Why Building a Crosswalk in LA Is Kafkaesque

Odd Lots

In this live episode from Los Angeles, hosts Joe Weisenthal and Tracy Alloway sit down with real estate experts Bill McBride and Zach Lasry.

Key takeaways

• Zach Lasry applies an 'A24-style' approach to real estate by seeking visionary tenants rather than generic chains.
• The process for installing a simple crosswalk in Los Angeles is described as 'Kafkaesque' due to extreme costs and bureaucratic delays.

Main topics

• Los Angeles real estate development
• Urban zoning and density

Notable quotes

It's like a Kafka novel.

Conclusion

The episode offers a nuanced look at how regulatory, economic, and tec

Transcript preview

Speaker 1 (0:00) AI is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags. Join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examine the defining trade-offs shaping the future of AI. Thank you to our presenting sponsor, Salesforce, and supporting sponsors, IDA Ireland and Schneider Electric. Learn more at BloombergLive.com slash Tech London. Speaker 3 (0:32) Bloomberg Audio Studios. Podcasts. Radio. News. Speaker 6 (0:48) Hello and welcome to another live episode of the Odd Lots podcast. I'm Joe Weisenthal. And Speaker 2 (0:54) I'm Tracy Alloway. So Speaker 6 (0:55) 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 of booming real estate industry. But what did the... the changes in economic development and the housing market, how does it manifest itself here? Speaker 2 (1:12) 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. And 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. So Speaker 6 (1:38) enjoy our conversation with the legend Bill McBride of Calculated Risk, as well as Zach Lazary, real estate developer, founder of The Western Company. Thank you both so much. Zach, what do you do? What's your job? I'm a real estate professional. Okay, what does that mean? Because there are a lot of people who could say those words. So my goal with the Speaker 5 (2:02) 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. Okay. You know, you'd have a really exciting neighborhood pop up in Silver Lake or Echo Park or Highland Park. Yeah. And then all the new whenever scaffolding would go up for a new building, there's generally a, 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? Speaker 5 (2:44) new creative spirit is going to enter into that structure. And I just Speaker 6 (2:48) don't Speaker 5 (2:48) think the commercial real estate industry is that inspiring in that way. Those outcomes haven't been so inspiring. So our goal is to sort of infuse development with the art spirit. All Speaker 2 (3:01) right. So I'm going to ask a very basic L.A. 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 L.A. a couple of times, but we don't know that much about it. Whenever I come here, I am sort of stunned by the diversity of independent businesses compared to New York. Speaker 6 (3:19) I think about this all the time. Yeah, Speaker 2 (3:20) there's so there's so many mom and pop shops like I pass 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 L.A. so far compared to other places in Speaker 5 (3:40) the U.S.? All Speaker 2 (3:40) the donut shops. Yeah. Speaker 5 (3:44) 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. Speaker 6 (4:21) So Speaker 5 (4:21) 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. Speaker 4 (4:30) Bill, Speaker 5 (4:31) thoughts? Speaker 4 (4:31) I would also address the density issue. Speaker 2 (4:34) In Speaker 4 (4:34) 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. Speaker 6 (4:42) Yeah. Which Speaker 4 (4:43) 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. You know, 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, you know, I think it's the density. I Speaker 6 (5:11) have to say, I've talked about this, I love strip malls. I love, like, seeing, like, the Korean restaurant next to the tooth whitening place, next to the vape shop, next to the karate school, next to the... Like, to me, like, that's like... One of my favorite, I love driving Speaker 2 (5:26) by. Speaker 6 (5:26) Truly multi-use development. But Zach, when you're thinking about, okay, you want this to be, you want to create a building that actually get people excited rather than another building. What are the ingredients to that? Speaker 5 (5:39) I think you have to be focused on, so the way that we're trying to approach finding tenants, we like to think of it like almost like how A24 tries to find filmmakers. Yeah, okay. How can