Friday, June 26, 2015

Silicon Beach is Officially Spreading to the Venice Boardwalk

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Tech businesses continue to spread and booting out other businesses in their path. A brand new 28,000 snazzy building is coming offering a huge office space on the Venice Boardwalk. 

Silicon Beach is Officially Spreading to the Venice Boardwalk
ocean fron walk.jpg
Thursday, June 25, 2015, by Bianca Barragan

The Silicon Beach effect is spreading through all of Venice like wildfire, with tech businesses flocking to the area and, in many cases, booting other businesses out so they can move in. On the Venice Boardwalk, the creep has been slow and steady: totally-not-just-for-sexting app Snapchat began in a rented former pot shop on the Boardwalk, then later moved into a spot in the Thornton Lofts (and with a bunch of other nearby locations). Now there's a possibility that an actual full-on, glassy office building could be coming to what's now a parking lot right on Ocean Front Walk, says Yo! Venice, and word is that there's already a tech tenant circling.

The plan calls for a snazzy, 28,000-square-foot structure that, from the available rendering, appears to be three stories tall. According to city planning documents, about 22,800 square feet of that would be offices, with about 5,200 square feet of retail space and one residential unit. There are also two levels of underground parking planned. The architect who designed the building, Venice-based Glen Irani, says there's an "active permit" for the site that allows a building of roughly the same size on the lot, but one that would be retail and restaurant space—more in line with what's already on the Boardwalk.
Irani says he told the owner that restaurants are gross and that an office would be better for the spot:

"It's an economically viable option, but certainly not the highest and best use nor the most neighborhood friendly use. Such a use would entail numerous deliveries every day, food trash odors, homeless lurking for food trash, constant vehicular traffic, and possibly a bar or two with loitering drunkards after-hours as most every bar does have," Irani says. It's rumored that there's already a tech tenant waiting in the wings for the office complex to be built (Yo! Venice suspects it's Snapchat, which is currently spread out across several locations that are close but not unified and seems constantly to be signing more and more leases.)

Neighbors who were present at a community meeting to discuss the potential development seemed mostly worried about the loss of the parking lot, which many of them actually use.


Friday, June 19, 2015

New owners plan $30-million face lift for Promenade at Howard Hughes Center

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Howard Hughes Center mall on the Westside is getting a major makeover to meet the demands of the changing demographics of the area as thousands are moving into area of Playa Vista which is within walking distance. It will be another positive addition which was spurred in part by the purchasing power due to the proximity of both residents and employees who live and work in the area.

New owners plan $30-million face lift for Promenade at Howard Hughes Center

The Promenade 

A rendering of the changes at the Promenade at Howard Hughes Center in Westchester. (Laurus Corp.)

By Roger Vincent - June 18, 2015

The Promenade at Howard Hughes Center, a prominent but dated mall next to the 405 Freeway in Westchester, has been sold to Los Angeles investors who plan to give it a $30-million face lift.

Howard Hughes Center, the neighborhood where the mall is located, has a collection of high-rise office buildings and a growing number of apartments. Soon it will have a total of 1.3 million square feet of office space and 3,200 apartments, said Jean Paul Szita, president of Laurus Corp.

The mall is also close to Playa Vista, an office, residential and retail development being built on land that once was home to the aviation empire of business mogul Howard Hughes.

The investment was spurred in part by "the purchasing power of the residents and employees who live and work in such close proximity," Szita said.

Laurus Corp. bought the mall from Passco Cos. last week. Terms of the sale were not disclosed, but real estate data provider CoStar Group Inc. valued it at about $100 million.

The mall's new design, by Los Angeles architect the Jerde Partnership Inc., calls for more indoor-outdoor uses such as courtyards with landscaping. The installation of south-facing escalators and a new pedestrian crossing on Center Drive aims to make the mall easy to access by pedestrians.

The courtyard adjacent to the Cinemark theater complex will become the new center of the mall, with a new outdoor screening area and fire pit, as well as new restaurants, an outdoor dining area and casual lounge space. The team will also update the current Art Deco retail facades throughout the center to reflect a more modern aesthetic.

The Playa Vista area is experiencing a growth boom. In recent years many technology and media firms that found themselves priced out of Santa Monica and other Westside office markets have gravitated to new and renovated buildings in Playa Vista.

Internet titan Google Inc. last year bought nearly 12 acres at Playa Vista that is zoned for new offices or studios. Google is also expected to lease the massive 1943 hangar where aviator Hughes built his "Spruce Goose" airplane. Yahoo Inc., another huge Internet company, said in January that it will move regional operations from Santa Monica to Playa Vista.

Landlord Laurus Corp. has more than $1 billion in assets under management and is affiliated with real estate private equity firm Ethika Investments.


Monday, June 15, 2015

Is Another Housing Price Bubble Looming?

