John Parker is the chief executive and founder of Parker Brown Inc., a Canoga Park-based construction company specializing in tenant improvements. The company has recently been doing a lot of work in the medical sector.
Parker is also involved in Mission Valley Bank and works with a number of Valley organizations. He sat down with the Business Journal at The California’s at the Sheraton Universal Hotel for a power lunch to discuss his career.
How do the types of properties Parker Brown worked on when it first launched compare to what you are doing now?
Today, Parker Brown is involved in a lot of medical suites, like surgery centers, infusion clinics and a variety of doctor offices. When we started 30 years ago, we mainly remodeled smaller offices and banks and some physical therapy offices.
Why did this change?
During Covid, as people were not in their offices, we pivoted more to medical and industrial and simply because there was a lot less office remodeling happening. We were able to maintain employment for all our staff.
How did the pandemic and rising costs impact the industry? Did either affect the way you do business?
The pandemic created a lot of challenges for PB with staff health issues and in relation to (the) supply chain. (The rising) costs made it difficult. There was great support from our vendors during this time. For instance, as we were limited to how many employees could be on a job site, some agreed to do a second shift (to work 2-10 p.m.). We are very happy to be part of creating a lot of facilities in our communities, building out urgent cares and surgery centers so folks are treated in their communities and not at hospitals.
What is next for the company?
PB will continue to grow, albeit at a more modest rate. There are still providers and management companies we would like to work for, and we have a large amount of repeat customers that will keep us busy for years to come.
How about for you? Are you scaling back your role at Parker Brown?
Chris Collier stepped up into operations and is doing a terrific job (and is now an officer at PB), so I will continue to step back and concentrate on business development as the company is in very capable hands. — Hannah Welk
Capstone Green Energy’s CEO, Vince Canino, points at one of his company's products.
As it continues to recalibrate from Chapter 11 bankruptcy, Van Nuys microturbine manufacturer Capstone Green Energy has picked its new leader.
Capstone – which builds a variety of electricity-generating microturbine units that run on numerous fuels, to both sell or rent – in March hired Vince Canino as president and chief executive. Canino was also brought on as a member of Capstone’s board of directors.
A headhunter ultimately led Capstone to Canino, whose resume bolsters many energy industry bonafides. He was most recently chief operating officer of ESS Inc., a long-duration energy storage firm in Oregon. He also was previously chief executive of Canadian HVAC manufacturer Smardt Chiller Group, a space Canino noted had “a big focus on energy efficiency.”
Canino says his familiarity with Capstone goes back to his Smardt Chiller days and that it was an exciting prospect to take the reins at Capstone.
“It was exciting in the sense that it was coming out of Chapter 11. It came out quite quickly, which is a good sign that it’s going to come out a lot cleaner,” he says. “If you fast-forwarded from when they first started, it’s one of the last microturbine businesses still going and it’s lasted over 30 years. To me, the technology is proven, and the exciting part of the challenge is how we take it to the next level.”
Capstone emerged from Chapter 11 on Dec. 7, less than three months after filing the prepackaged plan. The agreement had Goldman Sachs take on 37.5% of the company’s ownership in a debt-for-equity exchange that reduced Capstone’s debt from $53 million to $23 million. The company also emerged with $7 million in new money and was at the start of the year sitting on around $25 million in inventory ready to be offloaded.
Board member Bob Flexon took over as interim chief executive about five weeks before the bankruptcy filing. With Canino’s hiring, Flexon has shifted to non-executive chair of the board.
“Vince has extensive experience in the energy industry, much of which is in the markets we serve. His strong operational background and skill set in product innovation and driving down product costs make him the ideal candidate to lead our company into its next phase of growth and profitability,” Flexon said in a statement. “We are confident that under Vince’s leadership, Capstone will become a much-improved company.”
Problems Canino will have to solve include building trust with Capstone’s suppliers, moving more product in a timely manner and guiding the company to what Flexon says would be its first profit in at least two decades. Canino inherits a strong model to help build, which is Capstone’s energy-as-a-service offering – essentially, long-term rentals with maintenance of microgrid units to petroleum, agriculture and utility clients. In his time there, Canino says he has been developing protocols to promote stronger accountability and metrics across the departments.
