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The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a panel discussion on October 12, 2021, about the growth in the life science market sector. The panel provided an owner’s perspective of what is valued during the growth period as well as the implications on facilities location and design to accommodate the new technologies.
Kevin Klein, a life science specialist with over 20 years of experience who recently led Global Front End project and portfolio planning at Amgen, served as the moderator for panelists from Kite Pharma (A Gilead company), Amgen, Takeda and AbbVie.
Growth in the Life Science Market Sector in Southern California
While the COVID pandemic has created challenges, it has also reinforced the importance of the life science market sector. Growth in the sector is being driven by the introduction of new technologies such as cell and gene therapies and increased global demand.
“Takeda has a large molecule and cell therapy business where we are looking for treatments for rare diseases around the world,” said Brian Cooper, director of new product introductions at Takeda. “We also do a lot of gene therapy for our oncology group.”
As explained by Cooper, cell therapy is introducing cells into an area to treat a modality. Gene therapy is the process of extracting the material and modifying the genetic component using the gene backbone to develop a therapeutic treatment or grow cells with that modified genetic material.
“COVID has really accelerated the life science industry and everyone has been scrambling to increase capacity so that they can ensure product supply,” said David Steinberg, project management specialist at AbbVie.
Largely, the life science industry has proven to be resilient and ever-growing. Although COVID has restricted many things, lab work and facility support has continued and become a critical segment in the expansion of research in medicine.
Supply Chain Disruptions and Implications on Capital Projects
The disrupted supply chain has made it difficult to stay on schedule for projects and manufacturers. Materials that used to take six months to obtain are now taking 18-24 months.
“Contract manufacturing is where we are outsourcing to another company to do the work for us,” said Talena Williamson, senior manager of project controls, construction, and external supply at Amgen. “COVID has changed our approach to look more in our region for contract manufacturing because of the travel and supply disruptions across the different continents and countries.”
There has been a glass shortage and companies are getting pushed down the line for materials because they need glass for vials to store COVID vaccines.
“Subcontractors and contractors are doing their best to leverage their stance in the supply chain, but ultimately, the people making the vaccines will get the materials first and the rest of us just have to fight over the scraps,” said Cooper.
Unfortunately, a lot of large capital projects were negotiated before the pandemic began, so subcontractors and contractors are having a hard time meeting the performance clauses that were put in place prior. Many companies, as a result, are restructuring their physical assets based on the supply chain tightening.
Life Science Market Looks Ahead at Sustainability and Digital Design
The life science industry is growing in Los Angeles and a common denominator that has become prevalent among industry-leading companies is sustainability.
“Sustainability is really big with AbbVie,” said Steinberg. “We have large goals to reduce carbon emissions by 25% by 2025 and 42% by 2031.”
Many companies have adopted a sustainability component in their bidding criteria. According to Cooper, each project is evaluated on its impact on the site, as well as a competitor analysis on other bidders’ sustainability records.
“We are being asked to look forward as far as design in order to reduce our carbon footprint and the amount of labor that goes into the work,” said Cooper.
Cooper explains an example of this reduction looks like a tradeoff between a traditional warehouse with forklift drivers to a robotic warehouse. You can fit the same amount of storage in a quarter of the space and retrieve it in a quarter of the speed.
Fluidity in Office Spaces
There has been a lot of discussions among companies on the right time to return to the office. Williamson says there are substantial shifts happening from pre-COVID to post-COVID.
“COVID has forced a lot of industries to rethink what is really required from an office space and in-person perspective,” stated Williamson. “I think we’re moving towards an increase in larger collaborative spaces with a more virtual approach.”
Many propose companies will migrate away from cubicle setups to larger collaborative areas and the majority of the work will be done from home. The office space will be used for gatherings to network and collaborate among teams.
In summary, flexibility, speed and agility are critical for companies in the life science industry. Those who have jumped on being more fluid in their approach to design and thought processes during the last few years are doing very well in the industry and will continue to propel the future of research and medicine.
The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a panel discussion on September 14, 2021, about future post-pandemic strategies and how design and construction are changing in healthcare.
