Parking “Robots” Provide Relief for Developers in Dense Urban Areas (PT 1)

By now it’s well documented: people are driving less and buying fewer cars. This is particularly true among younger generations. According to a study by the University of Michigan, only 69% of 19-year-olds had a driver’s license in 2014, down from 90% in 1983. The percentage of 20-somethings with driver’s licenses has also fallen 13% over the past three decades.

ZipCar, Uber and other on-demand ridesharing services are likely to exacerbate these trends moving forward.

Nonetheless, most municipalities require developers to build at least one parking space per new housing unit, even in transit-oriented areas. This is particularly pronounced in Los Angeles, where the city’s minimum parking requirements require developers to build 1.0 parking space per studio unit, 1.5 parking spaces for one bedroom unit, and at least 2.0 parking spaces for units with two or more bedrooms.

The costs of building those spaces can quickly add up. In Los Angeles, it costs an average $83/square foot (SF) to construct an above-ground parking space; it costs $108/SF to build underground parking. This means a single parking space in Los Angeles can cost anywhere from $27,000 to $35,000 to construct.

In reality, these estimates are an understatement because they only refer to the cost of constructing a parking space in Los Angeles. These estimates do not include the cost of the land beneath, or soft costs and carrying costs.

Los Angeles land values vary drastically depending on the condition of land (vacant, improved, existing utilities), its shape, size and location, and how it is zoned. Land that is zoned for denser development often costs more because the land costs can be spread out over a larger number of units. Nonetheless, land values in Los Angeles are among the highest in the country. A CoStar analysis reveals that, as of May 2017, the average acre of land was selling for $13,000,000 million in Los Angeles, or about $300 per square foot.

The average parking space is 330 SF, and there are 43,560 SF per acre. This means that in Los Angeles, the average cost of land per parking space is nearly $100,000. When land costs and construction costs are combined, it means that developers often have to pay upwards of $127,000 to build an above-ground parking space; or more than $135,000 to build a below-ground space. Depending on the size of the unit, developers may be required to build more than one space per unit.

It’s no wonder, then, that the cost of parking has become prohibitively expensive for some developers. This is especially true for developers trying to build in dense urban areas like Los Angeles, where land is at a premium and construction costs (labor, materials, etc.) are higher than national averages.

UCLA Professor Donald Shoup demonstrates how break points in the cost of building a parking garage affect development decisions. He uses the example of a seven-unit apartment building (shown right). The four-story apartment building is typical of those found in Los Angeles. It sits on a lot that is 50 feet wide and 130 feet deep. The parcel is subject to the city’s R3 zoning, which would have allowed the developer to build eight units on the site, but the city’s (number of spaces required would depend on type of units, 1 for a studio, 1.5 for 1+1, etc) parking requirement meant that the developer would need to construct 18 parking spaces. Only 16 spaces could be squeezed into one level of underground parking. Building the remaining two spaces would require excavation of a second underground parking deck. The prohibitively high marginal cost of building two more spaces on a second underground level reduced the feasibility of dwelling units from eight to seven, a reduction of 13 percent.

Shoup goes on to explain that parking requirements not only reduce density on sites that are developed, but also reduce the overall number of sites that are developed at all.

If the required parking spaces increase the cost of constructing a building by more than they increase the market value of the building, they will reduce the residual value of land. Residual land value is defined as the market value of the most profitable development that could be constructed on a site minus the cost of constructing it.9 For example, if the best choice for development on a site would cost $750,000 to construct and would have a market value of $1 million, the residual value for the land is $250,000. If $250,000 is not enough to pay for buying and demolishing an existing building on the site, redevelopment won’t happen. The residual land value of a site for redevelopment must be greater than the value of the existing building on the site before a developer can buy the building, clear the site, and make a profit on a new development. Therefore, if minimum parking requirements reduce residual land values, they make redevelopment less likely.

In Los Angeles, a city starved for additional housing, arcane parking requirements are preventing the development of badly needed housing. More parking for cars means less housing for people.

One solution is for cities to rethink their parking requirements. New York City and Seattle only require one parking space per unit. Other cities have considered adopting parking maximums (particularly in transit-oriented districts) as a way to alleviate traffic congestion and promote walkable, dense urban development.