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Real estate is stronger than ever so put the worries aside as another bubble is probably unlikely. There have been many changes since the last bubble in 2006 which eliminate the threat of a bubble like the last one. These factors are the following:
  • Appraisals tend to err on the low side today, rather than on the high side as was the case during the bubble.
  • Alternative documentation rules that allowed many borrowers to qualify without adequate financial capacity, are gone; full documentation is the rule.
  • The private secondary market in mortgage-backed securities, which financed most of the sub-prime mortgages written during the bubble period, collapsed during the crisis and has barely begun to recover.

All these were important changes that make it fairly impossible to support another bubble as lessons have already been learned.

Is Another Housing Price Bubble Looming?

Jack M. Guttentag  Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania

Many of those commenting on the question, however, don't understand what a price bubble is. It is NOT a marked rise in prices. Sharp price increases are common, and pose no threat to the stability of the economy whereas price bubbles are rare and do pose a threat.

A price bubble is a rise in price based on the expectation that the price will rise. Sooner or later something happens to erode confidence in continued price increases, at which point the bubble bursts and prices drop. What makes it a price bubble is that the cause of the price increase is an expectation that the price will increase, which sooner or later must reverse itself.

Bubbles can only arise in markets where the stock of items is very large relative to new production. If a rise in price immediately stimulates an increase in supply, any bubble will quickly disappear.

Housing meets that condition because the stock of houses is large relative to new construction, but ocean liners have an even longer production cycle than houses, and to my knowledge that industry has never been hit by a price bubble. Something else must be involved and it is quite possible that there is no single explanation.

The expectations of price increases that drove the house price bubble of 2000-2006, which led to the financial crisis, was not limited to consumers looking to buy houses. It also engulfed the lenders who financed their house purchases, and the investors here and abroad who purchased the securities that were issued against home mortgage collateral. Indeed, they were the crucial players in the bubble.

Rising home prices convert virtually all mortgage loans, even those that violate the most sacrosanct underwriting rules, into good loans. For example:
  • The borrower with an adjustable rate mortgage can't meet the new higher payment on the first rate adjustment date in two years. No problem, after two years of price increase, the house will then have enough equity to allow the lender to refinance the loan with a new lower payment.
  • The borrower has no money for a down payment. No problem, after two years of five percent price increases, the borrower will have equity of more than 10 percent.
  • The borrower is a poor credit risk with a high likelihood of defaulting. No problem if he defaults, the price increases will cover the foreclosure costs and we'll get our money back.
The presumption that house prices could only rise was supported by a long record of house price increases interrupted by only occasional declines in specific areas that were moderate and short-lived.

Prior to 2006, there had not been a national decline in house prices since the depression of the 1930s. The premise that this pattern would continue was entirely plausible -- so much so that it was generally accepted by regulators who did nothing to deflate the bubble. Wholesale acceptance by lenders, investors and regulators of the premise that house prices could only rise led to the bubble, which invalidated the premise when the bubble burst -- as all bubbles do.

House prices generally fell between 2006 and 2012, and have been on the rise since 2012, with the increases in some areas bringing prices above the highs reached in 2006. Reports of large price increases are now invariably accompanied by concerns about whether or not another bubble may be brewing.

My view is that we are a long way from another house price bubble. Home buyers, lenders, investors and regulators now understand that a nationwide decline in house prices is possible -- because we recently lived through one. Probably it will take another generation to forget what we learned.

Even if the lesson was forgotten tomorrow, changes that have occurred in the housing finance system as a result of the crisis and the recession would make it very difficult if not impossible for the system to support a bubble. Among the more important changes:
  • Appraisals tend to err on the low side today, rather than on the high side as was the case during the bubble.
  • Alternative documentation rules that allowed many borrowers to qualify without adequate financial capacity, are gone; full documentation is the rule.
  • The private secondary market in mortgage-backed securities, which financed most of the sub-prime mortgages written during the bubble period, collapsed during the crisis and has barely begun to recover.
In many respects, these changes went too far and made the housing finance system less effective, but they did eliminate the threat of another housing bubble. I don't expect to see another one in my lifetime.

Tuesday, June 9, 2015

The Point, South Bay’s new $80 million ‘living room,’ on track for July 30 opening

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The new "Pointe" is on track to open its doors end of July.  It's a new shopping, entertainment destination in El Segundo midway between the South Bay and the Westside. It's central location will feel like a living room of sorts with a contemporary beach feel theme filled with hand picked tenants. Another exciting destination for folks to check out and a definite positive addition to the community.