Alicia Wachtel, executive director, facilities planning, design and construction at Cedars-Sinai, a nonprofit and multispecialty academic health science center located in Los Angeles, California, served as the moderator for panelists from Kaiser Permanente and Providence.
Partnerships are Paving the Way for Healthcare Capital Strategies
“It’s very valuable to have various contacts in the industry guiding us in forming strategies and implementing them in the early stages of development,” said Suzanne Schwab, land use and planning director, real estate strategy and director of operations for Providence.
Providence and Kaiser Permanente have joined forces to expand their reach of care and encourage the ongoing development of healthcare in Southern California; the goal is to create a robust health platform by leveraging the strengths of each institution.
“The partnership we have with Providence is one that addresses urgent community needs,” said Joseph Stasney, national director hospital center of excellence – program delivery for Kaiser Permanente. “The high desert is underserved. As we both face similar challenges, it made absolute sense for the two organizations to partner together.”
The Future of the Healthcare Built Environment
“Healthcare systems have had pandemic plans in place for many years but have had to course-correct,” said Wachtel. “Part of the course correction is closely monitoring the market changes that can affect capital strategies for large developments.”
Cedar-Sinai had plans to start construction on a larger replacement hospital in Marina del Rey, but with an uncertain market, have postponed the expansion project.
“On the outpatient side, we paused a considerable number of our medical office building developments for Kaiser Permanente,” said Stasney. “As everyone, we did a lot of rethinking on outpatient care as we experienced a large volume increase in video visits.”
Transform model of care is what Cedar-Sinai calls their outpatient clinics’ collaborative spaces. When the pandemic started, they stopped utilizing those spaces and had to make substantial adjustments in how they see and move patients through the system.
“We developed virtual waiting,” said Wachtel. “We would have patients waiting in their cars and when it was their turn, take them to their room immediately.”
These changes have brought forth conversations on eliminating collaborative spaces and common areas and utilizing video visits exclusively for outpatient care.
Utilizing Unused Space for Workforce Housing
Schwab stated Providence is working on a new initiative with their real estate department on tackling workforce housing. Instead of a sign-on bonus, you might get a special rate on an apartment subsidized through Providence. The institution is working with the development community on how they can develop vacant spaces for Providence employees.
“Home and Community Care, an extension of Providence, provides supportive housing and one thing we’ve seen come out of the pandemic is a dire need for workforce housing,” said Schwab. “Caregivers cannot afford their rents and that has been exacerbated by the pandemic over the last 18 months.”
Construction Delays and Design Changes in Healthcare
With supply, material and cost chains fluctuating, it has been difficult to acquire materials for capital projects.
“You can lock in a price for a material and the supplier will honor your $10.00 offer for a widget, but someone else will offer $15.00 and move ahead of you in the sequence,” said Stasney. “Rearranging to address the challenges that are constantly changing is like a game of chess. We make one move, the suppliers make another move, the market changes, and you have to think outside of the box on how to deal with the challenges you have in front of you.”
Many discussions have taken place concerning design in healthcare spaces to be better equipped for the pandemic. Cedar-Sinai did a study on how they plan and design future buildings to analyze and identify strategies for improvement.
“I think an important point here is we want to be able to serve all patients,” said Wachtel. “So how do we take care of highly contagious patients without compromising our other patients.”
Kaiser Permanente has introduced a national design standards council to review the dialogue between clinicians and facility workers to try and put forth an official guideline. Stasney says it is an active dialogue that will continue to be evaluated.
In summary, collaborative relationships between organizations and employees have played a fundamental role in advancing healthcare platforms and capital strategies during a global pandemic.
The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a panel discussion on June 8, 2021, about how colleges and universities will effectively return to campus this fall through the lens of the built environment. The informative session discussed lessons learned from the pandemic, distance learning, bringing back the collegiate experience, and the impact of revenue and enrollment on planning and building sequencing.
Hakim Chambers, deputy program director for the Los Angeles City College District (LACCD), a billion-dollar Capital Improvement Program, served as the moderator for panelists from Cal State Long Beach, UCLA, UC Berkley, Stanford and USC.
