When Salesforce CEO Marc Benioff designed the layout of his company’s flagship new building in San Francisco, he brought in Buddhist monks for help. The enterprise software billionaire was developing Salesforce’s new headquarters, the tallest skyscraper in all of San Francisco, while...
In January, office rents in San Francisco eclipsed those of New York to become the most expensive in the country. Two months later, there are signs the San Francisco may not maintain its dubious position for long. The biggest indicator? There’s suddenly...
Amazon to open 2nd physical bookstore, this one in Southern California
Amazon will open its second physical bookstore in the summer — this time in Southern California — venturing further into the business that it squeezed over two decades. Called Amazon Books, the store will be located at Westfield UTC mall near UC...
Mall Renovates For Comeback
Los Angeles Business Journal
Lagging behind the times and preparing to lose its anchor tenant, the Westside Pavilion is ready for a fresh start. The 31-year-old West L.A. shopping mall is planning major renovations to attract customers. “A lot of those old-fashioned ’70s and ’80s malls need...
HealthInsight Management Corporation leases at 700 North Brand Blvd. in Glendale. Deal represented by Phil Petruso of Cresa.
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John Cushman III on returning to his roots as a broker, IPO rumors and Donald Trump
The career of John Cushman III is about to come full circle. He got his start as a broker at Cushman & Wakefield, the firm co-founded by his grandfather and uncle, fresh out of college. In 1976, he headed up its...
LA's Unbuilt NFL Stadium Already in the Running to Host the Super Bowl
Fun fact about Los Angeles: it was the site of the very first Super Bowl back in 1967. More than 60,000 fans packed the LA Memorial Coliseum to watch the big game, launching a winter tradition that's morphed into a multi-million-dollar...
How Monks Convinced Marc Benioff To Install 'Mindfulness Zones' Throughout Salesforce's New Offices
When Salesforce CEO Marc Benioff designed the layout of his company’s flagship new building in San Francisco, he brought in Buddhist monks for help.
The enterprise software billionaire was developing Salesforce’s new headquarters, the tallest skyscraper in all of San Francisco, while Vietnamese zen master Thich Nhat Hanh stayed at his house with an entourage of 30 monks. The group visited Salesforce’s offices and didn’t like what they found. “They said everyone was talking all the time and working all the time, and I said, that’s what we do here,” Benioff told a group of chief information officers and founders at the Forbes CIO Summit in Half Moon Bay on Monday. A company driven by salespeople for salespeople, Salesforce made for an unlikely place
Benioff and the monks “negotiated.” The result: mindfulness areas on every floor of Salesforce’s new building.
For Benioff, the new spaces are part of a philosophy to innovation the Salesforce chief encourages other founders and CEOs adopt. “You need to create space and connect with people that are innovative,” Benioff said Monday. Seeking out a range of experiences outside of one’s comfort zone can help a business leader develop what Benioff calls a “beginner’s mind.” Benioff’s formula for thinking flexibly includes daily meditation and experiences from swim trips in Hawaii to a stay in a yoga ashram in India.
Easier said than done when you’re not bringing in nine-figure sales deals, like Salesforce did last quarter. But Benioff also noted that in Salesforce’s early experiences, the company didn’t translate that mindset into fancy office meals or perks. Salesforce’s early cultural investment was in volunteerism, its cofounder explained. “You got seven days paid off for it. We weren’t going to focus on keeping you until 3am or doing your haircut.”
Benioff disputed the notion, relayed by managing editor Bruce Upbin, that successful executives from a recent Forbes profile of Starbucks SBUX +0.03% billionaire Howard Schultz that founders might be smart to focus on public service after achieving significant scale with their business. “It’s probably just what Howard said to you as a business publication,” Benioff pushed back. “If you spend five minutes with him, this is what he knows. One of the greatest things about being an entrepreneur is you’re expressing yourself back into a business,” says Benioff.
Benioff finished by returning back to the Buddhist monks and their observations of U.S. work culture from lectures they made in California during their stay. The monks told Benioff they could tell audiences were coming to hear him just to take a break from their over-stressed schedules. “They said people seemed trapped in buildings and could never get out,” says Benioff. “These monks really got to me in case you couldn’t tell,” he told the audience to laughs. “And they helped me design our new real estate.”
In January, office rents in San Francisco eclipsed those of New York to become the most expensive in the country.
