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Tuesday, Jun 6, 2023

Lofty Living

When Greg Brody first started building urban-style multifamily buildings in 1990, it was on a small scale. That first project was 30 units, with about 7,000 square-feet of retail and 2,000 square-feet of office space at Van Nuys Boulevard and Dickens Street in Sherman Oaks. Fast forward almost 25 years, and that first project almost seems quaint. This summer, the Sherman Oaks developer and his BW Brody Affiliated Cos. finished Metro Art Sherman Oaks, a 113-unit development with 16,500 square-feet of retail frontage on a busy stretch of Ventura Boulevard east of Van Nuys Boulevard. Then there are rental prices, which start around $1,800 a month for a loft and run about $3,000 for a two bedroom – more than many pay for their mortgages. “Let’s face it, professionals are generally who can afford these rents,” said Brody. “While they’re not extremely expensive by L.A. standards, they’re definitely higher by Valley standards.” Pricey but apparently there is a market for them. The developer bought the parcel for his project from Bank of America Corp. for $6.3 million in 2009, but the move looks like it will pay off. The development is already more than 80 percent leased since opening in June. Perhaps it’s the Metro Orange Line bus way within walking distance, the Ralph’s grocery next door, or the Island’s restaurant and Mendocino Farms sandwich shop on site. In short, the trendy mixed-used multifamily projects that have popped up on the Westside have arrived for real in the Valley. And like their counterparts elsewhere, the developments tend to be located in busy districts and near mass transit, where younger residents might ditch their cars, hop on bike or catch a train or bus. Sherman Oaks is an ideal Valley neighborhood for these developments, with plenty of office and retail nearby, but across the region there are examples, from the Talaria at Burbank and the Citi Live/Work Community in Glendale to Cielo at Villa Metro in the Santa Clarita Valley. But the arrival of this new type of development hasn’t come without conflict. From city officials often hesitant to approve zoning changes and variances to nearby residents fearful over potential increases in traffic and noise, it’s often a battle to win approval. One project, Il Villaggio Toscano in Sherman Oaks, only got the green light a few months ago – after a 10-year feud with local homeowner associations. Commercial broker Matthew May, president of May Realty Advisors in Los Angeles, who has worked on urban development projects for more than 20 years, said there is little doubt in his mind that the wave of projects is noteworthy. “The Valley really has come of its own,” he said. “The momentum is changing, including the overall perception of the Valley.” Urban living The argument in favor of these projects is simple: People can live, work and play in a neighborhood, limiting traffic and the money spent on gas. And for those that still need to commute, many of the projects sit near public transportation and could make a car less integral to city life. Take the $150 million Talaria at Burbank project. The 241-unit development was recently proposed by longtime Burbank developer Michael Cusumano and his Cusumano Real Estate Group for the city’s busy Media District. The five-story, 385,000-square-foot project at 3401 W. Olive Ave. will feature a mix of one-, two- and three-bedroom units, in addition to a 43,000-square-foot Whole Foods Market Inc. grocery on the bottom floor. The 3.8-acre site is in the center of the Media District, with Warner Music Group directly across the street. Not far away are Burbank Studios (formerly NBC Studios), Warner Bros. Studio and the headquarters of Walt Disney Co. “We think it will work really well. In our downtown, we have people who live, work, eat and shop all nearby,” said Joy Forbes, community development director for the city, who said the project also offers the city financial advantages in tax revenue. “There are strong economic development possibilities too.” Adam Christofferson, first vice president and regional manager at the Encino office of Marcus & Millichap Inc., said all multifamily development is hot right now, with vacancy rates in the Valley at record lows – about 3 percent – and rising home prices that make buying increasingly difficult. And the luxury amenities these projects can offer make them attractive to young professionals with busy schedules. “Part of the renter profile out there likes the idea of having amenities right at their feet, having a sandwich and dropping off dry cleaning on site,” said Christofferson. “At some level, it’s the filling in of the gap in the marketplace as well.” The effort to build the projects can be brutal, though. Last decade, a larger plan with even more units forced the original developer, Platt Cos., into bankruptcy. Cusumano later picked up the property for an undisclosed sum. In Sherman Oaks, developer M. David Paul Associates of Santa Monica is still fighting a decade-old battle over its $130 million Il Villaggio Toscano. The 325-unit, 605,000-square-foot project received L.A. City Council approval in August. It’s on Sepulveda Boulevard near Camarillo Street – a few feet from the Ventura (101) and San Diego (405) freeways interchange. Toscano features 52,000 square-feet of retail that the developer hopes to fill up with a specialty grocer, a four-story parking garage, two levels of which are underground, with