Welcome to our
1st Quarter 2018 Newsletter
, highlighting the recent work of the firm; including new developments in commercial real estate, how the super rich attempt to spend their money, real estate development brought forth from the Lego Movie, and a fascinating turn of events in the Downtown LA luxury housing market.
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.
Steven R. Norris, MAI, CRE
Norris Realty Advisors
Lego Movie Producer
Creating Media Mini-Campus
Just east of Downtown Los Angeles in the Westlake area, a media production studio is being constructed by the production team behind the successful Lego movies. Our firm was recently requested to provide value opinions for this facility involving two buildings, an inner courtyard, along with a large parking lot. In the course of investigating the property, we found that the buyer had recently purchased the adjacent industrial property which had an additional huge parking lot immediately adjacent. We subsequently learned that the buyer had produced the Lego movies and would be housing his production company on-site, and building a larger studio complex that could also be rented to others in the film business.
It turns out that land in Westlake, though selling at a relatively high price per square foot was actually far less expensive than buying into the Hollywood area. The buyer had looked in Hollywood and the Arts District for some time, but could not find the amount of space they wanted in a reasonable price range.
Further, according to our research, Netflix has pre-leased the entire Sunset Bronson Project on Sunset Blvd, and developers have added more than a million square feet to the Hollywood market in the last several years, while vacancy has remained stable. In addition Warner Music moved into 257,000 square feet in the Arts District.
The House That Lego Built moved farther east, adjacent to downtown! Will more media companies follow? It seems like a good bet - and
Everything is Awesome
For more, see this article,
Very Very High End Homesites
Every so often, our analytic work takes us t
o places where few will tread.
And if we do tread on the pro
requires hiking gear.
Over the past year, Norris Realty
Advisors was retained to estimate value for a very unique property in Southern California. Some of the characteristics of
the work involved:
- The need for extensive grading of 45 degree sloping hillsides with commanding view of the Pacific Ocean and all of Los Angeles
- Requirement for a switch-back and cantilevered concrete access road costing several million dollars - just for basic site access.
- Proposed completed homes of from 50,000 to over 75,000 square feet. Yes, you read that correctly.
- Recent press accounts of developer legal troubles in the area due to the growing eagerness to fit in extra mansions in risky hillside locations.
- Median home values in 2017 of more than $5.5 million.
- A preponderance of often irrational home buyers with lavish lifestyles and ego-driven motives.
Local market experts have noted prices in the area range from $100-million guard-gated mega-mansions to $600,000 homes on smaller lots. Because of that diversity, clear-cut comparable sales are hard to come by.
It is quite difficult to value homes in a mixed neighborhood with these characteristics. This furthers the notion that this market area is somewhat of an anomaly, and developers may have a difficult time targeting the right buyer.
Our research lasted well over a month, and revealed that the local luxury residential market has recovered well and pricing is well above pre-recession levels. However, a number of sources interviewed indicated that this same market has plateaued over the past six months, and there may be little room for future appreciation, particularly in light of anticipated interest rate trends.
Housing prices have reached an all-time high point, but growth has slowed to an almost stagnant pace. Additionally, market participants are cautious moving forward as the housing market expansion has continued for some time, with the overriding concern now being how long housing appreciation can continue.
For more on the somewhat bizarre world of high-end hilltop land, read this
. Note, this is
the property studied by our firm.
Fire Sale - Luxury Condos?
Just this past week, news emerged that a very large and unfinished luxury condominium tower development in Downtown Los Angeles will be put on the market - at pricing reported to be over $400 million.
We consider the implications of this listing to be significant, as it illustrates two issues that have concerned us for some time:
- As noted in the press release related to this, the listing suggests trouble is brewing with capital flows for some major Chinese developer/investors. This issue has been of note for some time in the residential markets of Southern California.
- This is further evidence of a latent softness and overbuilding in the luxury high rise housing market in Downtown.
Could this listing be the first crack in the otherwise impenetrable armor of real estate markets in the Southland?
Only time will tell.
For more on this news item, go
|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