Monday Morning Quarterback

(Monday, October 9, 2023)

Tucked alongside a large dorm building on the fringes of Woodbury University’s campus in Burbank is a small but very eye-catching new house. The 425-square-foot home is structured in a gently curving concrete form equipped with a generous porch and a dramatic sloping roof. Slender, carefully staggered floor-to-ceiling windows illuminate the interior. It’s a nice piece of architecture. But what makes it truly remarkable is who built it — and how. The ”Solar Futures House,”?as it is formally known, was designed by Woodbury architecture students and constructed out of concrete using the latest 3-D printing technology. It is the first such permitted structure in the county of Los Angeles, according to Woodbury architecture dean Heather Flood. And it was built by Emergent, a 3-D printing construction firm based in Redding. Most notable is how quickly this project came to fruition. “It was 15 months from design, going through the permitting process with the city and county, working with the printing company and dealing with 14 atmospheric storms.” ?From design to completion in 15 months? In bureaucratic Los Angeles, that counts as damn near?miraculous. But it is an impressive piece of design, achieving a lot in a small space. The layers of 3-D-printed concrete give the walls a geologic look, and the curving shape and high ceilings prevent this intimately scaled studio from feeling like a shoebox. In addition, the covered porch and living room are connected by a sliding door; throw it open and the space feels bigger and airier. The structure they built is all about efficiency. Shower water is recirculated for toilet flushing. The home’s bending form and sloped roof are designed to respond to the angle of the sun over the course of the year, thereby maximizing the generation of solar power. Currently, the structure features one solar array on the roof, which makes the building net zero (meaning no additional electricity is needed to power the home). In other real estate investing news, let’s get under the hood…

World's Billionaires Betting Big On Multi-Family. Bisnow reports the ultrawealthy are increasingly turning to multi-family?properties as their favorite investment. Over the past 10 years, some of the world's richest have more than doubled their investments in apartments globally, with a particularly heavy emphasis on the U.S.?For example, the world's 13th richest person?and founder of clothing brand Zara,?Amancio Ortego, purchased 727 Madison,?a luxury apartment building in downtown Chicago, in August for $231 million. It is the city’s most expensive multi-family sale?so far this year.?In June, Global Holdings?Management Group, led by billionaire Eyal Ofer, acquired a Manhattan apartment building near Gramercy Park for $30 million. Late last year, an investment firm backed by David Rubenstein raised $240 million to invest in multi-family units. California-based billionaire Tom Steyer?is investing in multi-family properties?in Western cities. Multi-family seems to have traded places with office properties when it comes to billionaire investments. Prior to the pandemic, the office market was booming, and owners could make a sizable return on investment with a prize tower in a busy metro. Now, however, with the popularity of remote working?and office vacancies, office buildings are taboo. As a result, billionaires have pivoted.?Multi-family was the most popular asset class among all investors in the second quarter, according to CBRE.?Plus, housing demand?has been on the rise. This has led to a surge in rent growth, albeit one that has been slowing, from a 17.6% national annual increase in 2021 to 3.5% in 2022 and 2.5% year-to-date. Net absorption rebounded?in the asset class during Q2 after a yearlong fall. With oversupply being an issue?in the multi-family market and more units on the way, properties have become cheaper to acquire in the last year. Apartment building prices declined?17% in February and 16% in August, making them more affordable for investors.

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Opportunity Zone Markets Rebound In Second Quarter Of 2023. ATTOM released its second-quarter 2023 report analyzing qualified low-income “Opportunity Zones” targeted by Congress for economic redevelopment in the Tax Cuts and Jobs Act of 2017. (Opportunity Zones are defined in the Tax Act legislation as census tracts in low-income neighborhoods that meet various criteria for redevelopment in all 50 states, the District of Columbia and U.S. territories.) Census tracts, as defined by the U.S. Census Bureau, cover areas that have 1,200 to 8,000 residents, with an average of about 4,000 people. In its report, ATTOM looked at 3,909 opportunity zones around the United States with sufficient data to analyze, meaning they had at least five home sales in the second quarter of 2023. The report found that median single-family home and condo prices increased from the first quarter of 2023 to the second quarter of 2023 in 61 percent of Opportunity Zones around the country, and rose at least 5 percent in about half. The increases reversed a brief fallback in values during the prior two quarters in a majority of zones, which sit in and around low-income neighborhoods where the federal government offers tax breaks to spur economic revival and rehabbing. The renewed price growth continues a long-term pattern of trends in Opportunity Zones largely matching those in other neighborhoods around the U.S. Values in those areas also dipped from late 2022 into early 2023 before recovering in the second quarter. Changes in home values inside Opportunity Zones have been tracking closely with national patterns for at least the last three years – mostly rising in a sign of economic strength inside some of the country’s most distressed communities. By two key measures, Opportunity Zone markets even showed signs of rebounding slightly better than other neighborhoods around the country during the second quarter of this year. For example, median prices inside those zones rose more often at a faster pace than nationwide driving both quarterly and annually.