Two months later, there are signs the San Francisco may not maintain its dubious position for long. The biggest indicator? There’s suddenly 1.7 million square feet of sublease space available in San Francisco, up more than 50 percent from 1.1 million square feet in November, according to CBRE Group, a commercial real estate services and investment firm.
That kind of jump in four month’s time suggests ripple effects from a funding slowdown that stretch beyond a small but growing number of layoffs.
If the trend isn’t giving local landlords flashbacks of the late ‘90s, it may soon. The Bay Area’s real estate market enjoyed an historically active 2015, with San Francisco accounting for the world’s highest rent growth at 14 percent, according to brokerage Cushman & Wakefield. (Oakland saw the third biggest jump in rent nationally, said the brokerage.)
The last time San Francisco surpassed New York in price per square footage, says CBRE, it was 2000, the same year that the tech market famously peaked then abruptly imploded.
Of course, today’s volatility in the public tech sector pales in comparison to the tech market nosedive that followed the dot com boom of 16 years ago. The slowdown in venture investing isn’t as sudden or severe, either, making it “too early to tell” if the economy has turned in a meaningful way, says Colin Yasukochi, director of research and analysis at CBRE. Still, says Yasukochi, “There are definitely signs of change. It’s mostly a question of how severe they are, and how they evolve.”
Bay Area brokers, landlords and tenants appear to be in a kind of discovery stage at the moment. On the one hand, despite the dramatic increase in subleased space that’s become available, new tenants aren’t seeing a huge discount, which is usually an indication of a weak market.
“It depends on how long the lease is – one, two or five years or more – in terms of cost,” says Yasukochi. “But if you compare a good quality sublease space to a good, quality space direct from its owner, you’re seeing maybe a 10 percent markdown.”
It’s when discounts rise to 30 and 40 percent that a market is officially in trouble, says Yasukochi.
Yasukochi says another clue that the market is holding its own centers on commercial real estate development, which has been booming in recent years and continues for now.
“I haven’t seen developers stop their projects yet,” says Yasukochi, who began tracking the real estate industry in 2000. “Most of the buildings that are under construction right now are fairly well under way, and the one office building in downtown San Francisco that’s just starting construction right now appears to be going ahead with its plans.”
According to Colliers International data, four properties completed construction in San Francisco in the fourth quarter alone, opening up 1.2 million square feet of new space to the market. Notably, all the newly completed construction was pre-leased, with tenants scheduled to take occupancy during the first half of this year.
In fact, Yasukochi says that “we’re not really seeing landlords trying to increase rents and otherwise tighten terms for tenants,” which is a clear sign of nervousness.
That may be starting to change, though. So suggests Evan Combs, a San Francisco-based advisor at Cresa, a corporate real estate advisory firm that helps tech startups land the right space and which began to observe the increase in subleased property in the third quarter of last year.
Combs says that while “we haven’t seen landlords shifting their pricing plans yet,” he and his colleagues have registered more “landlords now trying to tie up their vacancies. If they can lock someone in for five to seven years,” they’re going to do it.
CBRE’s Yasukochi also notes that the real estate market typically lags the broader investment market by half a year. That could mean that if the market is going to get squeezed, that shift is around the corner.
“When the stock market peaked in April 2000, the real estate market reacted six months later,” he says. “The same thing happened 2008. Whether this market peaked last July when the Nasdaq hit 5200, or it effectively peaked in the fall or later,” possibly when mutual fund investors began publicly marking down their private company holdings, is an open question, he notes. Either way, he adds, “I’ve got to imagine that any new starts this year will be scrutinized much more.”
Plainly, so will the amount of space that tech companies need to make it through what could be a painful year, given a mostly shut IPO market and investors who are thinking harder about each check they write.
Such reassessments aren’t such a terrible thing, particularly given the runaway perks that startups had begun to offer their employees. There’s less pressure to build an office slide when everyone else is cutting back on spending.
The growing amount of subleased inventory is good for nascent tech companies, too. While startups “still request those personal touches – they all want the communal kitchen and the game room,” Combs says, startups and their backers have also grown “more opportunistic.”
Though subleases aren’t coming at a huge discount (yet), startups are still benefiting from entering into space that other tech companies previously occupied. “The infrastructure is in place,” says Combs. “These offices require less build out.
“That cash flow preservation” at a time when startups need it the most.
Amazon to open 2nd physical bookstore, this one in Southern California
Amazon will open its second physical bookstore in the summer — this time in Southern California — venturing further into the business that it squeezed over two decades.