“Those are some of the simple things. You’ve got to put operating disciplines in place so people make smart decisions and so you don’t use processes that are antiquated as well,” he adds. “This company’s been around for 30 years. There’s a number of people who have been around for 20. I was impressed with the tenure around here, but what comes with that is getting people who are used to doing things a certain way.” — ZANE HILL
Phil and Nellie Akalp are the husband and wife team behind CorpNet. (Photos by David Sprague)
The growth of CorpNet Inc. is based on one crucial factor: the manner in which founders Nellie and Phil Akalp set up the business.
At the Westlake Village-based legal document filing service, the married couple has established partnerships in all 50 states with tax and legal professionals, CPAs and with other companies, including Intuit Inc. in Mountain View, Gusto Inc. in San Francisco and Patriot Software LLC in Canton, Ohio.
Phil Akalp says it was critical to set a priority, to take action on it, to measure whether it is succeeding, and then quickly pivot based on the information and data that they get.
“We try to set up an objective, we empower (the team) with that objective, we measure the performance on that and we give feedback on how to do better the next round,” he says. “What we find is that internally it exponentially grows in unexpected ways and in unexpected directions.”
This year, CorpNet landed at the No. 56 spot out of 170 companies on the Inc. Regionals Pacific fastest-growing private companies list with 259% in revenue growth over a two-year period. By comparison, it was in the 75th position last year and at No. 213 in 2021.
“Our growth is mainly due to our payroll tax registration and business formation (services),” says Nellie Akalp.
Offering both of those services came as a result of the pandemic, she adds.
“We decided to go full force in launching the product and automating the product and offering it in all 50 states as a product to our partners,” she says.
Companies use payroll tax registration to set up tax accounts need to pay employees. State income tax withholding accounts must be established, as well as state unemployment insurance accounts, Nellie Akalp says.
Nelli Akalp in her office.
This became crucial during the pandemic, when companies began hiring remote employees who lived in different states.
Entrepreneurs and small-business owners often have no idea how to go about setting up these accounts, she continues.
“Our mission has always been to educate and assist entrepreneurs and CPAs and tax professionals to make the business filing-process seamless,” she says.
Not their first rodeo
CorpNet isn’t the couple’s first business. In 1997, after having both graduated from California State University, Northridge and from law school, they started MyCorporation Inc., another business-filing company.
In 2005, they sold the company to Intuit for $20 million in cash. (Intuit would sell back the company to an employee of MyCorporation in 2009.)
Phil Akalp then went off to study for the bar exam, and that is when Nellie Akalp sprang into action, he says, adding, “When she took over she added LLCs, she added trademarks, she added rush fees, she added upsells. She added all these variety of products.”
When he came back from studying for the bar, he hardly recognized the business anymore.
“I walked into the two-bedroom apartment and there were two people there from Pepperdine Law School, working at a desk because she had hired them,” he recalls. “I couldn’t believe how much she was growing this thing from stuffing envelopes on the floor into what she had built.”
“He is great being the visionary,” Nellie Akalp says of her husband. “He is great in bringing it all together. Whereas I am really good at the executing on that.”
A thriving business model
The couple started CorpNet in 2009, investing just $10,000 to get it off the ground, plus an additional $3,000 to buy the online domain name CorpNet.com.
The CorpNet business model is based on charging fees for filings,
“We are a pay-as-you-go service and we charge a fee for any business filling or payroll tax registration or an annual compliance service that an entrepreneur or a professional representing a client wants to order through us,” Nellie Akalp says.
Nellie and Phil Akalp in their Westlake Village office.
There are annual subscription services as well, says Phil Akalp, such as registered agent services, annual corporate compliance and maintenance services, annual report services and meeting-minute services.
Additionally, the company will partner with large payroll companies using its (application programming interface) to help them provide payroll tax registration services to clients.
“We act as their backend fulfillment service,” Nellie Akalp says.
There is another aspect to CorpNet’s growth – the company’s employees.
“Everyone who works here we give them a chance to grow,” Nellie Akalp says. “We believe in paying it forward.”
The couple shows their appreciation to employees by making sure they know they matter, she continued.
“That their words count, that their ideas count. And a result is evidenced by our growth,” she adds. “I cannot take responsibility for our growth just because it is me and Phil … ”
“They did it, they grew it,” Phil Akalp says. “We just try to provide a structured environment where they could do so freely and safely.”
Milton Turcios, the director of operations, is the number three person after the Akalps at CorpNet.
He started more than a dozen years ago as a temporary receptionist and was hired on full time before his first week was over.