Work Resumes On World's Tallest Tower. Bisnow reports that Jeddah Economic Corporation has resumed work on the Jeddah Tower, a skyscraper with aspirations to reach a height of more than 3,200 feet, which would stake its claim as the world’s tallest building.?The project, which broke ground in 2013?along the coast of Saudi Arabia, has been rife with stops and starts, including delays after Saudi Prince Bakr bin Laden was detained by Prime Minister and Crown Prince Mohammad bin Salman?in a corruption purge of the country’s royals in 2017. Bin Laden was the owner of the construction firm Saudi Binladin Group, which was building the tower before work ceased in 2018.?The tower, formerly known as “Kingdom Tower” and designed by Adrian Smith +?Gordon Gill Architecture in Chicago, reached the 63rd floor (of 165 planned stories) before construction stopped. Construction firms Skanska, Samsung C&T, China State Construction Engineering Corp. and Hyundai E&C are among the more than a dozen contractors invited to bid on completing the tower and have three months to send in their proposals. Jeddah Tower, which was estimated to cost $1.3 billion in 2008, according to Forbes, is envisioned to be part of a larger Jeddah Economic City development, which is expected to have?a total of 56M SF of development. BTW, the current tallest building in the world is the Burj Khalifa in Dubai, which?rises 2,700 feet.

Judge Orders Co-Founders Of NYC Development Firm To Stop Firing Each Other. There is a circus going at a New York real estate development firm.?Partners are firing each other.?Jeffrey Simpson and Jared Chassen launched Arch Properties in 2017 after working together at Greystone. Their projects include a Soho?residential property, a 17-story mixed-use residential development in Ridgewood?and the acquisition of a Greenwich office building (where WeWork’s?crazy Adam Neumann?is a co-owner).?Arch has a portfolio of over $1 billion in real estate, including more than 5,000 multifamily units, plus office and retail assets.?Disagreements began in early August, according to court documents. Chassen locked Simpson out of the company’s emails, its First Republic bank accounts and its Greenwich Village?office.?But Simpson alleges he had fired Chassen a day earlier for refusing to take a pay cut, The Real Deal reports. But another factor is potentially at the root of the disagreements: a?series of costly lawsuits that Arch is involved in. Arch alleged in a lawsuit that its partner at its SoHo residential property owes Arch money. The firm also sued Meir Babaev, a partner on another project in Ridgewood, Queens, claiming Babaev had misrepresented the status of the development. Arch is also tied up in a lawsuit over a UCC foreclosure in Flatbush, Brooklyn, where the property owner, Eli Karp, allegedly entered into a lease agreement without permission from Arch, which was the property’s lender. These suits are a source of displeasure for 35 Oak (Arch’s main investor and the guarantor of some of the firm’s loans), which then sued Simpson alleging he breached his fiduciary duties. Simpson threatened to “blow the company up” if 35 Oak “didn’t stop messing” with him. As a result, the pair have been sparring in court since mid-August, with Simpson calling Chassen’s actions “a coup d’etat.” In response, Chassen claims he confronted Simpson about his horrible decisions and misappropriating funds. But Simpson claims he fired Chassen on Aug. 5, a day before Chassen claims the confrontation took place. Nevertheless, a judge’s order restored Simpson to his position at the firm.?But Simpson then fired Chassen again! Furious, the judge then reinstated Chassen to the company in mid-September, calling the dispute “childish” and ruled that the pair must try to work together again. Sounds like these guys don’t need a judge – they need a marriage counselor!

