On a warm and cloudy Los Angeles summer afternoon, commercial real estate professionals gathered at the downtown Hotel Indigo at Connect Los Angeles to talk business. The overarching topic: how to deal with the sudden economic challenges that have sent the industry reeling.
Throughout four panel discussions and two presentations, leaders in Southern California commercial real estate talked in detail about how their business has changed in the past 90 days, thanks to climbing interest rates and the spike in inflation. How investor psychology has flipped with the sudden uncertainty and how long it may take to emerge from the muck.
Despite comparisons to the real estate crash in the late-2000’s, Marcus & Millichap President and CEO Hassan Nadji offered some comforting words during his Economic Macro Overview presentation: CRE fundamentals are solid and THIS slowdown is completely different. In addition, while the interest rate spike is making investors nervous, historically, it remains well below the long term average.
Another topic covered at Connect LA was the emergence from the pandemic and how industry leaders were tackling the challenges. Kidder Mathews CEO Bill Frame, Kilroy Realty President Tyler H. Rose and Nadji discussed how their firms are taking on hybrid work, mercenary employees, the flight from urban to suburban, and now back again and what to do with vacant office buildings.
The office building situation was mentioned frequently during the afternoon, namely, the effort to repurpose them for a much more pressing need: multifamily. Every panel talked about the Southern California housing shortage and the frustration with local governments in zoning restrictions and other roadblocks that won’t allow conversion of unused office buildings into residences, especially at the Class B and C level.
A detailed discussion about Environment, Social and Governance (ESG) and Diversity, Equity and Inclusion (DE&I) was also a part of the Connect Los Angeles event. iimpact Capital CEO Ada Arevalo moderated a panel that covered the impact of ESG and DE&I in commercial real estate, from balancing profitability to looming SEC environmental disclosure rules to CRE United’s effort to lift up women- and minority-owned businesses.
A panel of Los Angeles power players wrapped up the day to talk about local projects and how their companies are progressing through the economic headwinds. David Waite, Partner at Cox Castle and Nicholson moderated the discussion with Avison Young’s Chris Cooper, Skanska’s Clare De Briere and JLL’s Carl Muhlstein. “The Great Reset” and “The Great Pivot” were catch phrases used to discuss the current challenges and many creative solutions were offered, from adaptive reuse of office buildings and malls to making return-to-work environments more employee-friendly.
Connect Los Angeles was also a “Return-To-Work” success story. ConnectCRE CEO Daniel Ceniceros, a native Angeleno, was beaming during the afternoon, happy to be finally hosting a Los Angeles event “in-person” for the first time since 2019. Welcome back.