Search

LA Real Estate in a Pandemic: an interview with David Park

There is no doubt that these are unusual times. We are attempting to navigate unforseen circumstances in foreign ways.

I sat down with David Park, Los Angeles’ premiere real-estate guru, to discuss the pandemic and its effect on real-estate strategy and trends.

How have you seen the pandemic affect real estate?

Everything that humans touch is being affected. Specifically I have seen hotels, restaurants, bars, and other commercial space hit the hardest. Hotels, for example, are the biggest things that people invest in and are experiencing insurmountable levels of vacancy. Restaurants and bars can’t make rent. This affects everything.

What strategies have you seen employed by investors and companies during this time?

What I’ve noticed is that during this time diversification is key. Real estate moguls and companies that have diversified their assets are better able to compensate for the loss of rent from commercial and residental tenants, which in turn, allows those businesses and people to stay afloat.

What this circumstance has really highlighted - even though at some level we inherently know this - is that you never want to put your eggs in one basket. Especially when it comes to real estate.

What advice would you give to someone interested in diversifying?

One of the most under-utilized strategies I’ve seen in real estate is business partnerships - and I’m not talking about two established moguls going in on a property together - although that’s smart too. I’m talking about the business entrepreneurs - the restaurant and hotel owners - the people who usually rent space partnering up to purchase their own space.

For example I have a colleague in the restaurant industry. He decided to purchase his restaurant property with other key investors/business owners - by employing a partnership strategy property ownership became possible and, in turn, gave him a financial safety net to pursue other ventures - hence diversifying.

I also think a situation like the one we’re seeing now really highlights the need for the partnerships. It’s a very important way that businesses have been able to absorb the financial hit. My prediction is that people will start to see this more after the pandemic.

In the past, I’ve noticed many business owners who have a singular vision for their business and are hesitant to partner. My thought is you need to not only diversify your assets but also your dream. If you share in someone’s dream and approach with a cooperative mindset you will support yours.

Again, its all about not putting your eggs in one basket.

What are other ways that you think real estate will be changed by the pandemic?

In a lot of ways I think that real-estate is trapped in archaic times. We just haven’t seen it adapt to changing circumstances as quickly as some other industries.

What we’re seeing now however is everyone being forced to use technology in ways that they weren’t before, which will definitely change the landscape of how we orient ourselves to real estate.

Even the way we are changing the relationships to our living space will have an effect. People will start to become more conscious about what they want from their residence as they spend more time at home, which could lead to more add-ons/renovations. Perhaps we will see more ADU’s (accessory dwelling units) popping up as the use of home offices increase - the possibilities are endless. We are truly seeing a shift that hasn’t happened before. It will be interesting to see how we - and real estate specifically - adapt.

Are there any ways that you think real-estate will stay the same?

Yes - there are definitely things that are not going to stop. One thing I’ve come to realize is that money to investors is an ‘employee’ and if their greatest employee isn’t working they’re not making any money. Thus, investors are always going to invest. That’s going to continue forward especially with real estate.

Another thing is working with the city itself. If you’re going along with the city initiatives - stuff like Measure M for example - you’re going to maintain success. Its inveitable that Los Angeles becomes an International hub via transportation driven intitiatives - we will have the backing of the city money for that.


81 views

800 West 6th Street Ste 1250, Los Angeles, CA 90017

2019 Copyright © All rights reserved.

TCS LOGO NEW 2018 White.png