Little by little he caught the business bug, Turcios says.
“I felt their energy as entrepreneurs and how much ingrained into the business world they were and I was like, that was something to strive for,” he says of his bosses.
“I have done every job imaginable here for the last 12 years,” Turcios adds. “They saw me through my undergrad and through my MBA and now I am their right hand.” — MARK R. MADLER
Sonya Blake, President and CEO of the Valley Economic Alliance. (Photo by David Sprague)
Sonya Kay Blake is the president and chief executive of the Valley Economic Alliance.
In her role, she helps facilitate economic development in the San Fernando Valley. She previously was director of Community Business in Los Angeles Mayor Eric Garcetti’s Office of Economic Development.
Blake has an art background. She studied art history at Yale University and “knew that the career would only be in New York or in Los Angeles.” Blake, whose parents are from Jamaica, was raised in Connecticut. She says she came to Los Angeles on vacation and “loved it so much that I didn’t go back” to Connecticut. She says she appreciated that art collectors in the area start their own museums to showcase their collections.
She knows taekwondo. Her brother owns a karate studio and taught Blake when she was a kid. Today, she has a green belt in the Korean martial art practice. While she doesn’t practice much anymore, Blake says she would “like to get back to it.”
Blake learned to fly trapezeas part of a public service announcement for the Legal Aid Foundation of Los Angeles. In the ad, a trapeze artist fell into a safety net: “It was a metaphor that the organization was a safety net for our community,” Blake says. The budget for the piece was $100. Blake got a trapeze school to donate a trapeze artist by joining the school and learning to trapeze. “There’s a video of me falling through the air and screaming on the way down,” she adds. The PSA went on to be nominated for a Daytime Emmy Award.
She loves ice cream,but doesn’t always indulge her sweet tooth. Blake says pistachio and Rocky Road are two of her favorites, but she hasn’t had them in a while because “they cost too much in Weight Watchers points.” Instead, Blake enjoys fruit tarts with sugar-free pudding and other healthier dessert options.
She is close with other Garcetti alumni.Blake says the pandemic and civic unrest at the time “brought us together.” She sees people from Garcetti’s team individually every few weeks and as a group on occasion as well. “We’re still doing the same work, we are still mission aligned and thankfully our paths are still aligned,” she says.
Beatriz Porto holds a tray of pastries from Porto’s in Glendale. (Photos by David Sprague)
Some of Southern California’s best empanadas can be found in Glendale.
The same can be said of pupusas, arepas, ceviche and ropa vieja. In downtown and south Glendale – a city known today for its distinctive Armenian identity – you will find a healthy offering of restaurants, bakeries and shops – small, thriving businesses – representing a wide swath of Latin America. One of those mom-and-pop originals – Porto’s Bakery and Café – took off from there, becoming a household L.A. name whose signature yellow pastry boxes are often the price of admission for house parties.
“Food brings people together. The love for food, the love for making food, the love for sharing food. There’s no dividing food,” says Beatriz “Betty” Porto, daughter of the namesake founders and one of the company’s co-owners. “It’s really cool to be working in an environment where you make people fall in love with the world, without going anywhere.”
To some, the proliferation of eateries has become an interesting part of the so-called Jewel City, a noteworthy characteristic of the county’s fourth largest municipality. Latino and Hispanic restaurants have taken off on a national basis – a Pew Research Center analysis this year found that 10% of U.S. restaurants serve Mexican food. Los Angeles County boasted nearly 5,500 Mexican restaurants at the time, leading the nation by a wide margin and composing nearly a third of California’s Mexican restaurants.
Porto’s in Glendale.
On why there are several very specific Latino outposts in the city, some see it as indicative of historic migration patterns among immigrant communities here.
“Glendale’s a very interesting place,” says Jorge Leal, a cultural and urban historian with the University of California, Riverside. “It’s suburban but it’s also central enough to
Los Angeles. The location has allowed people from the Valley, as well as people venturing from Central Los Angeles up north, to say ‘we’re going into town.’”
Porto’s drives people to Glendale
Formed in 1976 by Cuban immigrants, the Porto family’s first bakery moved from Silver Lake to Glendale shortly thereafter – in part because of a good deal on a location and also because a good number of other immigrants from the Caribbean nation lived in the area at the time.
“That area got kind of iffy, and my dad was afraid for our safety,” recalls Porto. “We would get out at 2 or 3 o’clock in the morning and the element that was hanging around wasn’t the best, so that’s why we moved to Glendale.”