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Iconic L.A. Homes You Can Tour. ?The most iconic homes in L.A. are all about the details — in the concrete textile blocks of Frank Lloyd Wright’s Ennis House, in the hand-carved millwork of Greene & Greene’s Gamble House, and in the pool that cantilevers over the hillside outside Pierre Koenig‘s Stahl House. The steel-and-glass Eames House?in Pacific Palisades was considered so important to 20th Century design, it was left largely intact after designers Charles and Ray Eames died. In a city as complex as L.A., it’s easy to be overwhelmed by the diversity of architecture. Walk around most neighborhoods, and you’ll find a mix of Midcentury Modern, Streamline Moderne, Spanish Revival and Tudor architecture standing side by side. They might be fun for art and architecture fans to ogle from the sidewalk, but sadly, many of the most quintessential L.A. homes (i.e. John Lautner’s Chemosphere, Frank Lloyd Wright’s Ennis?and Millard House?and Ray Kappe’s?wood and glass home in Rustic Canyon) aren’t open to the public because they are privately owned. But here’s a house that is open to the public:

????????????????????????????????????????????????Adamson House

23200 Pacific Coast Highway, Malibu 90265. Touring the grounds of the Adamson House, with its views of the Pacific Ocean and Malibu Lagoon and its stunning Spanish Revival architecture, is so fantastic that you wouldn’t be disappointed if you skipped the docent-led tour. But if you are a fan of Malibu Potteries tile, you must go inside the house, which was added to the National Register of Historic Places in 1979. Designed by Stiles Oliver Clements for Rhoda Ringe and Merritt Adamson, founders of the Adohr Dairy (Rhoda spelled backwards), the 1930 home offers a spectacular display of the priceless tile from the hallway floors to the walls of the bathroom and kitchen. The docent-led tour provides a historical overview of the family and house and a rare opportunity to see the family’s original furnishings including some beautiful paintings by Danish artists Ejnar Hansen and Peter Nielsen. I have taken this tour several times and am always amazed at the beauty of the Malibu tiles. The Adamson House is open from 11 a.m. to 3 p.m. for general public tours on Thursdays, Fridays and Saturdays.?

Rupert Murdoch's Retirement Plan? Wine Down. Now that the media mogul has finally stepped down from News Corp., where will he spend his time? Los Angeles Magazine reports that Murdoch will spend most of his time at his beloved Bel-Air winery, Moraga Estates. Yes, the Bel-Air property he spends more time at than his other homes in Montana, London and New York. Murdoch, 92 (a little slower, a little harder of hearing, and a little unable to name the three grapes in his Bordeaux-style blend) says he does, in fact, sort of chill out at the vineyard. “The other day I walked up to some nice chairs outside Paul’s office and just sat and took it all in for an hour,” he says. To feel what it’s like to be him, Murdoch suggests getting a bottle of his red ($140) and a steak from Snake River Farms ($139 for the porterhouse), which uses beef raised on his Montana ranch. There’s no winery in America quite like Moraga. Because it’s an insane idea. Putting a vineyard on some of the most expensive real estate in the world makes as much economic sense as planting rice paddies in Tokyo’s Ginza district. It’s a wild flex. Moraga is in the backyard of a house on a residential city street, Moraga Road, in Bel-Air. Behind the gates, there’s more than seven acres of vines, growing Bordeaux red and white varietals. After you pass through the gate, the driveway forks. On the right is the 7,500-square-foot Craftsman house Murdoch bought for $28.8 million in 2013, after seeing the 16-acre property listed in the Mansions section of his?Wall Street Journal. The previous owner, the CEO of Northrop Grumman, planted the grapes in 1980 and made Murdoch promise to keep the winery. Moraga Estates makes only 500 cases of a red ($140, down from $165 before the pandemic) and 300 of a white (a $92 Sauvignon Blanc, down from $129), though it also used to make a dessert wine. It’s not all that hard to find the Morage brand at stores and some restaurants, though few people realize Murdoch owns it.?Even though the winery is on a residential street, Murdoch isn’t worried about visitors annoying his neighbors. Moraga has fewer workers coming in and out than nearly any other house on the block, all of which have contractors driving in and out daily.?

Survey Describes Hollywood’s Walk of Fame as Worst Tourist Attraction in the United States. A new survey by Stasher says the Hollywood Walk of Fame scored just 3.42 out 10 in an assessment of the world’s best and worst tourist attractions. BTW, 3.42 is the worst rating among the 432 attractions in the survey!?So perhaps we should start calling it the “Walk of Shame”? The Hollywood Walk of Fame conjures up images of glitz and glamor, but visitors say that it’s also “dirty” and “grubby.” “Unsafe” and “slightly scary” are some of the other words used to describe the Walk of Fame on Google, TikTok and other social media. The conclusions were assembled by a blog called “Stasher” and are now reposted all over the internet. Among the criteria were distance from the nearest international airport and tourist safety. But disappointment came almost immediately after taking a stroll down the sidewalk, with tourists saying they noticed the smell. If they return to Hollywood, they said, it won't be for the Walk of Fame. But not all is lost. After all, you can still take a selfie with your favorite sidewalk celebrity and that is absolutely free. Besides, there are still shopping centers, the Chinese Theatre and other attractions available to enjoy, I guess.