This isn’t unfamiliar territory for Los Angeles. In 1999, the city adopted its Adaptive Reuse Ordinance (ARO), which allows developers to convert economically distressed or historically significant office buildings into new residential units – with no new parking spaces required. In the three decades prior to adopting the ARO, only 4,300 housing units were built downtown. In the nine years after adopting the ARO, developers created 7,300 new residential units spread across 56 historic office buildings. Nearly all of these office buildings had been vacant for at least five years; converting them to residential housing became feasible thanks to the new ARO policy, and occupancy of these buildings has breathed new life into the downtown.

But developers only have so much control over the policies implemented at the local level. Sure, they can lobby policymakers to adopt more sensible parking requirements. Absent a zoning overhaul, developers must take things into their own hands.

And they can do so by implementing automated parking system, or “parking robots,” to optimize space that would otherwise be set aside for parking.

Although these systems vary slightly by company, they tend to work something like this: A driver enters a parking garage and is guided into a parking bay. After exiting the vehicle and locking the doors, the driver’s job is done. The bay is equipped with sensors and motion detectors to confirm there is nobody left in the car before beginning the parking process. The sensors scan the car for general size, width, height and weight. A parking robot then “retrieves” the car and, using a system of tracks throughout the garage, moves the vehicle to the most efficient parking space for that vehicle. Depending on the size and layout of the garage, the automated system might include parking lifts that allow the cars to be stacked efficiently on top of one another – similar to building blocks. The system will usual track and monitor vehicles at all times, shuffling cars as needed, to optimize space.

To retrieve a vehicle, simply swipe a resident key fob or parking ticket at the parking kiosk. A monitor will display which bay the vehicle will arrive in and its position in the cue. Cars are typically returned to their drivers within 2 to 5 minutes.

The concept isn’t exactly new. The earliest examples of automated parking garages date back to 1905, where Europeans parked their vehicles on a structure that looked akin to a Ferris wheel. Kent Automatic Garages built two automatic garages in NYC in the late 1920s and early 1930s; the garage at the corner of 61st Street and Ninth Avenue in Manhattan was dubbed the “Hotel for Autos”. The use of parking robots remains in its nascent stages here in the U.S., but these systems have been used abroad for decades. They’re particularly common in Germany, Japan and throughout the Middle East. We suspect U.S. adoption to increase as technology continues to be refined.

A few companies are at the forefront of this new technology. Just as Uber and Lyft revolutionized how we hail a cab, Unitronics and CityLift are deploying new technology to transform how we park.

Unitronics UniDrive Unitronics UniPorter Unitronics UniVator

Vehicle Entry and Exit Bay Vehicle Conveyance Shuttle Multi-Level Vertical Lift

Automated parking garages can take many forms, from manual to semi- and fully-automatic systems.

For instance, CityLift offers five different parking design solutions:

  • The Puzzle system is the company’s most popular, designed for compact urban areas. The Puzzle is a semi-automatic stacking system that CityLift calls ideal for new construction or retrofit projects that have a minimum clear height of 11’7”. This system can accommodate up to five levels of parking, with or without pits, and can be designed in tandem configurations.
  • The Tower is best for narrow spaces, and can be built as a stand-alone garage or part of a new structure. This fully-automated system uses steel beams and columns and doubles as the building structure.
  • The Aisle is a fully-automated system designed to accommodate large development projects. It can be built above or below ground, above buildings or behind and between other structures. The Aisle is popular for its ability to achieve high density parking.
  • The Shuffle is optimal for one-story projects. It maximizes parking by eliminating “dead spaces” like driving aisles.
  • The Stacker is CityLift’s only manually-operated system, making it one of the more versatile and cost-effective parking solutions. The Stacker is a quick and easy way to increase parking in buildings that offer valet service.

Depending on the system implemented, a developer can double – even triple – a project’s parking capacity. What’s more, they can do so while reducing the parking garage’s overall footprint.

These systems aren’t cheap. The cost per space for a robotic parking system depends on a number of factors, including the size and layout of a property, the total number of parking spaces needed, and the required speed of the system. The average turnkey price of a system ranges from $20,000 to $30,000 per space for a mid-sized garage. Yet when cost of land (or reduction thereof) is factored into the equation, the spaces become more affordable—roughly $10,000 to $16,000 per space, again, depending on project size.

How the Influx of Tech Companies is Helping Revitalize Downtown L.A.

Above: Portal A offices, one of the many tech startups that’s moved to downtown L.A.

“For decades, Downtown has been the dark center of L.A.: a wasteland of half-empty office buildings and fully empty streets,” writes journalist Brett Martin. “But amid the glittering towers and crumbly Art Deco facades, a new generation … [is] creating a neighborhood as electrifying and gritty as New York in the ‘70s.”