Lessons Learned from the Pandemic
“The pandemic has forced us to look at our behaviors and how we operate, to really reflect on how we have been doing things so far and how we can improve them. Working from home and video conferencing has allowed us to connect with one another, but we’re still missing that one connection, the human connection,” said Hakim Chambers, deputy program director at LACCD.
Chambers amplifies how important it is for student development in education to experience in-person education and the impact it has on their college experience.
Students Returning to On-Campus Learning Fall of 2021
“We’re working closely with LA County Public Health to identify what that means when we come back in the fall; our plan is to come back at 80% in-person classes,” said Peter Hendrickson, associate vice chancellor at UCLA.
UCLA is preparing to reopen outdoor activity areas, recreation programs, and planning for a somewhat normal fall quarter. UC Berkley will be in-person this fall, similar to UCLA, but classes with over 200 students will be remote.
New learning models developed during the pandemic will be more flexible and inclusive. With hybrid models becoming more common, many businesses and schools are experimenting with different structures. UCLA is exploring the option of outdoor learning attributed to what was introduced as the “healthy campus initiative.”
As the COVID infection rate decreases and mandates come to an end, university leaders are working diligently to acclimate staff and students to new learning models, local data and regulations. A lot of experimentation is anticipated to see what works and what doesn’t as staff and students navigate unprecedented times.
Bringing Back the Collegiate Experience
“Students have felt disengaged,” said Monica Makutano, associate director of design and construction at California State University Long Beach. Student and faculty focus groups were conducted and the feedback received showed students value the face-to-face interaction, but also enjoy having Zoom to offer more flexibility. Staff, however, expressed they felt they were more effective working from home.
“It is kind of a big question. There are still a lot of unknowns, but we are headed to a positive place. We are grateful to have those focus groups to try and get back to what the future looks like,” said Makutano.
The Impact of Revenue and Enrollment on Planning and Building Sequencing
Housing and hospitality services were significantly impacted with limited numbers on campus using services during the pandemic. Hendrickson believes it will take four years to recover from the effects.
“We have about 15,000 beds on campus and at the height of the pandemic we only had around 750 students on campus,” stated Hendrickson.
USC, which lost several beds due to building closures was intending to break ground January 2020 on a new building in USC Village that has been put on hold for various reasons.
“We actually have had to lease space and add an offsite location that is not part of USC housing to accommodate the number of students we have joining us in the fall, specifically the freshman class that is about 200 over what we normally accept,” said Barbara Sladeck, assistant vice president at USC Auxiliary Services.
The COVID-19 pandemic has undoubtedly created many challenges for higher education institutions, and while university leaders are staying diligent and constantly evolving to the current issues, many suggest it will take years to come back from this crisis.
“We never go back; we are always moving forward. What is different this time around is we don’t exactly know what tomorrow is going to look like. To assume tomorrow is going to look like the last 15 months is a mistake, and to assume tomorrow is going to look exactly like yesterday is a mistake,” stated Niraj Dangoria, associate dean for office of facilities planning and management at Stanford School of Medicine.
Dangoria expressed how important a role colleges play in a student’s transition into adulthood, and how vital a robust dialogue is as they continue to serve students. The most important function university leaders provide is helping students transition into other phases of life, and it is a priority to help them navigate whatever path that may be, he said.
The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a panel discussion in May 2021 about how Los Angeles’ television and movie production spaces not only have survived but have rebounded over the past 12 months and what this means for the future of the entertainment industry in the city of Angels.
Abbey Ehman, vice president at Lincoln Property Company, one of the largest and most diversified real estate firms in the United States, served as the moderator for panelists from RIOS, Hackman Capital Partners, JLL and VoyagerOne Studios/Virtual Production Occupier.
The Future of Soundstages Across Southern California
“Why did the studios all coincidentally migrate to this area? Within an hour's drive, you have pine tree-covered mountaintops, you have desert, you have beaches, you have every kind of set imaginable,” said Carl Muhlstein, international director at JLL.
Southern California will continue to be a prime location for soundstages echoed Bob Hale, a partner at RIOS. He believes content creation will remain centered in Los Angeles.