El Morfi Grill’s Rene Vildoza with a plate of some of his eatery’s offerings.
The business moved into a 3,000-square-foot bakery on Brand Boulevard, a serious upgrade from the 600 square feet the family occupied off of Sunset Boulevard. The prior owner had trouble doing business at the bakery, Porto says, both because of the lack of meaningful foot traffic in what was then a sleepy downtown Glendale and ongoing street repair work in the area.
“But we didn’t depend on foot traffic because we had a clientele – mostly Cubans who lived in Atwater (Village) and some areas of Glendale – so they followed us. They knew us. It was a huge population around Glendale. Our people would come through the back, enter the back of the bakery. That’s how we did it while everyone else was going out of business.”
Porto’s has taken off dramatically from those early days. The company moved across the street to accommodate construction of a high-rise, for the first time owning property (and at a serious deal, thanks to the 1980s recession). It has since added five other stores in the county – including in Burbank and Northridge – and is planning to open a sixth at Downtown Disney.
Other eateries also see success
A block away, El Morfi Grill has been serving up delicious Argentinian lunches and dinners since 1991.
Brothers Rene and Jorge Vildoza started the restaurant about a dozen years after immigrating from Buenos Aires. Rene Vildoza, who still manages El Morfi, brought along the business acumen he learned from growing up in his father’s deli, while Jorge Vildoza – who died in 2018 and had moved back to Argentina – was the brains in the kitchen, the one who helped develop the restaurant’s signature chimichurri sauce.
“He was a really good cook. He was the family cook, the one to cook for everyone,” Rene Vildoza says of his brother.
At the start, the customer base for El Morfi – a phrase akin to enthusiastically declaring, “this is it!” – was “100% Argentinian,” Vildoza says. While that clientele has significantly diversified since, Vildoza speaks with fondness as he brings up the generational customers he has.
“I’ve got families who started to come in 1991, and they’ve got kids then. And now, they’re 40, and they bring their own families,” he says. “I see that a lot. That makes me feel great. People really like this place.”
These two eateries are among many dotting downtown and South Glendale, a fact that does not escape the Glendale Latino Association. The group maintains a map detailing all of the locations of Caribbean, Central American and South American food outposts in the city and has put on “food crawls” to highlight the restaurants.
Near Porto’s and El Morfi, you also have Lola’s Peruvian and Natalie Peruvian Seafood; Cariaco, a Venezuelan bodega; El Sabrosito, a Salvadoran pupuseria; and a wide range of Mexican and Mexican-fusion options. This, Porto said, reflects the onetime ease in getting a food joint off the ground.
“When we opened, it was easy because you didn’t need a lot of capital. That’s why you see so many Mexican Americans have all of these mom-and-pops,” she said. “They’re easy to open. You need a mom and dad, two or three people. We started with my mom, my grandmother and my dad.”
Finding areas with high immigrant populations
Leal, at UC Riverside, isn’t surprised by this. Having grown up in neighboring Glassell Park, Leal said his family often gravitated toward Glendale for their outings, “as opposed to areas that are more traditionally Mexican.” In line with the Porto’s family’s story, Cuban exiles who did not land in Florida came to L.A., where they first took up in the Echo Park area, shifted to Atwater Village and Glendale as they built wealth, and then on to places like Northridge.
“Immigrants do that. They follow other immigrants,” Porto said. “We knew there was a lot of Cubans in this area.”
Additionally, Leal says, Glendale became home to nightclubs and bars that catered to Latino nightlife as a complement to daytime amenities like restaurants. He says the city developed a “pan Latino” identity, particularly in South Glendale as predominantly white residents moved out; the city was, infamously, a “sundown town” for decades, so-called because non-whites who remained in town after working hours risked their safety. The city formallyacknowledged and apologized for this in 2020.
“The reason that more Latinos were able to begin residing in Glendale was because of white flight,” Leal says. “They started moving out and stopped renting homes and apartments, so Latinos moved into these parts where they could afford.”
Now, he says, housing costs have forced working class families – many of them Latino – into other parts of the county. Still, Glendale has enough draw to pull them back in for work and play. There are many second- and third-generation customers at longstanding places like Porto’s and El Morfi. And the 2020 U.S. Census showed that about 19% of Glendale’s population was Hispanic or Latino.