Indeed, downtown Los Angeles is making a comeback. It’s happened quickly, but certainly not overnight. The city’s transformation began in 1999, when the City Council adopted an adaptive reuse ordinance that made it easier for private developers to invest in and rehabilitate deteriorating buildings. Since then, more than 700 businesses have moved downtown. Residential development has exploded, and the downtown population has swelled from an estimated 19,000 in 1999 to 58,000 by 2014.

Much of this growth can be attributed to the $4.2 billion Los Angeles Sports and Entertainment District development (commonly known as “L.A. Live”). The massive mixed-use project required upwards of $150 million in public subsidies, but only after the developer agreed to sign the “Staples Center CBA,” one of the most progressive community benefits agreements ever created, and one that involved negotiations with a coalition of 30+ stakeholder groups. The massive complex has generated a constant flow of downtown foot traffic, and people travel from far and wide to go to world-class shows, performances and sporting events at the Staples Center and Nokia Theater, which anchor L.A. Live.

But it’s not just the tourism and entertainment industries that are reaping the benefit of L.A. Live and downtown’s resurgence. There’s suddenly a burgeoning tech scene, too.

Twenty years ago, most tech entrepreneurs would scoff at the notion of locating east of the 405. “Now, they’re not just venturing beyond that once-unthinkable border, they’re taking their companies with them,” writes Andrea Chang for the LA Times. “Like many Angelenos, they’ve become charmed by the new, revitalized downtown.”

As the area around L.A. Live is redeveloped, tech entrepreneurs are pushing eastward toward the Arts District – an area that is still plagued by commercial vacancies and high crime, but an area that offers affordable rent and boatloads of charm.

By some estimates, there are more than 78 tech-oriented firms now located in downtown Los Angeles, or as the trendsetters call it, “DTLA”. During the industry’s early years, many of the tech companies skewed toward e-commerce given the proximity to L.A.’s fashion district and the abundance of warehousing space and manufacturing facilities. Figs (trendy medical scrubs), Milk & Honey (customized shoes) and Poprageous (leggings) are just a few of the many e-commerce companies located nearby.

With the city’s reputation for movies, entertainment and fashion people tend to forget about the strength of the local manufacturing industry, explains Jamie Kantrowitz, managing director at Mesa Global Digital Media. “We’re a great place to build e-commerce companies because we have the largest manufacturing business in America.”

As downtown’s tech scene grows, it’s evolving beyond e-commerce. Mobile app, hardware and digital media companies are popping up left and right. Just last fall, Portal A, a digital content studio best known for creating the annual YouTube Rewind video, began to outgrow its 2,000 square foot offices in the Los Angeles Times building. When confronted with the decision to stay downtown or move to a digital media hub in the suburbs, Portal A doubled down on DTLA and locked up a 4,000 square foot space just a few blocks away at the 600 Wilshire building.

“It feels like you’re in a real city, not in a Hollywood or Silicon Beach bubble,” says Portal A co-founder and managing partner Zach Blume. “You look out of the windows and it’s like you’re watching a scene from ‘Chinatown’ or some other movie like that. There’s such a hubbub of activity. It just feels vibrant and thriving, which is not something you could say about L.A. downtown 10 years ago.”

Co-working locations, business incubators and accelerators have also sprung up in the area and are feeding the entrepreneurial ecosystem. LACI, the Los Angeles Cleantech Incubator, is one such example. LACI opened downtown in 2011 and has become one of the largest cleantech incubators in the world. Companies like 360 Power Group (advanced generators), Envi (waterless car detailing), GOmeter (smart meters for home water systems) and Hive Lighting (energy efficient plasma lighting) have all gotten their start at LACI.

Locating downtown isn’t just the trendy thing to do. It also serves a real business purpose. According to Cushman & Wakefield, downtown office rents average $3.04/SF compared to $4.32/SF in Santa Monica or $15.00/SF in Venice to the south. Flex space often rents for as low as $1.30/SF in downtown L.A.

And then there’s the ability to draw a more diverse, talented workforce.

“There’s definitely tons going on: lots of new start-ups and co-working spaces and nightlife and restaurants opening all the time,” says 29-year old Kai Powell, a developer who moved downtown after accepting a job with NationBuilder in 2012. “For people who are excited by that kind of thing, I don’t think there’s any other place.”