Called Amazon Books, the store will be located at Westfield UTC mall near UC San Diego. New signs posted in front of the e-commerce company's future bricks-and-mortar location confirm what's been expected since early February, when Amazon advertised online for Amazon Books store managers, booksellers and device enthusiasts.
The Seattle company already operates a bookstore in an upscale shopping center in its hometown and could eventually open up to 400 bookstores, according to a recent earnings call from mall operator General Growth Properties Inc.
"We are excited to be bringing Amazon Books to the University Towne Center Mall in San Diego and we are currently hiring store managers and associates," Amazon spokeswoman Sarah Gelman said. "Stay tuned for additional details down the road."
Amazon is jumping in at a time when many independent bookstores are enjoying an upswing after titanic shifts in the industry, including the boom in buying cheap books online and the rise of e-books.
Many small booksellers are seeing sales increases, buoyed by the "shop local" movement that has pushed many customers to patronize their neighborhood shops instead of buying online. Some bookstores are even investing in new branches and finding buyers when their original owners retire, said Oren Teicher, chief executive of American Booksellers Assn.
In 2015, the group had 2,227 bookstores on its membership roster, up nearly 35% from 2009. Members also reported a more than 10% rise in unit book sales from 2014.
Many booksellers are worried about the effect Amazon's offline efforts will have on bookstores.
Amazon "dominates the book market," said John Mutter, editor-in-chief of Shelf Awareness, an online newsletter for booksellers and librarians. "In some ways it feels like they want to get into brick-and-mortar book retailing to try and disrupt the one part of the business they don't dominate."
Analysts say that Amazon could also be experimenting with using physical stores as smaller versions of distribution centers, which it has been aggressively opening in recent years to ensure speedy delivery times. Orders can be shipped directly from the stores, while the locations themselves can serve as convenient places for shoppers to browse products and return items in person, industry watchers said.
The San Diego store will presumably resemble the Seattle location, which sells a limited selection of Amazon's best-reviewed books. That venue also doubles as a showroom for the e-commerce brand's expanding hardware lineup, which includes its Kindle, Fire TV, Fire tablets and Echo. The Echo, the company's latest gadget, is an in-home personal assistant powered by artificial intelligence.
Mutter, who has been to Amazon's Seattle store, said he was surprised by its sparse book inventory. The shop seemed to be more a showcase for devices, he said, than books.
"For a store of that size, they don't have that many books compared to what an independent would have," Mutter said. "I had this distinctive reaction," he joked, "that cash flow is bad, so they can't afford inventory."
In some ways though, Amazon's first two bookstores will mimic the formula of many traditional bookstores — opening up shop where affluent shoppers are.
The San Diego store will be located in an upscale mall adjacent to a Tesla store and across from an Apple store. In the same mall, other e-commerce companies such as menswear retailer Bonobos and trendy eyeglass company Warby Parker have also put down physical roots.
The shopping center matches the style and retailers of University Village, the Seattle-area mall where Amazon's first bookstore opened in November. That location spans 7,500 square feet, with approximately 5,500 square feet of retail space.
The Westfield UTC mall represents a great "showcase" location for Amazon, said Miro Copic, a branding expert and marketing lecturer at San Diego State. San Diego's demographic makeup presumably matches that of the e-tailer's online customer base, he said.
Copic anticipates that Amazon will use the San Diego venue to sell its entire brand — not just books — and teach shoppers about the perks of Prime membership, such as music and TV content, or educate them on the advantages of owning an Echo.
"It will be a way to have the Amazon experience at the mall," Copic said.
Both stores are near big colleges, which could provide a boost from students curious to check out Amazon in person after regularly ordering from the website.
It remains to be seen whether Amazon will undertake a serious expansion into real bookstores.
"I suspect it's a test," Forrester analyst Sucharita Mulpuru said. "Two small stores aren't going to change the fortunes of a company" that has topped $100 billion in annual sales.
Lagging behind the times and preparing to lose its anchor tenant, the Westside Pavilion is ready for a fresh start.
The 31-year-old West L.A. shopping mall is planning major renovations to attract customers.
“A lot of those old-fashioned ’70s and ’80s malls need to really change to meet the needs and the desires and lifestyles of today,” said Clare De Briere, president of downtown L.A. developer Ratkovich Co. “If they take dramatic action, they’ll be fine.”