“Food connects people to their cultural background and origins, but also it creates new memories. It’s kind of like that ‘Ratatouille’ moment,” Leal says, referencing a scene in the iconic Pixar film when the coldhearted food critic is warmed by the familiarity of a dish of ratatouille. “These restaurants have a possibility to create new memories for people. I think that Glendale might be more of a destination, because of the cost of living in Glendale. That has happened with different groups of Latinos in Los Angeles.”
Syd Leibovitch, president of Rodeo Realty, at his office in Beverly Hills. (Photo by Thomas Wasper)
While studying law at UCLA, Syd Leibovitchstumbled into real estate trying to earn some extra cash. And after selling just a few homes, he quickly became hooked on the profession and ditched law school plans.
Following graduation, Leibovitch went on to work for a few big-name brokerages of the time, including one that merged with Coldwell Banker, when he decided the bureaucratic life was not for him and it was time to start his own company. Leibovitch founded Paramount Properties, a venture that later evolved into Rodeo Realty, in 1986 at the age of 25. Today, the company stands as one of the largest independent residential brokerages in California, operating 12 offices and with its hands in approximately 5,000 transactions a year.
Leibovitch sat down with the Business Journal to discuss his career, what’s it like running an independent firm and company growth plans.
Rodeo Realty has 1,200 agents spanning Los Angeles, Ventura and Orange counties. What’s it like to oversee it all?
It’s very rewarding. Now I have the children of some agents working here. I’ve watched them grow up and now I see them selling real estate. I’ve seen people go from nothing to doing really well. It’s always a challenge. I love handling the more difficult deals. I love motivating and trying to get people to understand that they can get to the next level if they believe in themselves and follow a program. I like to think of myself more like a coach than a business owner.
Syd Leibovitch at his desk.
Are you still selling real estate?
Back in the day, the agent didn’t want an owner that was competing against them. So I made a decision to stop selling (around 2010). I was one of the top agents here, but I made a decision to stop selling and focus on running the company. But I’m seeing a new breed now. A new philosophy where some of these people that do own these companies are selling real estate and the agents seem to like it. I will do some deals, but they’re mostly higher-end deals.
Within Los Angeles, which neighborhoods are you most passionate about, and why?
Whatever my clients are looking for, I just love the houses that are the right houses in that price range. I mean, who’s not passionate about a $100 million house in Bel Air, Beverly Hills or Holmby Hills – which is probably the area that I know best these days – but I’m really familiar with many areas because we have agents all over. I’m passionate about all real estate.
You’ve supervised more than 150,000 real estate transactions. Does one stand out to you?
I’d say the first home I sold when I was in college has to be one of them. I was 22 and I was able to show a young couple (some) homes. After seeing 10 or 15, they decided on one. It was a colonial on a large lot with a view and pool. When the escrow closed, I met them at the house and delivered the keys and a microwave oven that I bought them as a housewarming gift. The wife was pregnant, and she gave me the biggest hug and said, ‘I never imagined owning a home like this!’ That is what sold me on real estate. I knew immediately that I had found a profession for life.
Another home that I sold was a 7,000-square-foot home. The buyer had recently gone through a divorce. He was in a new relationship with a lady whose husband had passed away. I sold both of their homes and sold them the 7,000-square-foot home. When I met them to thank them and bring the keys and a gift, he said, ‘I not only got a great house, I made a great friend!’
Of course I’ve been involved in homes that have sold for $62 million, $70 million, $94 million, but it’s sales like the two above that have been the most rewarding. I’ve met so many great people and have hundreds of close relationships. I could not be more proud to be a real estate agent.
Syd Leibovitch in his company’s in-house print shop.
What’s it like running an independent brokerage? How does Rodeo Realty set itself apart from its bigger competitors?
I think the difference is that I’m a real estate person. I grew up selling real estate. I’m used to working with buyers and sellers, and I’m not asking anybody to do anything that I haven’t done myself. I think I’m in a unique position over these other companies because they’re run by brilliant people – much smarter than me, MBAs from Harvard and stuff and they ran huge companies – but they never sat in an open house and sold homes and showed property and worked with clients. It’s hard to know how something is until you’ve done it. Everything we do here is with that in mind.
This is a sad time in real estate. It’s a sad time in everything. Services are out the window. These real estate companies have cut back so much on staff and marketing and advertising that there’s just very little help for these people. And they bought all the companies that were supportive to try to get them out of the marketplace. Do we really all need to work for a giant corporation? They do everything they can to stop me. They hate me because I’m standing in their way.