The Point, South Bay’s new $80 million ‘living room,’ on track for July 30 opening

All the retail spaces open out into a park-like setting at The Point, located in El Segundo at Rosecrans Avenue and Sepulveda Boulevard. May 12, 2015. (Brad Graverson / Staff Photographer) 

Posted: 05/12/15, 7:16 PM

Six months ago, it was a towering mound of dirt. Now, the 45,000-square-foot central plaza finally resembles just that — a lush, grassy patch of land surrounded by trees and shrubbery, with a fountain and fire pits just waiting for final touches.

This is the South Bay’s future “living room,” say developers of The Point, the $80 million retail, dining and office space at the corner of Rosecrans Avenue and Sepulveda Boulevard, next door to Plaza El Segundo. The center is set to open on July 30.

On Tuesday, representatives of owner Federal Realty Investment Trust offered a first-look VIP tour of the 115,000 square feet of retail space, soon to be home to 30 high-end, unique retailers and eateries such as Superba Food and Bread, Mendocino Farms, Soul Cycle, Athleta and a one-of-a-kind Lucky Brand flagship.

The developer on Tuesday announced even more tenants, many the first of their kind or the first in Southern California, including Lou & Grey (sibling of Ann Taylor Loft), prAna, SIX:02 fitness, No Rest for Bridget, Planet Blue, Marmi and Michael Stars. Also included on site is 25,000 square feet of second-floor office space overlooking the plaza.

The development, however, is anchored on nearly each side by in-demand restaurants such as hopdaddy, True Food Kitchen, ShopHouse, North Italia and a new concept by Manhattan Beach restaurateur Mike Simms called Craft Shack.

The developer has lauded its carefully considered mix of tenants.

“We’re always trying to figure out who can play in the sandbox together,” said Bob Baker, leasing consultant for Federal Realty. “Putting together the right mix gives you the right productivity.”

The buildings themselves are a blend of dark wood, navy blue and splashes of bright orange, designed to emit a “contemporary beach casual” feel, with various building heights, pop-outs and scales.

“The materials feel very warm as opposed to coming in and doing all stucco,” said Jeff Kreshek, Federal Realty’s vice president of West Coast leasing.

But the pièce de résistance is clearly the project’s bright, open central plaza. The grassy oasis is already booked for parties, outdoor movies, s’mores by the fire pits, yoga and more once it opens. On Tuesday, construction workers were building the children’s play area, complete with a colorful miniature lifeguard stand on which kids can climb.

“When you look at what’s up and down Rosecrans and Sepulveda, while they’re fantastic properties and very productive, they all lack the sense of place The Point is creating,” Kreshek said. “This 45,000 square feet of effectively park gives you a place where the function of shopping goes away. It’s an experience.”

Nodding to nearby shopping centers and even the big-box stores in Plaza El Segundo next door, Kreshek said The Point was developed to stand out from the rest.

“When you’re going to Best Buy, you go for a function. We wanted something more experiential as opposed to functional,” Kreshek said. “Otherwise we’re just another retail outpost where you drive up, come in, get what you need, get in your car and leave. This is the customers’ place. You can have events here. Go to yoga in the park here. Kids will run around here.”

To keep with the theme of a gathering place, every restaurant in the center will have a large outdoor patio or community space.

“So you’re not just contained in there and pushed out another door on your way out. The (restaurants) are designed to free flow between indoors and outdoors,” Kreshek said.

The architects did their best to make the space feel intimate, but also spacious. It takes about 5 minutes to walk around the entire property.

The Point will have two entrances — one off Rosecrans with a full traffic signal and one off Sepulveda Boulevard — as well as 689 surface parking spaces. The center does not connect to Plaza El Segundo next door because of the active railroad lines in between the two parcels, Kreshek said.
Despite sitting at one of the busiest intersections in the South Bay, the development is not expected to have a significant impact on travel patterns and offers an abundance of parking, Kreshek said last year.

The Point was originally approved by the city in 2005, along with the proposal for Plaza El Segundo, which is also owned by Federal Realty. The City Council at the time enacted a limitation on the total number of car trips for the project.

“That trip cap is not being exceeded with the completion of The Point,” said Kim Christensen, the city’s planning manager.

The traffic effects identified during the environmental review of both projects have been offset through various improvements, including deceleration lanes, the signal at Village Drive off Rosecrans, the extension of left-hand turn lanes and the like, she said, adding that the city feels confident that all environmental and traffic issues were addressed.

The owners of Manhattan Village mall in Manhattan Beach, directly south of The Point, have proposed a $110 million remodel, featuring open-air village-like retail shops and a central plaza, nearly a decade ago. Those plans finally secured city approval last December and continue to move forward.

But Federal Realty is not concerned about the mall remodel, confident in the unique blend of uses at The Point.

“We’re not trying to win Black Friday or back to school. We want to fit into people’s lives,” Baker said. “It’s not a shopping center. It’s a place to go. It’s a place to meet friends. You can have all kinds of events here. There’s a tremendous opportunity we have here.”