs and More on the Westside

Speakers included AECOM Capital’s Ted Fentin, Artisan Realty Advisors’ Mark Laderman, Lowe’s Marty Caverly, Hackman Capital Partner’s Mike Racine and Allen Matkins’ Spencer B. Kallick. (Panel pictured above.)

Panelists agreed development in Los Angeles requires an approach that includes patient capital, flexibility and underwriting contingencies that may arise. AECOM’s Ted Fentin said “The process is lengthy even when you have entitlements in place.” He added development in L.A. “requires a long-term vision,” especially for “big complicated projects.”

Late-Cycle Financing: Navigating Capital, Interest Rates and Inflation in an Era of Uncertainty

The line-up of speakers included George Smith Partners’ Gary M. Tenzer, Madison Realty Capital’s Bradley Ross, Greenberg Glusker’s Craig Coan, Money360’s Ken Gaitan, CIM Group’s Nicholas Bryer.

George Smith Partners’ Tenzer addressed the potential of an economic slowdown, noting that should one occur he doesn’t not expect it will cause the “same bubble to burst” as what happened in 2008. “It may be choppy but there’s not going to be a drop in values,” predicted Tenzer.

Though panelists noted that today is key for borrowers to know and understand the source of capital, since that often translates to how it can be deployed and the expectations of the lender.

Westside LA Power Players

Speakers included Boston Properties’ Jon Lange, Lincoln Property Company’s Kent Handleman, Harbor Associates’ Paul Miszkowicz, NMS Properties’ Neil Shekhter and Kennedy Wilson’s Christine Deschaine.

Experts on the Westside LA Power Players panel agreed that demand for space was being driven by large entertainment and technology companies, especially in the content creation and streaming sector. This segment is now being called “tech-taiment, and panelists noted it is early in the emergence and evolution of this occupier group, thus there is expected to be room for continued growth.

It was also noted that tech-tainment players are typically more concerned with recruiting and retaining talent than rent and the cost required to create the amenity-rich work environment in the right location that pulls top talent in. Lincoln Property Company’s Handleman said companies are “getting as much office space as possible, and then going out and getting top talent.” Coupled with L.A.’s lifestyle it creates a situation where companies feel they “have to be here,” he added, noting it was a “natural progression” southward for companies seeking a highly coveted labor pool in SoCal.

The afternoon also included a presentation of Connect’s 2019 Next Generation award winners, and concluded with a cocktail networking reception.

For comments, questions or concerns, please contact Dennis Kaiser