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Welcome to our
2nd Quarter 2017 Newsletter
, highlighting the recent work of the firm, trends in commercial real estate, the virtues of patience in real estate development, a look at the Metropolis development in downtown, and an update on the challenges of homeless housing in LA County.
Anytime we can provide you with market research information, consulting, or simply answering a question, just let us know; we are happy to be of help. That is why we are here.
Sincerely,
Steven R. Norris, MAI, CRE
Norris Realty Advisors
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Norris Moderates CRE Panel
Capital Markets Forum Provides Varied Insights
One word dominates commercial real estate markets these days - uncertainty. Where are markets headed over the next year, and what will the future landscape look like? 
Recently, Steven Norris, CRE, moderated a panel of industry leaders discussing market direction and capital flows - during the Capital Markets Forum of the Spring Meeting of the Counselors of Real Estate in Los Angeles. Counselors from the US, as well as Europe, South America and Asia attended.
Panel participants included Jim Costello, CRE of Real Capital Analytics in Boston, Mike Hu of Gaw Capital in Los Angeles, and Jacky Denning of MetLife in Los Angeles. The varied experience of the panelists offered insight from the worlds of data analytics, foreign capital, and domestic institutional investors.
The discussion among panelists was lively and covered a number of topics, including the outlook for US interest rates, how capital flows into the US from China and other Asian nations may change in the coming year, and an overview how these trends compare with the actual history of commercial real estate market behavior.
While no single direction was clear, the panelists agreed that the market is in the "later innings" of the expansion cycle, and that change is likely to come over the next 12 to 24 months - with some from of contraction anticipated by all.
One topic not covered: the effect of the word "covfefe" on world capital markets.
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The Rewards of Patience
How Waiting Can Be Rewarding
John Quincy Adams once said,
"Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish."
Our recent experience in consulting and valuation of several hundred acres land on the California coastline illustrate the somewhat magical effects of patience in land development. In this case, the property had been owned for more than a decade before development of single family homes was permitted.
The property (whose location and ownership are confidential) had been proposed for a small single family home development for more than 10 years. An initial application for development had been filed a number of years ago with the California Coast Commission, who then denied this initial application.
The property ownership, who were persistent and undaunted over the next 5+ years, carefully modified the development plan with the specific requirements of the Coastal Commission in mind. These requirements were voluminous and highly detailed, even dictating site improvements down to the level of wattage on outdoor night time "dark skies" landscape lighting. Another important component was an effort by the ownership made to "mend fences' with many of the neighboring property owners, in order to gain their endorsement for the project.
After many years of planning, waiting, investment in relationships and hard costs, the property owner prevailed, and an environmentally sensitive and conservation-minded development plan has been approved.
This entirely unique assignment was referred to our firm by a long-time friend who understood that this was far more than a typical valuation effort. We revel in these challenges, and are thankful for the opportunity to be of help.
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First Look at Metropolis
Site Tour of New Luxury Development
Provided by Urban Land Institute
The Norris Advisors team was part of a unique opportunity to preview the luxury mixed-use development downtown,
Metropolis, at the ULI's panel discussion and site tour of the property recently.
Metropolis is located at the Harbor Freeway and West 8th Street in Downtown Los Angeles - and stretches the entire block. The developer is Greenland USA, a subsidiary of the Chinese real estate development company, Greenland Holdings. When completed, the development will include three condo towers, an upscale hotel flagged by Hotel Indigo, and over 70,000 square feet of indoor and outdoor retail space. It will also feature private amenities for its residents such as fitness centers, yoga studios, lounges, business centers, dog parks, rooftop pools and rooftop parks.
Tower I contains 308 units and is already over 75% sold, according to Metropolis sales representatives. It contains studios ranging in size from 526 to 531 square feet and priced from $680,430 to $948,880; one-bedrooms ranging between 760 and 895 square feet and priced from $974,580 to $1,440,880; and two-bedrooms ranging between 1,365 and 1,489 square feet and priced from $1,385,000 to $1,529,580. There are also several two-story penthouses that are priced from the $3 millions.
We were able to tour one of each unit type, and were impressed by the panoramic views offered. However we were amused by floor plans in some units - when searching for a bathroom that was hidden inside a closet, as well as when we entered a unit and immediately found ourselves inside a small walled-off office space. Perhaps some architectural thought may be lost in translation.
The final outcome of this development remains to be seen; will all the units be snatched up in pre-development, or may the changing economy catch up to the boundless optimism of the developers?
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Homeless Housing Challenges
LA County Begins to Address the Future
Measure H - The LA County funding initiative dedicated toward solving the homeless crisis in Los Angeles County will be directing over $350 million per year to homeless housing, services, and programs.
Recently, Steven Norris was invited to participate in the Annual Interfaith Summit on Homelessness, held at the California Endowment in Downtown Los Angeles.
Separately, we have been providing valuation services to a major proposed homeless veteran housing development in LA County. Homeless housing projects will continue to be a pressing issue in the region for the foreseeable future.
For more information on the recent dramatic rise in the homeless population in LA County, see the Homeless Count results here.
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A Brief Word on Confidentiality
You will notice that we do not identify individual property locations or client names in our Newsletter publications.
We do not release the names of individuals, law firms, specific details of our work, or public or private agencies.
It is our policy to faithfully honor the privacy of both property owners and clients we serve.
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Thank you for taking the time to review our Newsletter. We greatly value our relationship with clients, peers, and friends of the firm. Contact us directly with any questions.
Steven R. Norris, MAI, CRE 
Norris Realty Advisors
626-405-9922
[email protected]
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