Why Building a Crosswalk in LA Is Kafkaesque

SPEAKER_1 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Joe Weisenthal (0:18)

Hello, and welcome to another live episode of the Odd Lots podcast. I'm Joe Weisenthal.

Tracy Alloway (0:24)

And I'm Tracy Alloway.

Joe Weisenthal (0:25)

So we're here at the Vermont Theater in Hollywood. And of course, you talk about Hollywood, but you also have to talk about the real estate industry. We know this has always been a hub, a booming real estate industry. But what do the changes in economic development and the housing market, how does it manifest itself here?

Tracy Alloway (0:42)

That's right. So we have a real treat for you. We're going to be speaking to an absolute legend in the world of residential real estate. Someone who actually called the subprime bubble before 2008, and maybe even more importantly, called the bottom of the housing market after 2008 Then we're also going to be speaking to a relative newcomer in the world of commercial property, someone who's doing new things in LA and trying to develop basically a new neighborhood.

Joe Weisenthal (1:08)

So enjoy our conversation with the legend, Bill McBride of Calculated Risk, as well as Zach Lasry, real estate developer, founder of the Western Company. Thank you both so much. Zach, what do you do?

What's your job?

Zach Lasry (1:24)

I'm a real estate professional.

Joe Weisenthal (1:25)

Okay, what does that mean? Because there are a lot of people who could say those words.

Zach Lasry (1:30)

So my goal with the Western Company, the goal that we have is that being able to say, I'm a real estate professional is more exciting than it normally is. So I come from a theater and acting background.

And what I noticed was the developments that I was seeing in Los Angeles moved here in about 2014

Joe Weisenthal (1:51)

Okay.

Zach Lasry (1:52)

You know, you have a really exciting neighborhood pop up in Silver Lake or Echo Park or Highland Park. Yeah. And then whenever scaffolding would go up for a new building, there's generally, oh, oh no, what's that going to be?

And that's not the reaction that you should have when a new building is being built. There should be some excitement. What is that going to be? What kind of new creative spirit is going to enter into that structure? And I just don't think the commercial real estate industry is that inspiring in that way. Those outcomes haven't been so inspiring. So our goal is to infuse development with the art spirit.

Tracy Alloway (2:31)

So I'm going to ask a very basic LA question, and I'd be curious to get both your takes on this. And again, Joe gave the caveat earlier, which is we've been to LA a couple of times, but we don't know that much about it. Whenever I come here, I am stunned by the diversity of independent businesses compared to New York.

Joe Weisenthal (2:49)

I think about this all the time.

Tracy Alloway (2:51)

There's so many mom and pop shops. I passed by a linoleum emporium on the way over here, which I just don't think you would ever see in New York. And I'm sure the direction of travel for a lot of independent businesses isn't that great, but how have so many managed to survive in LA so far compared to other places in the US? All the doughnut shops.

Joe Weisenthal (3:12)

Yeah.

Zach Lasry (3:14)

Well, I went to school in New York, went to NYU, and a lot of my most talented friends left New York and moved to Los Angeles because New York just got too expensive. And LA, while it's expensive to buy a home in LA, you can generally find a good rental deal in a really exciting neighborhood.

It's a lot harder to do that in New York City. So you have people who are just dedicated to their craft, who can survive in LA and focus on their art versus in New York, it's a lot more difficult to be able to focus on your craft while being able to pay rent. So I think you just have more of an experimental group of people who are moving out here and who exist and trying to start and create new ideas.

Bill McBride (4:00)

Bill, thoughts? Well, I would also address the density issue. In New York, you have really high density and therefore, you're going to have high rent for a particular location. Here, we're really spread out, which is an issue, by the way.

We should address zoning in LA because we can't stay spread out forever, or as spread out as we are. But I think that's a reason that you see so many mom and pop shops, which is great. In my community, I live right off PCH, Pacific Coast Highway, and most of the stores are mom and pops. There are some chain restaurants and stuff. So I think it's the density.