Given the number of high-profile agent moves we’ve seen lately, how do you attract and keep talent?
I think you have to take great care of them. You have to have a lot of staff, a lot of service, and you have to care. And I’m very fortunate because I had three top agents that left. Two have come back and one we’re going to announce is coming back next week. We’ve been very fortunate; we very rarely have people leave.
Do you have any plans to expand into other markets or open additional offices?
Yes, we’re really looking for opportunities to expand. Right now, everybody is closing offices and cutting back. I’m kind of hanging in there, but I am looking for opportunities.
I’d really love to expand to the Newport Coast. I’d love to expand to the Pasadena area. I’d love to expand and open another office in the South Bay area (and maybe) Palm Springs. I don’t want to go so far that I can’t oversee it.
What’s next for Rodeo Realty?
We want to keep growing slowly so that we can continue to deliver everything that we promise. It’s our job to add value, to help take our agents’ careers to the next level and to make sure that our clients are getting the very best service that can be possible.
VITAL STATISTICS BRICKSTONE ARTS DISTRICT
441 Colton St., Los Angeles Square Footage: 25,000
AIRE Ancient baths and spa had been looking for a space in Los Angeles since 2015. The requirements were very specific and difficult to locate within the market. AIRE needed approximately 25,000 square feet with the ability to build pools on close to half the surface. The team needed a building with character, high ceilings, and very few columns that could withstand the weight of the water surface. After AIRE hired Urbanlime Real Estate in 2022, toured the entire market, the decision makers were able to narrow the options down to two potential properties and secured a 25 year lease a year later.
AIRE Ancient Baths and Spa signing a lease in DTLA’s Arts District reaffirms the importance and attraction of that submarket to tenants wanting to be in a community that stands out. The Arts District is a place where adaptive reuse has created some of the most unique spaces and experiences in the city. AIRE Spa’s use is also a new concept to LA, which has no similar tenants in the market. This required the group to hire a group of experts to navigate the zoning code and introduce various city agencies to the particular needs. The project is anticipated to take 18 months to build and cost $12-$15 million dollars.
This 40-unit senior affordable housing complex located in South LA was purchased by a local non-profit senior affordable housing company that has a large presence throughout the Los Angeles submarket. After a lengthy escrow process that was required to HUD approval for the ownership transfer, the transaction successfully closed in December 2022. The asset consists of 40 senior (age 55 and up) apartments on a two-acre campus. The community currently maintains strong occupancy and was consistently high before and through the COVID-19 pandemic. Section 8 housing waivers subsidize the majority of the rent, providing a stable and consistent income stream.
The immediate surrounding area is expected to see a significant increase in the senior population over the next five years, notably a 23.9% increase in the 75-plus age group. Ensuring that the property sold to a non-profit company that would continue to have rents subsidized with HUD approval was an important feature for ownership.
VITAL STATISTICS MODERA ARGYLE
6220 Selma Ave., Los Angeles Square Footage: 23,211
In October 2023, upscale regional grocer Bristol Farms signed a 15-year lease for 23,211 square feet at Modera Argyle, a luxury community with 276 apartment homes, at the corner of Selma and Argyle Avenues in the heart of the Hollywood Entertainment District. Kennedy Wilson Brokerage’s executive vice president and director of retail, Lee Shapiro represented the landlord, Mill Creek Residential, in the transaction.
Modera Argyle is located between Sunset and Hollywood Boulevards one block east of Vine St. and consists of studio, one-, two- and three-bedroom luxury units. It sits adjacent to the Hollywood Palladium. The mixed-use development is currently under construction, and expected completion is Q2 2024.
VITAL STATISTICS THE PROMENADE AT WESTLAKE
140 Promenade Way, Thousand Oaks Square Footage: 21,517
CBRE’s Justin Schultz and his team successfully facilitated a complex transaction that met the needs of clients Nike and Williams-Sonoma. Nike was able to buyout of the lease and Williams-Sonoma was able to secure the same space under favorable terms. The landlord, Caruso Affiliated, also had a positive outcome with a valuable new tenant that helps elevate this already prominent shopping destination.
This transaction presented a remarkable level of complexity as it involved addressing the financial considerations of three prominent stakeholders. Through strategic negotiations and a deep understanding of the retail leasing landscape, Schultz successfully harmonized the financial interests of all parties.