While the demand for soundstage space is at a peak, soundstage projects are a big commitment because it takes at least three to five years to get through the development process, said Hale. A California Environmental Quality Act (CEQA) review which is a law that requires California’s public agencies and local governments to measure the environmental impacts of development projects.
Typically, a soundstage is not built as a standalone product. Stages are usually 18,000 square-feet and one story.
The Transformation of Studio Space
Studios have undergone a substantial transformation, said Zach Sokoloff, vice president of asset management at Hackman Capital Partners. Before the pandemic, industry workers were seeing about 2.5 square-feet of production office and support space to every 1.0 square-foot of stage space. The ratio has been flipped on its head. Now it is more than 2.0 square-feet of production office and support space for every 1.0 square-foot of stage space. The space and cost requirements of the stages are so huge that studios are building in places where land is a bit cheaper.
“As tempting as it is to look at a warehouse and say, ‘Gosh, that could be a stage,’ there's really a lot more that goes into building a stage than simply putting up a concrete space,” said Sokoloff.
Virtual Production Is the Future
The Disney+ series, The Mandalorian, is a good example of how epic television and feature films are going to be made using virtual production, said Matt Hanna, founder at VoyagerOne Studios and Virtual Production Occupier. The program looks like it was shot around the world but in reality, the entire series was shot on a giant soundstage in Manhattan Beach in front of a giant LED wall, that tracked the movements of the actors who performed in front of the screen. The actors were able to see the environment being projected behind them.
Hanna added that his group just closed its first round of financing to build out a pilot facility in Burbank. The group hopes to book and build it out quickly and expand to more facilities in Los Angeles and other viable production hubs, both domestically and internationally.
“We plan to be in the virtual production services business and hope to find not only clients like Netflix and Disney, but also commercial production like music video production,” said Hanna. “We are going to be a content studio that is actively developing intellectual property utilizing the virtual production capabilities that we're building,” said Hanna.
His team is also planning to build an asset library, a digital catalog of the environments available to be put on the screen.
Get Involved in The Industry
Muhlstein suggested that professionals in the industry get involved in their local communities by writing a letter of support or perhaps helping the homeless. The Hollywood Chamber hosts a Homelessness Summit to have educated conversations on how to end the crisis of homelessness in Hollywood.
“I don't care if you're a renter, owner, Democrat or Republican, I think the tide is turning that we really need to do something about California’s homelessness crisis,” stated Muhlstein.
In summary, the entertainment industry will stay in Southern California and virtual production will be more common as the industry adjusts to coronavirus prevention practices.
The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a panel discussion about what makes a successful dense district, how density affects unhoused residents, and the different strategies private developers and public agencies are looking towards such as the Density Bonus Ordinance.
Greg Ames, managing director at Trammell Crow Company, one of the nation’s leading developers and investors in commercial real estate, served as moderator for panelists from the American Institute of Architects (AIA) Los Angeles Chapter, Los Angeles County Metropolitan Transit Agency, City of Long Beach Development Services Department and MacFarlane Partners. Ames began the conversation by introducing speaker Wells Lawson from LA Metro.
Density in Transit-Oriented Communities
Lawson, senior director of joint development for LA Metro, said density is about figuring out the best use of public land and going forward with joint development projects.
“Part of our joint development project is actually branding the station areas around the metro stations to make them feel attractive and identifiable, and to create places that people can celebrate,” said Lawson.
The project also calls for trying to effectively extract a variety of transportation benefits such as rebuilding portals and bike lanes. As density becomes the primary goal of transit-oriented communities, Lawson explained LA Metro’s vision for the program.
“We see these sites as gateways. We want to demonstrate and push the envelope where we can show what could be developed near transit. We are right now taking a broader look at what we’re doing,” Lawson said.
Density in Long Beach
Christopher Ira Koontz, deputy director of the development services department of the City of Long Beach, spoke about density in Long Beach and how ongoing and future projects address affordable housing.
“Density, that works, has a mix of unit sizes and a mix of affordability. In Long Beach, we are trying to add density in a lot of places, not just downtown, to address affordability and overcrowding,” said Koontz.
