What Recession? Flush With Cash And Terminal Sunshine, West LA Could Be The Gold Standard Of Commercial Real Estate Investment

Concerned about the nation going into a deep recession? Concerned about interest rates and office vacancies and commercial real estate investors shying away from multifamily for the rest of the year? You’re not at a real estate developer in West Los Angeles. At the very least, you’re not Larry Taylor. 

Taylor, the founder and CEO of the Malibu-based real estate development company Christina, has found a permanent recession buffer in West LA that he refers to as “the gold standard,” not just for Southern California but the world. He calls the cities representing West LA the “Hermes of real estate.” 

Taylor is delighted to be tunnel invested in the communities of Beverly Hills, Brentwood, Century City, Malibu, Santa Monica, Silicon Beach, West Hollywood and Westwood. He told Benzinga that not only is the current national economic malaise not affecting his area of the world, but he’s also not in a position to even speculate on what’s happening elsewhere. 

“The west side of LA is five separate cities, representing about 100 square miles,” he said. “Within those five cities, I can speak to you coherently. As for the rest? I have no idea.” 

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Commercial real estate analysts, like those at Cushman & Wakefield, have recently referred to San Francisco and Los Angeles as the epicenter of the technology industry downturn. Both cities, according to C&W, have an office vacancy rate of 21.6%. 

Recently, a subsidiary of asset manager Brookfield Corp. defaulted on $783 million in loans linked to two LA buildings. 

Taylor referred to those developments as representing an area of LA that has continually had issues. But not where he lives and works. 

“Century City has the lowest vacancy rate and highest rental rate in Southern California. Fox just announced they're adding 1.5 million square feet to their production studios,” he said. “Yeah, there’s a lot of problems in cities with a central core, but I live and work in Malibu. I only go downtown to see a basketball game.” 

He also has a problem with the negative vacancy numbers representing office space, which has long been troublesome. 

“Those numbers take into account millions and millions of office space square footage that’s not relevant,” he said. “Downtown LA has never been less than 20%.” 

Taylor’s West LA world also has an advantage many investors don’t have in other parts of the country. While interest rates and a lack of bank funding continue to slow commercial real estate investment in many regions, that issue is apparently a nonstarter where Christina invests. 

“It’s all cash here. I’ve never seen so much cash around in my life. The Fed and the government have printed so much money, why borrow from a bank? People have a tremendous amount of cash,” Taylor said. “We’re in the middle of the best real estate in the U.S., in the best year-round climate. There’s no vacant land, and our demand always exceeds supply.”

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