The Los Angeles housing market has historically struggled to meet demand. However, the rising interest rates and escalating development costs have created significant hurdles for investors and developers, hindering the much-needed supply in the market leading to intensified housing challenges that require innovative solutions.
THE MULTIFAMILY SOLUTION
In the face of challenges, the Los Angeles multi-family market has emerged as a crucial player in tackling the city’s housing issues. With limited land availability, multi-family properties provide a practical solution to meet the growing demand. This living option not only accommodates a larger number of residents but also diversifies the supply to cater to various consumer preferences and budgets, ranging from affordable housing to luxury options.
OPPORTUNITY IN THE VALLEYS
The future living sector will offer residents a comprehensive ecosystem right at their doorstep. This holistic approach will encompass not only living spaces but also work, leisure, and access to transportation within a micro-precinct. The San Fernando Valley and San Gabriel Valley emerge as prime locations for such developments with ample available land, existing job centers, lifestyle amenities, and affordability. CBRE facilitated the sale of a 2.9-acre site in Arcadia, situated next to the Gold Line light-rail station and intended for construction of a seven-story, 319-unit multifamily development. This endeavor showcases the immense potential the Valleys hold in meeting the ever-growing demand for housing while creating vibrant neighborhoods.
INVESTMENT INSIGHTS
Los Angeles’ multi-family market continues to display resilience, even in the face of moderate rent gains and increased vacancy rates. According to CBRE research, parts of the San Fernando Valley and San Gabriel Valley have experienced some of the highest year-over-year rent growth, further highlighting the overall potential of the multi-family sector in the Valleys.
CBRE’s recent report shows that going-in cap rates, exit cap rates, and unlevered internal rate of return (IRR) targets for prime multifamily assets have improved for the first time since early 2022. These positive shifts hint at a possible peak in key underwriting metrics, anticipating rate cuts later this year.
In Q4 2023, the local multifamily market revealed that a 10-basis-point increase quarter-over-quarter brought the vacancy rate to 4.8%. This reflects the pandemic’s challenges but also underscores the need for more housing options.
FUTURE FOUNDATIONS
Investing in multifamily housing in Los Angeles isn’t just about financial returns; it’s about shaping the city’s future. As we navigate economic shifts and housing demand, multifamily properties will continue to offer housing solutions, community, and a chance for new Angelenos to call this vibrant city home.
Dean Hunt is executive managing director for CBRE, Los Angeles North Region. Learn more at CBRE.com.
13925 Sherman Way, Van Nuys; 12310 Chandler Blvd, Valley Village; 5247 and 5415 Cortex Pl., Valley Village Deal Value: $28.4M
Rick Raymundo, Jeff Louks, Brett Sanson and Phil Rodgers of Marcus & Millichap listed and sold a four-property multifamily portfolio in the San Fernando Valley on behalf of a private family trust. The transaction involved multiple sales to three separate buyers, totaling $28,440,000. The portfolio consists of 125 apartment units spread across 125,884 square feet in Valley Village and Van Nuys.
What makes this deal stand out is not only its size but also the rarity of the properties involved. Most closings in Valley Village tend to be significantly smaller than those included in this portfolio.
21300 W Oxnard Street, Woodland Hills Deal Value: $15.8M
One of the few remaining significant development parcels in Warner Center, located at 21300 Oxnard Street in Woodland Hills, was brokered for sale to provide 301 affordable housing units while replacing a blighted office building. Brandon Michaels and Lonnie McDermott of Marcus & Millichap brokered the sale while representing both seller and buyer.
This transaction highlights a prominent trend to provide much needed affordable housing while replacing the depressed office product that currently occupies the nearly 100,000 square foot parcel. The agents strategically utilized their buyer relationships and the Mayor’s Directive 1 program to gain support from the West Valley Alliance for Optimal Living.
The 8213-8217 Winnetka Ave. land property was a notable transaction due to its complexity, strategic thinking, and successful outcome. Floyd Shaheen of Marcus & Millichap listed and sold the deal comprised of two parcels totaling 63,756 square feet, approximately 1.46 acres, with one parcel zoned as RA-1, a very low-density zoning.
The successful sale of the complex site at a price point that surpassed initial expectations underscores Shaheen’s expertise in navigating intricate transactions and turning challenges into opportunities.