Spokeswoman Karen Maurer of Macerich Co., the Santa Monica owner of the Westside Pavilion, said its renovation plans are still in development and did not know when they would be released.
“We are in the planning process and not ready to share the overall vision yet,” she said.
However, the company has been sharing its ideas with local community leaders over the past few months.
The biggest change on the books is to tear away bunkerlike walls that separate the front of the mall from Pico Boulevard and expose the ground-level shops to the street, according to Barbara Broide, president of the Westwood South of Santa Monica Boulevard Homeowners Association.
“The community is very excited to know the mall wants to revitalize and open up the street,” said Broide. “The mall never really related to Pico.”
Making it work
De Briere believes these new strategies are poised for success.
“Having that street engagement on Pico is fantastic because it’s already a natural retail environment,” she said, citing the famous Apple Pan across the street.
She also said that the families and UCLA students living on surrounding streets would be a natural target audience, and that it would be smart to tap groceries and restaurants as anchor tenants rather than a big-box clothier such as current anchor tenant Nordstrom Inc., which now occupies three stories of the retail complex but is moving next year to a Century City mall owned by Westfield Corp.
“In that location, they can figure out how to make that space work,” said De Briere. “I don’t think the loss of Nordstrom is going to make that much of a difference to the success or failure.”
But Steve Sann, chair of the Westwood Community Council, said the loss of Nordstrom could prompt other Westside Pavilion retailers to flee, possibly relocating to Westwood a couple of miles away.
“With that special retailer leaving the Westside Pavilion, the theory is you’re going to see an exodus of the better retail stores leaving the mall,” he said. “The question is, what does Macerich do to replace them?”
Even with Nordstrom still operating, the mall’s business has dragged over the past several years, Sann said.
“You can roll a bowling ball down those walkways and not hit customers most of the times of the day,” he said.
The Westside Pavilion’s insular design style was popular among other L.A. malls built several decades ago, such as Santa Monica Place and the Beverly Center. At the Westside Pavilion, designed by the late Jon Jerde, the only hint of the outdoors is sunlight streaming through the domed skylight roof.
The Grove, built in 2002 in L.A.’s Fairfax District by developer Rick Caruso, took a new tack by placing shops on faux streets, complete with a trolley car, fountain and park. It was a hit, and Caruso followed it up in 2008 with the similar Americana at Brand in Glendale. Gradually, older malls have embraced the open-air aesthetic.
Santa Monica Place, owned by Macerich, stripped away part of its roof and created an outdoor dining court overlooking the ocean as part of a $265 million renovation in 2010.
Macy’s Plaza in downtown Los Angeles will reopen this summer as the Bloc after a $180 million renovation that has torn away the mall’s roof to create a three-level retail plaza open to the sky.
The boxy, windowless Beverly Center will soon detail extensive renovations plans.
In addition, Westfield is working on an $800 million expansion of its Century City mall that will lure away Nordstrom from the Westside Pavilion. By next year, the upscale retailer will take over a three-story space there with 149,000 square feet.
“We believe we can offer customers a better shopping experience in a new store that will include our latest design concepts,” said Jamie Nordstrom, president of stores for Nordstrom, in a statement last year.
Broide said plans for the Westside Pavilion could include a revamped exterior with “lots of glass.” The ground-level parking lot behind the mall might be expanded to two levels, so shoppers can access the second level of shopping directly from their cars.
The third floor could be converted into creative office space, which Broide thinks would be an appealing location given the local restaurants and the upcoming light-rail station a few blocks away at Sepulveda and Exposition boulevards. She also said that Macerich had discussed Whole Foods Market Inc. replacing Nordstrom.
On the opposite side of the mall, Macy’s Inc. has shown no interest in renovating its massive store and attached parking lot.
On a recent weekday evening, a handful of customers strolled along the polished tile hallways of Westside Pavilion while music from the likes of Carole King and Adele played through the speakers. At the food court, about 15 tables were occupied, mostly by families who sent toddlers to play in a carpeted zone for kids.
A food retailer, who did not wish to be named because he was not authorized by Macerich to speak to the press, said his customers are mostly locals and thinks service-based businesses such as children’s activities or beauty salons could help drive foot traffic.
Several Santa Monica College students, including Zen Teo from Singapore, said they came to the mall to eat and shop simply because it is the closest retail center.
“I like this mall, even though it’s quiet,” said Teo.
