Economic metrics indicate that the economy is “on fire” with the lowest unemployment rate in 50 years. Headlines read: “Trump tax breaks giving companies more profits!”. The data shows the fundamentals of the economy are strong overall. In actuality, our view is more like an old cheeky television ad: things are “good, but not great”.
Last month, Rising Realty Partners granted us a tour of The Trust Building, a historic building now in the midst of a full restoration in Downtown Los Angeles.
Completed in 1928 at 433 S. Spring Street, the 11-story structure will offer 338,000 square feet of rentable space atop ground-floor retail upon completion later this year. Originally known as the Title Insurance and Trust Building, it is being redesigned by a team that includes Gensler and Architectural Resources Group to make the vintage property appeal to modern tenants.
Chris Rising is co-founder and president of Rising Realty Partners, a real estate operator and investor based in Downtown Los Angeles. Since relaunching in late 2011, the firm has played a big role in shaping DTLA’s development. Rising Realty Partners is best known for buying the historic PacMutual building for $60 million, spending $25 million to renovate it and ultimately selling it for $200 million — a record Downtown sale at the time. Last year, the firm paired with Colony NorthStar in the purchase of One California Plaza for $460 million. Rising is currently working on a renovation of the 320,000-square-foot former Title Insurance Building at 433 South Spring Street.
In recent months, the Los Angeles area has seen a dramatic increase in the number of electric scooters (e-scooters) on the roads, particularly on the Westside in the neighborhoods of Venice and Santa Monica. We should expect to see more e-scooters in other parts of LA now that the Transportation Committee has approved guidelines for dockless electric scooter companies to operate within city limits, especially in DTLA. We also believe cities with thriving urban cores like Glendale, Pasadena, Burbank, and Long Beach will soon see an influx.
Massive mixed-use projects like Metropolis and Angels Landing are helping to transform Downtown Los Angeles, but the neighborhood is still “adolescent at best. It’s not even driving yet,” according to one prominent new development broker.
At Rising, we embrace technology that allows us to work smarter, not harder. In this digital age, so long as there’s an internet connection, you can work from anywhere in the world. We see the effects of that in the workplace as offices evolve more into flexible meetup spaces for collaboration and presentations, compared to the traditional 9-5, fixed routine of having to ‘go to work’. While telecommuting can certainly complement a company’s existing culture and cast a wider net in attracting candidates, too much of it can actually do the opposite. If a company relies solely on telecommuting employees, there is no company culture – and ultimately every company needs cultures to succeed.
We recently shared a few cities that are on our radar as great investment opportunities. All of them are in the Western U.S. and as we head into Q2, I can tell you that Rising is still bullish on many parts of the Western U.S. market. As our company expands and we seek markets beyond DTLA, the Western U.S. continues to offer incredible opportunities. In order to properly assess the changing real estate market, we have to look at what’s happening in these Western cities in terms of demographics.
At Rising, we are always monitoring market trends and cultural shifts in the workplace. By having our finger on the pulse, we’re able to understand, predict, and ultimately exceed the needs of our tenants. That said, we know that millennials are the largest workforce this country has ever seen, and they are continuously redefining modern work culture as we know it. While it may sound trite, the modern workforce has different priorities than previous generations.
Connect Real Estate Los Angeles featured a jam-packed afternoon of conversations, networking and presentations. More than 500 gathered at the Hotel Indigo in DTLA and heard from commercial real estate leaders and economists about the trends driving decisions in Los Angeles.
In December, Congress passed the most comprehensive change in the tax code since 1986. While we do not yet know for sure how those changes will affect commercial real estate, the general consensus here at Rising is that the overall impact will be positive. We may see corporations utilize the extra cash from their tax cuts for built-to-suit developments or new headquarters, or grow their employee base and expand their leased space. This means there could be slightly more demand from the tenant side in both the capital and leasing markets.
Last fall, CBS put its Television City compound in West Los Angeles on the market, saying that it was worth a lot of money that could be “used better elsewhere.” Other film and TV companies that own vast studio lots in the same area, such as 21st Century Fox, Viacom and Sony, should follow suit.
Rising Realty Partners has unveiled three-dimensional renderings of the Trust Building, an office restoration project now underway on Spring Street. Built in 1928, the 11-story, 320,000-square-foot building is located at 433 S. Spring Street. The historic structure, previously slated for adaptive reuse as condominiums, is instead being retrofitted as creative office space with ground-floor commercial space.
Property management firms are proving to have an important impact on driving value and the success of an asset. One example of the growing importance of property managers is Catalina Landing. Colony Northstar purchased the struggling 280,00-square-foot office property in August 2015, and hired Rising Realty Partners to develop and execute a strategy to turn the property around.
The CalEdison Building at 601 W. 5th St. in downtown Los Angeles recently signed three new tenants: Digital advertising company TubeScience; furniture dealership Systems Source; and market researcher H&M Innovation Labs, according to a statement by building owner Rising Realty Partners.
For roughly three million people, the ultimate personal and team challenge is a Tough Mudder race. These races are obstacle courses between 10 to 12 miles long and the obstacles play on human fears like fire, water, electricity and heights. According to the Tough Mudder organization, the main principle revolves around teamwork. In talking with our team throughout the last year, I have come to believe that there are a lot of parallels between running a Tough Mudder race and the year we experienced. In the end, we completed the year in a strong position, we worked well together and had some real wins. However, it was not without its fears, its slow pace and its unknowns.