Many affordable projects are underway such as one next to the Metro A line in Long Beach. Koontz said that this project can deliver density even though it is not a particularly tall building, with only three to five-story elements. This allows the project to avoid some costs that would have been associated with different building typologies.
Ultra Density in Downtown LA
Kevin M. Roberts, senior vice president of MacFarlane Partners, spoke about plans to add ultra density with high-rise housing and hospitality in a downtown setting.
“The goal is to anchor what is already a growing and emerging walkable neighborhood, which many people might not think about right now. This includes the Grand Avenue cultural spine from Disney Hall to MOCA and offices on that spine, including our building, which will be a plaza leading into a wonderful Metro site connected to the rest of LA,” said Roberts.
The addition of high-rise housing will cater to a niche of luxury- to ultra-luxury operators.
Wade Killefer, president of the American Institute of Architects, Los Angeles Chapter, said that the first step to approach the problem of housing and homelessness will be to stabilize those on the streets by bringing them into shelters.
“There they can get clean, get fed, get properly diagnosed and get on the list for permanent supportive housing. We’ve been working on two shoulders for the county; West Athens adjacent to the 105 freeway at Normandy, and the other on a parking lot at the West LA Armory,” said Killefer.
The West Athens location, called Safe Landing, will serve about 3,100 individuals per year. It is made up of five metal butler buildings, including a dining hall and admin, clinic and community buildings.
The second shoulder shelter in the Armory will have the units but with less clinic space. According to Killefer, the north and east walls that are joined by the National Guard campus will be 12-inch thick concrete blast walls.
In summary, proposed density in the West will benefit communities and create a better living environment for those in the area.
The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a panel discussion about the future of aviation in April 2021.
Justin Towles, senior policy advisor at Akin Gump, a leading global law firm providing innovative legal services and business solutions to clients worldwide, served as moderator for panelists from Gevo, Los Angeles World Airports, Joby Aviation and Urban Mobility Labs. Towles began the conversation by asking what the future looks like for sustainability in aviation.
Sustainable Solutions for Jet Fuel
Patrick Gruber, chief executive officer and board member at Gevo Incorporated, said Gevo is a company with a focus on making sustainable aviation by utilizing renewable resource-based jet fuel with a net zero carbon emission.
“I think in the future in 2050, we’re going to see a mix of solutions. Which [primarily] is going to be hydrocarbon-based jet fuel, but you might see other applications of hydrogen or electricity happening in certain places where it makes economic sense,” said Gruber.
William Goodwin, deputy general counsel for policy and regulatory affairs at Joby Aviation, talked about how Joby Aviation is in the process of developing an eVTOL aircraft, an electric airplane that will be able to take off and land vertically. This would be the first vehicle of its kind to be a quiet and emissions free aircraft.
David Reich, deputy executive director of mobility planning and strategy at Los Angeles World Airports, shifted the conversation to explore the future of airport transportation, such as electrification for not just passengers but for employees as well.
“There’s been a revolution of mobility in the last decade, and a lot of that is affecting airports and will continue to affect it,” said Reich.
Reich spoke about plans for the future to improve the airport environment and relieve congestion in the central terminal area, also known as the horseshoe.
“Our $14 billion capital investment plan, which includes a $5.5 billion landside access program, will be the new automated people mover which will be on a fixed guideway. It will be autonomous and above all electric. This will increase HOV use by connecting to our metro system, “ said Reich.
Clint Harper, advanced air mobility integrator, urbanist and economic developer for Urban Mobility Labs, spoke about working on integration within the city of Los Angeles to improve the airport ecosystem.
“We have an opportunity to break down traditional transportation silos and lead the way through intermodal planning to create a balanced, sustainable and efficient mobility system,” said Harper.
Understanding Sustainability In a Business System
Gruber explored how sustainability functions by providing a transparent understanding on how greenhouse gas emissions are problematic and how the future of aviation will implement more renewable electricity.
Topping greenhouse gas emissions in the world at 73% is fossil-based energy such as electricity, natural gas for heating and production, etc; transportation is a contributing factor at 16%. All of these factors come into play in a business system.