-Daina Beth Soloman
John Cushman III on returning to his roots as a broker, IPO rumors and Donald Trump
The career of John Cushman III is about to come full circle. He got his start as a broker at Cushman & Wakefield, the firm co-founded by his grandfather and uncle, fresh out of college. In 1976, he headed up its first Southern California office in Los Angeles, with his hands in many of the deals that shaped Downtown L.A.’s skyline. He left in 1978 to start his own firm, Cushman Realty Corporation, with his twin brother, Lou Cushman. When that firm merged with Cushman & Wakefield in 2001, he moved all the way up in the ranks to chairman.
Now, after selling his stake in Cushman & Wakefield as part of its acquisition by DTZ, Cushman is preparing for a return to dealmaking. He’ll be a broker in his role at the merged company, and he could not be more excited about the comeback. In fact, he’s champing at the bit.
We sat down with Cushman in his skyline-view office at 601 South Figueroa Street, decorated with an array of Western memorabilia, to chat about the merger, IPO rumors and the upcoming election.
I was in New York because I am the chairman of the centennial which is the 100th anniversary of (Cushman & Wakefield). It is big deal. We are 43,000 people in 60 countries, 6 continents, 250 offices. We operate 4.3 billion square feet across the world. That is the equivalent of every office building in New York from lower Manhattan to Harlem, ten times over. The company will be looking at acquisitions that fit into the battle plan of what the company wants to be doing. It is a big, big company. We had a very good 2015.
So you divested your remaining interest in the company…
And how has your role change since the merger?
I am going back into brokerage, doing what I have done forever. It will not be a complicated transition. My new contract will be signed by the end of March. Before, I was involved in every aspect of the company as a director. I was on a salary and a bonus. That is all going to change when I go back to being a broker. I’m OK with that. I never really stopped (making deals). Even when I was a salary guy, I was doing it. I was just doing it differently.
What is your title now?
My title is now Chairman of Global Transactions and Chairman of the Centennial, the 100th Anniversary. So I have two titles.
So you’re going to be much more hands on now?
I am going to be a hell of a lot more hands on as it relates to transactions, yeah. I am going to be like glue, all over it.So is it kind of a return to some of your earlier days?
Yes. I’ve had a chance to do the largest office lease transaction in the world (the almost 4 million-square-foot world headquarters of Merrill Lynch & Company at the World Financial Center in New York) and sell billions of dollars worth of buildings and I am excited (to return) to that.
Will it be hard to readjust back to dealmaking?
A lot of people probably figure that after you have been out of it for 16 years that maybe I’ll have a hard time. I promise you that they will be disappointed. I will not have a hard time. I’ll be a force right out of the block.
What are you are working on right now?
We are handling this building (motions to the $1.2 billion Wilshire Grand Center being developed by Korean Air outside the window). It will be the tallest building in the Western United States. It will open in April of 2017. The tallest building now is the Library Tower. That’s a project that I put together with Maguire Thomas Partners. This building will be incredible.
You’ll be personally involved with leasing it?
Yes. It has 356,000 feet of office space, 900 hotel rooms, a small amount of retail at the base. First of all, from the last (big office tower Downtown) that was built to this building, when it is completed, it will have been 24 years. So technology on everything has changed: structural, mechanical. The ceiling height on each of these floors is going to be 10 feet high. The ceiling height in most office buildings when I started was 8’6. So it is going to be a very exciting space. The hotel will be over the top. Intercontinental is going to run it. There will be a restaurant on the top that they will be in charge of. We have 8 serious tenants looking for office space.
Are you pre-leasing the office space?
We can’t move them in until we get to the top floor and get a certificate of occupancy for the whole building, which is projected to happen in April of 2017.
I have to ask: is an IPO impending?
Well, Brett White, the CEO, has said publicly that at a point in the next couple of years, an IPO is, according to him, a distinct possibility. The stars have to be aligned correctly when you do this. The economy has to be right. The real estate world has to be right. But the people at the company in the leadership are very bright, they know what they are doing. So I would say it could happen.Now that you are a merged company, who is in charge of Southern California?
Well, Andrew McDonald was in charge of the LA office. He now has a new job where he is in charge of L.A. and Orange County. That is a big job. The CEO of the company is Brett White and he was the CEO of CBRE. He knows the business cold. Tod Lickerman is the global president. Tod is in Chicago, and he was the CEO of DTZ. The world headquarters of the company used to be in New York, it is now Chicago. We have a lot of new people.
How is the integration process going?
