More than 300 industry leaders gathered for the January SCDF 2025 Economic Forecast, engaging in discussions on the trends, challenges, and opportunities shaping the real estate landscape this year. The event served as a platform for sharing insights into market shifts and economic forces expected to influence the industry. 

Moderated by Sam Pepper, vice president of development for Lincoln Property Company, the expert panel featured Eric Sussman, professor at the UCLA Anderson School of Management; David Fan, senior research director with JLL; and Shlomi Ronen, managing principal and founder of Dekel Capital. 

Philanthropy and Community Commitment 

Before diving into market forecasts, SCDF took a moment to address the devastation caused by recent wildfires. This year, SCDF selected Architecture and Advocacy as its primary philanthropic organization, dedicating a significant portion of event proceeds to the nonprofit’s mission of redesigning neighborhoods for the better. Additionally, SCDF reinforced its commitment to wildfire relief efforts, partnering with organizations like Harvest Home and Flint Ridge Center. A representative of Architecture and Advocacy shared the nonprofit’s goals of addressing neighborhood inequality and providing students with greater access to STEM programs. 

Key Discussion Points 

· Economic Forecast and Wildfire Impact 

The discussion opened with a sobering acknowledgment of the destruction caused by the Pacific Palisades and Altadena fires, which decimated homes, businesses, schools, and public facilities. Panelists underscored the long road to recovery and the pressing need to streamline rebuilding processes to help affected communities move forward swiftly. 

David Fan outlined the immediate and long-term impacts on the residential sector, emphasizing that rebuilding efforts will likely take longer than anticipated due to rising construction costs and labor shortages. He also pointed to a significant housing challenge: many displaced residents want to remain in their original neighborhoods, but limited rental availability may force them to relocate permanently. 

Shlomi Ronen highlighted the growing concern around insurance costs. “Before these fires, developers often saw insurance as an overlooked line item. Now, with the rising impact of natural disasters, many are re-evaluating these costs and reconsidering where to build.” 

Eric Sussman, a Pacific Palisades resident himself, shared his gratitude for not being directly affected but emphasized the need for a more efficient permitting process. He pointed to regulatory hurdles from 

agencies like the Coastal Commission and the California Environmental Quality Act (CEQA), which often delay development. 

· Macro Trends and Market Indicators for 2025 

Shifting to broader economic trends, panelists expressed optimism about the retail and industrial sectors, citing strong inventory replenishment and consumer resilience. According to Fan, JLL’s Q4 2024 reports showed the strongest market performance in recent years. 

“Earnings are outpacing inflation, which gives retailers a confidence boost. We expect consumer spending to continue supporting the market into 2025,” he noted. 

Ronen discussed the evolving capital landscape, explaining that developers who once relied on traditional bank financing have increasingly turned to private debt funds. While Federal Reserve rate cuts may provide some relief, he tempered expectations: “It’s unlikely we’ll see 3% interest rates again in our lifetime.” 

· Multifamily and Office Sectors Outlook 

Fan pointed to strong demand for multifamily housing but acknowledged affordability concerns. “The median cost of homeownership in LA is nearly double the cost of renting an apartment. With LA ranked as the third most expensive market for single-family home affordability, multifamily rentals remain a viable option for many.” 

Ronen highlighted regulatory and financial hurdles, including rent control and the city’s mansion tax, which have deterred investment. He also criticized the prolonged approval timelines: “In LA, it takes at least 24 months from land purchase to breaking ground. That’s far too long given our housing shortage.” 

Sussman elaborated on the challenges facing office space, citing interest rates, inflation, and the increasing need for fire resilience. “In my class, I call it the ‘I’ of the storm—interest rates, inflation, insufficient rent growth, illiquidity, insurance, and intense regulation.” 

· The Future of the Office Sector 

Despite historically low office valuations, opportunities remain. Ronen noted that while institutional capital has pulled back, private capital investors are still active. “We haven’t seen the distress wave many expected. With return-to-office initiatives gaining momentum, the office sector may stabilize faster than anticipated,” he said. 

· Opportunities in Industrial, Life Sciences, and Retail 

New growth areas emerged in the discussion, with panelists highlighting data centers and student housing as strong investment opportunities for 2025. While Sussman urged caution regarding the bullish 

sentiment around data centers, there was broad agreement on a retail resurgence, particularly in high-quality centers. 

Looking Ahead: Rebuilding and Adaptation 

The conversation concluded with a focus on rebuilding efforts and the need to streamline processes to help residents return home more quickly. Adaptive reuse of office buildings for multifamily housing was discussed, though panelists acknowledged the financial and logistical hurdles that make conversions challenging. 

Despite these complexities, Los Angeles remains an attractive place to live, buoyed by strong universities, a thriving tech and entrepreneurial ecosystem, and an unparalleled quality of life. 

“As challenging as it is to build here, the fundamentals remain strong,” said one panelist. “You can ski and surf in the same day, and the weather is unbeatable.” 

In the end, Los Angeles continues to be an extraordinary place to live, work, and invest.