“We are going to build our own renewable energy sources. A business like ours is going to make both hydrocarbons for jet fuel and we will use renewable energy along the way,” said Gruber.
In summary, the future of aviation looks promising for both airport transportation and aircrafts through the implementation of sustainable practices.
The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a panel discussion in February 2021 about the future of prefabrication and modular construction. Any component of a building that is manufactured in a factory before arrival and installation at a building site is prefabricated. Modular construction is a type of prefab construction but it involves an enclosed space like creating a room.
Ray Boff, national prefabrication strategy leader at DPR Construction, a commercial general contractor, served as the moderator for panelists from UC San Diego, RMOD a Relevant Group Company, HCA Healthcare and UC Davis. Boff began the conversation by asking why prefabrication and modular construction are important now.
Prefabrication and Modular Construction Gaining Momentum
Darren Seary, a vp of modular operation at RMOD said prefabrication and modular construction are a necessity right now because a 2019 report by McKinsey shows that California is going to need an additional 3.5 million housing units by 2025. Seary said the industry is looking at alternative means of construction to achieve that target.
Jim Carroll, associate vice chancellor and university architect at UC Davis, is facing some challenges to constructing the number of properties needed by 2025. He is concerned about prevailing wages since the projects are extremely expensive.
“You have to ask yourself, do we really have the trades to be able to build with the speed and consistency that we really need to get some of these units up fast,” said Caroll.
Eric Smith, associate vice chancellor in the capital program management of UC San Diego, is also worried about the need for student housing. The university could deliver housing faster if it had a modular design for manufacturing and assembly techniques to bring the cycle forward, he said, which would be a huge benefit in terms of the ability to house students at a lower cost, as well as bringing revenue that comes from the housing.
UC Prefabricated Projects
UC San Diego is working on two projects. One is getting ready to start construction while the other has been interrupted briefly by Covid-19. The university is using a system-wide scale, unit-wide scale and component scale to develop housing for one of the projects. As a result, UCSD is building bathroom and kitchen pods, which help save time on construction.
UC Davis has two resident hall projects over the last five years and also has two public-private partnerships projects. Caroll said that one of the challenges is quantifying advantages to make off-site work more competitive.
“I think the contractors are giving us more repetitive build capabilities and saving the money themselves on the offsite efforts,” stated Caroll.
Healthcare Industry Use of Prefabrication
Natasha Morre, senior process improvement analyst in capital deployment of HCA Healthcare, said that the health care industry has been toying with prefabrication for years. Morre is looking at patient remodels, exterior walls and more complex MEP racks. Morre’s team is also trying to figure out how to get the maximum benefit of prefabrication for freestanding emergency rooms and has started prefabricating items that repeat in their hospitals.
“Prefabrication and modular allows us to speed to market without sacrificing the cost of quality,” said Morre.
In summary, there are prefabricated modules of all types in all places. Each location offers unique opportunities and capabilities.
The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a panel discussion about justice, equity and inclusion in the real estate industry in January of this year.
Chris Rhie, associate principal of Buro Happold, an international consultancy of engineers and consultants, served as the moderator for panelists from the Mayor’s Office of Oakland, the planning department for the City of San Diego and the City of West Hollywood. Chris began the conversation by asking what it means to have equitable access to physical spaces.
Warren Logan, policy director of mobility and interagency relations for the Mayor’s Office of Oakland, is focused on advancing racial equity in transportation. To help the city connect people from their homes to jobs, Logan wants to expand access to different types of transportation that include bicycling, scooter riding and light rail transit.
“The goal is to advance mobility justice, to change the way that we move around the region and to restore some of the really racist harms and injustices that prevailed by putting freeways where they work,” said Logan. “In Los Angeles for example, you can track where all of the lowest income people were located, based on where the freeways were placed.”
Lindsey Horvath, mayor of the City of West Hollywood, is working to bring an extension of the Crenshaw rail into West Hollywood to connect the two communities. Horvath’s team is also creating a new social justice task force, which will be comprised of residents, business owners, community members and stakeholders. To help create an equitable policy to access West Hollywood.