more than 1,000 spaces. And the building is walking distance from about 6.5 million square-feet of office space, making it ideal for those interested in the walkable urban lifestyle. But even though the city has given the go-ahead, M. David Paul Development Manager Paul Krueger is still not celebrating. “I haven’t taken a moment yet to go out and have cocktails and enjoy this,” he said. “I’m thankful for getting this far in the process, but nothing is over till it’s over.” Community pushback Krueger won’t celebrate because he knows city approval isn’t the final step. Community members that have been fighting the project all along have yet to surrender. “Litigation is always a possibility and we’re looking into it,” said Marshall Long, chair of the planning and land use committee of the Sherman Oaks Homeowners Association. Long cites a number of problems his group sees with the project, from the potentially large increase in traffic in an already congested area, to the noise neighbors will have to bear, to even the pollution Toscano renters could be exposed to from living so close to the freeway. And Gerald Silver, president of the Encino Homeowners Association, which also abhors the project, said it will fail to provide what it promises. “The reality is that people will move into an apartment and then get a job at the place with the best pay and opportunity. Being able to walk to work is forgivable for a better job,” he said. “If developers are building a high-density place, there should be requirements that tenants work nearby or the whole point is lost.” Still, the developer calls the battle “unfortunate,” stating that his firm took all the necessary time to educate the public on the benefits of the project and even altered it to appease the local community. The initial Toscano proposal was eight stories tall and had 500 units, 35 percent more than the approved plan. “Some people are always going to have a natural desire to complain about change,” said Krueger, the developer. “But it’s what development is about: change.” In contrast, pushback has been minor for some projects in more suburban, bedroom communities. Rick Bianchi, vice president at Aliso Viejo-based New Home Co., is working on two such projects: the 220,468 square-foot, $50 million luxury condominium Village at Calabasas complex, mere steps from the Commons at Calabasas; and the Cielo at Villa Metro, a 22-unit live-work project attached to a larger, almost $70 million single-family home development in Valencia. Cielo is next to the Santa Clarita Metrolink station making it a more urban option for suburbanites who commute. Both projects have received approval from their respective cities, with Cielo already open for initial sales. And while Valencia is known for its wealth of raw land for housing tracts, it isn’t so simple in Calabasas. The Village will require tearing down the more-than-40-year-old Calabasas Inn. “People have been very supportive of these projects,” said Bianchi. “And while it’s a new concept for the city of Calabasas, it will be something that’s commensurate with what people have become accustomed to in Calabasas.” Oversaturation? Then there is Glendale, which has a massive amount of urban development in the works. The city has about 2,000 residential units entitled or under construction in its downtown area. Earlier this month, Amidi Group of Redwood City received stage one approval for construction of a 535-unit live-work complex at Lexington and Central Avenues in the core of the city’s downtown. The land is owned by Citigroup Inc., but the New York bank is in the process of selling the entire city block to Amidi. But the 600,000 square-foot project represents only a fraction of all the dense urban development entitled or under construction in the city. Vancouver developer Holland Partner Group is constructing a 238-unit project just a few blocks from the Citigroup site; Camden Property Trust of Houston is starting work on its 315,000 square-foot Glendale Triangle project, a 303-unit development on San Fernando Road and Central Avenue in the southern part of the city; and Molasky Group of Cos. of Las Vegas has received preliminary approval to build a six-story, 167-unit project on Central and Wilson Avenues. Despite the strong push for development, the city thinks oversaturation is not a concern. “We have heard people say it has gone too far, but it hasn’t,” said Hassan Haghani, director of community development in Glendale. “Growth is happening exactly as we planned.” May, the broker, said changing demographics will make urban living more than a trend. It will involve a long-term evolution in the greater Valley region, with city’s like Glendale being a prime example. “The younger generation just lives and works differently. They much prefer the urban and high-energy environments. I don’t think there’s an issue with oversaturation,” he said. But Brody, the developer of Metro Art in Sherman Oaks, said those that question the speed of development and size of demand need only look at his project. “If there wasn’t demand, I wouldn’t get leased up so quickly. The only real place to do development in these densely populated urban areas is to go along the retail and transportation corridors,” he said. “While homeowners often have concerns, these are the right places to develop. There has to be some changes made in terms of regulations and people’s attitudes to allow more of this type of development.”

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