Ask anybody, integration is not simple. We merged Cushman Wakefield with DTZ and changed the name of the company to Cushman & Wakefield. But it wasn’t just two companies, they had already acquired Cassidy Turley and a few other companies. So there are several companies that need to be integrated into the system. For me, it hasn’t been difficult, but I don’t think I represent the average person at the company who maybe feels like they should be communicated with more frequently. Sounds like a long term process. Will there be more layoffs?
We put the company up for sale in January 2015 and by May we reached agreement an agreement that we were going to sell the company to (DTZ). I was on the strategic review committee that was comprised of three people. We closed on September 1st. So we are not even a year into it. It is going to take some time. There will be a lot of overlap in areas like HR and accounting, finance, tax, legal, administration.
Is that in every area or certain geographic areas?
I think you have a lot of overlap. If DTZ had an office and we had an office, there is overlap, right? And they had a lot of offices.Will the company be adding more brokers to its offices here?
It is very hard for brokers in some of these companies to compete (with Cushman & Wakefiled) because they don’t have a global platform. If the tenant has a requirement in Poland, what are they going to do? That was a problem at my old company, Cushman Realty. At some point I knew I was going to run into a wall with that. So the answer is, of course. We will be looking to acquire companies or business that are additive and accretive.
How do you feel about the Super Tuesday results?
Well, look, Rubio won one state, Trump won six. Bernie Sanders won four. And Hillary won a lot. I think that Hillary is going to do well. That’s a lot of states. I don’t know, I think it could be that we get to the end of the line and nobody has enough delegates and in that case we have a brokered convention. I don’t know what that means. I really don’t know what happens then. I am concerned about the process. The dialogue in the GOP debates and the low blows have not been appealing to me.
Is it safe to say that there isn’t a candidate that you are totally behind in this race?
I was, but not now. My candidate left and that’s not important who it was. But I was a big supporter and worked hard. Right now, I am thinking. I haven’t made up my mind which candidate I am going to get behind. The election for me has been a disappointment, because it has been a circus.
Is there anyone that you feel that is acting respectfully in this process?
I think that (John) Kasich has been respectful. He is not going to win. I mean it seems like everybody has some baggage. Trump, Rubio, Cruz, Hillary. I don’t know about Bernie. I certainly wouldn’t want to be in a situation where he was in charge of anything. He is just left of the socialists. If it was a popular vote, California would be really important. Because there are plenty of Republicans, there are just more Democrats. The state has so many delegates. I was a delegate from California in the last GOP convention in Tampa, Florida.
What is the biggest mistake that you see young brokers make?
Well, sadly, the one big difference from when I got into the business to today is that the word loyalty has left the vocabulary of people. People go from one firm to another. It is disappointing to me that people don’t have more loyalty.
Many millennials and young people live off their handheld devices and computers. They ought to know how to write a handwritten note if someone takes them out. Or type a letter. And not think the world revolves around emails. These devices are incredibly impersonal. I would never follow-up a dinner with somebody without writing them a letter. It would be like having a close friend die and writing the spouse an email. To me, that would be in such poor taste.
What are young brokers doing right?
I think young people today care much more about balance in their lives. I think that must be a good thing. I didn’t do enough of that. Where you have to balance between your family, children, your company, your extracurricular activities, the things you care about in terms of charity. I think balance is important and I would say that my four sons are doing a better job on that score than I did.As you mentioned, we’re seeing a lot of movement lately in the commercial brokerage world. You’ve seen multiple real estate cycles.
Does this often happen when there is consolidation?
I think you’ll see more consolidation of companies and more people jumping ship from one company to another company. Some of these companies are throwing out enormous amounts of cash that they are offering to brokers to move from where they are to a new company. Let’s face it, there are a lot of people that are very attracted by greed and if they can get some money they think it is attractive. With a platform and all sorts of things that they ask for, they are going to think about doing it.
You’re selling the Zaca Mesa winery you own in Santa Barbara…why?
Well, it is very simple. I’m going back into brokerage and am going to be incredible involved so it is a matter of (not having the) time. I started the winery 44 years ago with my twin brother, Lou. It was kind of a wild idea because nobody knew whether Santa Barbara was going to be a good area to grow grapes. It turned out that it was a good area. We own 100 percent of it. There are no other partners. So I tried to figure it out with my sons. My oldest son is an investment banker. He lives in Bronxville, New York and works in New York City. He can’t do it from New York. My next son is Jeff who is a very successful commercial broker with Cushman & Wakefield in the Silicon Valley, in the Bay Area. But he is working seven days a week, so he does not have the time. My third son, who lives in Hermosa Beach, Stuart, has two partners in the hotel business. They buy hotels, renovate hotels, build hotels, and he is as well too busy. All of my boys have two degrees. Stuart is helping me with the sale.