Housing Stability For All
Nancy Graham, development project manager of the City of San Diego’s Planning Department, believes that the city will not have equity until everyone owns a home. Graham’s department, which is working diligently to build as many homes as possible, understands that the development community needs a lot of regulatory flexibility to respond to constantly changing markets. The city is allowing developers to choose the height of the property near transit and the number of units.
James T. Butts, mayor of the City of Inglewood, has placed a 3 percent cap on rent increases per year and a moratorium on evictions to help residents stay housed during the pandemic.
Horvath is also supporting renters in West Hollywood. “I think we are the first and maybe the only city in the country to incorporate the idea of stabilizing rents,” said Horvath. “People were really looking to protect housing and I think we're seeing housing as a primary issue of equity.”
Logan recognizes a shift in the demographics in Oakland. He claims that Oakland’s black and brown neighborhoods used to center in the downtown area, but now, Logan is seeing those residents move to places farther away.
Graham is also seeing residents moving farther out of San Diego and her team is trying to make sure that jobs follow the new housing.
Equity With A Budget
San Diego has spent about 10 percent of its budget on social services for its most vulnerable community members. Before COVID-19, San Diego had $100 million in reserves, which was about its annual budget.
“You have to be nimble with your budget and plan to make sure that you can weather a very difficult storm like COVID-19 because the people who are at the margins are even further marginalized and more at risk,” said Graham.
Equity In The Real Estate Industry
The architecture, engineering and construction industries can help advance equity. Logan is constantly pushing contractors and subcontractors to hire people from Oakland.
In West Hollywood, Horvath is encouraging larger development projects to include public space on private land.
“If you make land more open, you start building community,” said Horvath. “You can make a better project if you bring equity onto the table.”
Feel free to use these equitable strategies to support your community.
The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a panel discussion in late November 2020 about the future of student housing in the Southern California market.
Jason Taylor, vice president of American Campus Communities, one of the nation's largest developers of high-quality student housing apartment communities, served as moderator for panelists from The Scion Group, Brailsford & Dunlavey, UCLA and USC. Taylor began the conversation by asking what changes they see in student housing.
Student Housing Is Still Thriving
In most university markets, occupancy levels outperformed expectations for the fall of 2020. Students in their freshman year view on-campus living as a rite of passage.
Colleges and universities are faced with financial challenges. Current short- and long-term financial strategies must be redirected to address potential cash flow shortages, financial solvency and future viability.
The drop in enrollment at community colleges ranges from 10 to 30 percent, said Kim Wright, a senior associate with the program management firm of Brailsford & Dunlavey. She noted that many low income and first-generation students choose not to enroll this year and that international student enrollment had also seen a significant decline. But Pearlman anticipates higher student enrollment at the community college level in the near future because of the unavailability of beds at four-year state institutions which have seen double-digit increases in applications. He said that community colleges are adding housing during the pandemic to compete with other community colleges.
USC welcomed about 720 spring admit first-year students, who started their college careers in January 2021, while UCLA saw record enrollment for its current freshman.
“We could have been close to 100 percent occupancy based on demand. Our students wanted to be here,” said Brian MacDonald, director of residential education for UCLA. He doesn’t expect a change in occupancy for the winter quarter and he is optimistic about the spring.
New Student Housing on Demand
UCLA and USC have put their RFPs for student housing projects for 2021 on hold but Wright predicts that there will be an uptick in the freshman and sophomore classes for 2021 and 2022, and suggests that colleges should plan to move forward with the RFPs so they will have enough housing for the next couple of years.
She added that students prefer to live in studios or one-bedroom units where they can live by themselves. Cost, location, and WiFi are key elements for students when considering housing.
The Evolving College Campus
Since the 2008 recession, nearly all universities in the U.S. have been forced to evolve their funding sources to be competitive. They have adapted to reduced public funding, maximized other revenue streams or simply created new revenue opportunities. Many schools are cash poor, real estate rich and are looking to monetize their land to help diversify their sources for income. This approach is being used for student housing but not for active multi-family housing projects or retirement villages. Other mixed-use projects can alleviate financial pressures on a campus, while surrounding the campus with productive uses of space.