Support Alligator Denied Entry Into Stadium. ESPN reports that a Philadelphia Phillies?fan and his emotional support alligator, Wally, were denied entry into last Wednesday's game against my hometown Pittsburgh Pirates. The fan, identified by the Philadelphia Inquirer?as Joie Henney, arrived at Citizens Bank Park walking Wally on a leash, claiming the 5-foot alligator as his “service animal.” The stadium's policy on support animals on the Phillies' official website states: "Certified service dogs or service dogs in training for guests with special needs are welcome. All other animals are prohibited." Because of the sudden notoriety, accounts linked to Wally now have a growing following on social media; the Instagram account @wallygatornjoie?had nearly 26,000 followers as of Thursday morning, while the Tick Tok account, wallythealligator,?had over 100,000 followers. Wally's denied entry reminds me of the famous "Curse of the Billy Goat" involving the Chicago Cubs. In 1945, William Sianis put a curse on the Cubs when he and his goat were denied entry into a World Series game at Wrigley Field. Outraged at not being able to watch his beloved Cubs, Sianis placed the curse on the team, saying the Cubs would never again win a World Series. Sure enough, Chicago would not play in another World Series for over 71 years. But the curse finally was broken in 2016 when the Cubs celebrated their first championship in 108 years (longest in MLB history).

4th Annual Los Angeles Real Estate Grand Expo.?Our 4th Annual Grand Expo returns on Saturday, October 21, 2023, 8:00 am to 6:00 pm. This year we’re taking over the entire Iman Cultural Center – it’s all ours for the whole day!?The north hall, the south hall, and the parking lot in the middle (with tents and food trucks). One entire day celebrating real estate investing. The theme of this year’s Grand Expo is “Hedge Inflation – Buy Real Estate." There will be 14 national speakers in breakout sessions, and over 70+ vendors in the North Exhibition Hall.?Keynote speaker will be Steve Price, executive Vice-President of Auction.com, the number #1 provider of foreclosure properties in the United States.?The Grand Expo is a joint production of the Los Angeles County Real Estate Investors Association, Sam’s Real Estate Club, Ventura County Real Estate Investors Association, and Realty 411.?Best of all, the Grand Expo is FREE to attend. Street parking is free and metered. Plus valet parking will also be available. But please RSVP at www.LAGrandExpo.com.

Real Estate Rockstars Return. When it comes to rock n’ roll, Dawn and Bill Twyford rock the house(s). This Colorado couple have investing down to a science. With hundreds of deals and properties coming and going, I can’t keep track. They have not been to California in years - so we are excited to welcome them back. Don’t miss their presentation and prepare to “dance with joy” at the strategies they use to invest. The title of their presentation is “Music to My Ears; Seven Strategies That Will Rock Your World.” Thursday night, November 9, 2023, 6:30 to 9:30 pm. Plus, come early and enjoy our Vendors Expo. Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, 90034 (Culver City adjacent).?FREE Admission. Metered and free parking. RSVP: www.LARealEstateInvestors.com.

LARealEstateInvestors.com Podcast.?Are you enjoying our weekly podcast, "LARealEstateInvestors.com" (cleverly named after our domain) hosted by our very own Bill Gross? Bill has been a Realtor, broker and real estate investor since the Ice Age!?No one is more experienced in local Southern California real estate than Bill Gross. Each week Bill interviews real estate professionals sharing their insights and advice for real estate investors. Our podcast airs every Tuesday live at 3:00 pm, and anytime thereafter on YouTube, Facebook, Zoom, and Google.

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This Week. Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy. Will they or won’t they increase interest rates before the end of the year? For economic reports, by far the biggest will be the Consumer Price Index (“CPI”) released by the U.S. Bureau of Labor Statistics on Thursday. CPI is a widely followed monthly inflation indicator that looks at the price changes for a broad range of goods and services. Beyond that, Import Prices will be released on Friday. Mortgage markets will be closed today for Columbus Day.

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Weekly Changes:

10-Year Treasuries:????????????Rose??025 points

Dow Jones average:???????????Fell????500 points

NASDAQ:????????????????????????????Fell????100 points

Calendar:

Wednesday (10/11):??????????? Producers Price Index

Thursday (10/12):????????????????Consumers Price Index

Friday (10/13):?????????????????????Import Prices

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For further information, comments, and questions,

Lloyd Segal

President

Los Angeles County Real Estate Investors Association, LLC

www.LARealEstateInvestors.com

310-409-8310

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