Have you seen interest?
We have people that are interested in it. I don’t want to rush. I don’t know when it will sell. I know someone will find it incredibly interesting. When you get out to our vineyard, it’s just like it was 10 million years ago. That’s not true in Napa. Napa is like being at 42nd Street in New York.
Based on what you’ve seen in previous cycles, do you think some of the major developments in Downtown L.A. could stall out in a downturn?
I would say that I think there has been a slowdown in a lot of cities. The activity in the high-end residential in New York City has slowed down. The condo pricing has dropped a little bit in Downtown L.A. Do I think it will slow down more? Maybe. I always say to my boys that the early bird gets the worm. The harder you work, the luckier you get. I think the people in our business and our company and our competitors, the ones that know the business well and work hard, they’ll have good years.
Do you expect that most of the proposed developments in Downtown L.A. will be completed?
I think that if they come out of the ground, they are not going to stop. They worked out all the loans. They closed. Could certain people in certain cities lose buildings? The answer is yes. Real estate developers take a lot of risk. The market could change where the rent that you thought that you needed for your pro forma all of a sudden goes down and you suddenly can’t meet your debt service. You are going to have a problem.
It seems like office leasing is slowing down in downtown L.A…
Well, it has been slow in downtown L.A. My activity will be in India, Mexico, London, in Anaheim, Newport Beach, Orange County, Northern California, Chicago, New York. For me, the world is my oyster. So I am going to be working anywhere. Markets change. You can’t ever generalize about markets, you can’t ever talk about the macro, you have to talk about the micro. You have to figure out why this particular situation is the right place for a tenant or a developer to build. Generalizing will get you in a lot of trouble in the real estate world.
What is the biggest problem facing commercial real estate in this area?
The state needs to make California more attractive for businesses. The taxes are too high. The cost of housing is too high. The commute is too long. The regulatory environment needs to be streamlined. These other states and cities have figured it out, not California. So we have too many people and businesses leaving California and that is sad. The biggest job if I was in charge, I would want to make sure I didn’t lose people and existing companies. Make it attractive to the people who remain and hope they grow. And then, when you really have your act together, make it attractive for new companies.
LA's Unbuilt NFL Stadium Already in the Running to Host the Super Bowl
Fun fact about Los Angeles: it was the site of the very first Super Bowl back in 1967. More than 60,000 fans packed the LA Memorial Coliseum to watch the big game, launching a winter tradition that's morphed into a multi-million-dollar sports spectacular, featuring Coldplay. In the decades to come, the LA area would host six more NFL Championship games, culminating in Super Bowl XXVII at the Rose Bowl in 1993. One year later, the NFL was out of Los Angeles completely, and the big game hasn't been back since.
But now the NFL is returning to LA (the Rams, if you haven't heard) and soon it may see its decades-long Super Bowl drought come to an end. NFL owners are meeting later this year to decide the Super Bowl venues for 2019, 2020, and 2021, and, according to KPCC, LA's future NFL stadium in Inglewood is in the mix.
In May, NFL's Super Bowl Advisory Committee will convene in Charlotte, North Carolina to decide among the cities vying to host Super Bowls 53, 54, and 55. Los Angeles is among those in the running for the latter two events. Owners will be deciding between Atlanta, South Florida, Tampa, and Los Angeles.
LA's $2-billion NFL stadium won't even be finished until 2019, but it's already made it on the NFL's radar in a big way—they've even made some rule changes to help LA's chances. Normally, the league requires a stadium be in use for two seasons before it becomes eligible to host the Super Bowl, which would have put the Inglewood stadium out of the running until at least 2021, but the league has recently waived that requirement. And LA's Inglewood stadium is the only future NFL stadium that would benefit from this rule change.
Besides LA, only Minnesota and Atlanta are set to open new NFL stadiums, and Minnesota is already hosting the 2018 Super Bowl two years after it's 2016 opening. Atlanta's stadium would be two seasons old by the time 2019 rolls around. So it seems as if the rule change was made specifically to put LA in the running.
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