“Arizona State University Mirabella is moving forward with multiple construction projects around the Tempe area including a research facility, public transportation and a retirement center. The project can generate a lot of revenue to help with other campus projects and priorities. It will diversify the revenue stream that is outside of student housing to support student housing and other campus life aspects,” said Wright.
In summary, there will continue to be a need for student housing. Four-year state institutions and community colleges should continue to build new housing.
The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a virtual town hall with Dave Gilmore, President and CEO of DesignIntelligence and Design Futures Council, about the pandemic’s impact on the real estate industry and the economy. Here’s what Gilmore is expecting in 2021:
Consumers Driving Construction
Consumers will drive further declines in the construction of new retail, entertainment, commercial office, aviation and higher education spaces. People are not buying and consuming the way they used to and if the political and social conflicts continue in the United States, economic distress will remain.
“Ultimately, everything comes down to how consumers consume. So, if you and I are feeling good about ourselves, we spend. If we're not feeling good about ourselves, we pull back and the markets falter,” said Dave Gilmore.
Commercial Office May Not Grow
The commercial office space will continue to see minimal activity for the first half of 2021. A study by Cisco Systems interviewed 1,500 executives across the United States and found that 90 percent of the companies would not bring back their employees into the office. Alternately, they are leaning toward a remote worker infrastructure.
Commercial real estate investor confidence continues to be subdued as well. People aren't paying their loans and the loans are defaulting. Institutional term loan defaults are estimated to exceed $100 billion through 2022. To make matters worse, the total commercial debt combined with multifamily debt has now approached $4 trillion at the end of the second quarter.
Residential Investments at Risk
The CARES Act placed a ban on all of the mortgage holders so that they could not take action on late payments, until August 31. 15 million residential mortgages are now at risk of foreclosure. Gilmore expects these homes to foreclose in the next 12 months.
Schools and University Cling to Safely Standards
K-12 schools and college universities need to standardize policies and processes to ensure the safety of those who are attending in-person classes. Higher education depends on the effectiveness of the vaccine and if people feel comfortable attending in-person classes. But many students are making the switch to online courses.
There will be an increase in K-12 construction with building designs that adapt to a pandemic. More kids will go back to school.
“We think that public bond money is going to be made available because people don't want their kids at home working from a screen, which is different than the higher education context,” said Gilmore.
Hospitality at Risk
Until the vaccine is distributed, the hospitality industry such as hotels and resorts will remain flat. 50 percent of current assets in the hotel market are now moving into default. There might be a series of fire sales of assets in 2021.
Healthcare Will Receive Funding
Hospitals and healthcare facilities will receive adequate financial support from both the state and federal sources to ensure their facilities are best provisioned for ongoing Covid-19 outbreaks. Nevertheless, many of the hospitals are radically under-optimized. There is an opportunity for those asset owners to improve their space.
Sports, Entertainment and Mass Transit in Danger
Even when the vaccine becomes available, will people be willing to sit close to one another? The pandemic has made it difficult for people to gather in large groups. The entertainment and sports industry are predicted to be flat for two years. Also, about 50 percent of the airport projects that were planned or started got postponed or canceled.
Key Takeaways for RE Leaders
Real estate leaders must refresh and transform their brand identity to create new value offerings and to initiate new financing structures. This is a period for redefinition since this is not a normal recession. We have been living through a series of crises and we are still in the middle of them. Healthcare, economic, political and social sectors are hitting us all at once.
Identify and secure the essential people in your organization that you depend on and will generate value for the firm. Invest in an authentic internal relationship. Consider getting creative about new models for recognition, rewards and compensation.
Reduce your physical footprint because you do not need it anymore. Adopt a mantra of less is more. If you're in charge of the money prioritize your top 10 spend and then reduce it to seven. Operate like every dollar counts because it does.
“It's time to reconsider the art and science of business development. If you've been doing business development based on the old paradigms and the world is radically shifted around you, maybe there is a new way to consider business development for the future of your firm,” stated Gilmore. “It is time to get crazy about environmental and social responsibilities. It's time to get crazy about doing the right thing for the good of all.”
Feel free to keep these helpful tips in mind to refresh your real estate firm to support the industry in 2021.
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