Despite DTLA’s buzz, there haven’t been many tech giants to move downtown just yet. Facebook and YouTube both have offices in Playa Vista; Snapchat and Google have offices in Venice. At one point, Yahoo toured office spaces downtown, but it, too, ultimately settled on Playa Vista.

If downtown L.A. continues its upward swing, it’s only a matter of time before one of these behemoths makes the leap back to the urban core. “Big fish chase the little fish,” industry experts say – meaning that corporate giants often move to where the smaller startup companies are in order to draw on their innovation, R&D and talent.

The influx of tech companies to downtown L.A. will have a tremendous impact on local real estate. Just look at what’s happened in San Francisco. That’s why excitement over downtown’s revival needs to be balanced with a close eye toward the anti-displacement of longtime residents.

One strategy is to pursue CBAs like the city did with the development of the Los Angeles Sports and Entertainment District. But real estate developers can only contribute so much before the numbers on a deal crumble under the weight of trying to prevent displacement alone.

Another strategy is to engage the tech companies directly. As tech tenants begin moving downtown, there’s an opportunity to negotiate a fuller package of community benefits.

This is a strategy that San Francisco has employed. The city offers a lucrative payroll tax exemption to companies willing to open in neighborhoods like Central Market and the Tenderloin—low-income areas that are ripe for transformation but at high risk for gentrification. In exchange for the tax break, the companies must agree to participate in the city’s First Source hiring program, which connects residents to entry-level jobs. If the tax exemption totals more than $1 million, the company must also agree to a separate CBA that providers a wider array of community benefits, such as job training and services for those who are homeless.

But as San Francisco has realized, gentrification is complicated. There’s no one cause, and certainly no one solution. It’s not a problem that can be solved through a new mobile app or high-tech solution. Yet as DTLA’s tech cluster continues to grow, and as the local real estate market bounces back in kind, the city has an opportunity to leverage the industry to deliver benefits to the entire community as a whole.

Uber, Driverless Cars Already Making their Mark on Real Estate Industry

It’s no secret that the sharing economy is having a major impact on the real estate industry. Co-work spaces like WeWork have created new demand for flexible office layouts, and Airbnb has eaten into the hotel industry’s profits. Now ride-sharing services are leaving their mark on the real estate sector.

Just this past week, the Wall Street Journal featured a story about how real estate developers are partnering with companies like Uber and Lyft. Unlike Airbnb’s adversarial relationship with the hotel industry, real estate developers see the value ride-sharing companies bring to their projects. Dave Bragg, an analyst for the real-estate research firm Green Street Advisors, went as far as calling Uber and Lyft the “single biggest game-changer for real estate” over the coming years.

This is particularly true in urban areas, where land costs continue to climb and building on-site parking becomes that much more cost-prohibitive. What’s more, people are driving less nowadays, so building excess parking seems like just that—an unnecessary excess.

So real estate developers are intentionally partnering up with Uber to offer tenants incentives to use ride-sharing services instead of keeping a personal vehicle on site. The earliest example of this partnership was in San Francisco: Real estate developer Parkmerced, whose portfolio includes more than 3,000 Bay Area rental apartments, started offering all new tenants a $100 transportation credit that could be spent on Uber and/or public transit. As part of the deal, Uber agreed to cap all UberPool rides between Parkmerced and the nearest BART or MUNI station to just $5.

“This is a building block for broader, smarter cities,” said Wayne Ting, Uber's Bay Area general manager earlier this year when the partnership first launched. “Our hope is that this is the first of many deals with real estate developers.”

Developers around the country have followed suit. Here in LA, the owners of the 41-unit Eleanor Apartments also offer tenants a $100 Uber credit each month. They had tried implementing a ZipCar strategy a few years back, but that didn’t work out. So then they began leasing spaces at a nearby medical office complex for tenants to use, but when the lease expired it wasn’t renewed. The owners were searching for an alternative way to mitigate the property’s lack of parking, and the $100 Uber credit seems to be doing the trick.

For renters like Taylor Fisher, a 33-year-old who recently moved into the Eleanor, the $100/month in Uber credit meant that the building’s lack of parking “wasn’t a deal breaker” anymore.

When partnerships like these allow developers to scale back – or eliminate – parking, it makes the units more affordable for renters. A single parking space can add upwards of $25,000 to a unit’s cost; and twice that if the developer has to build structured or underground parking.

The Wall Street Journal also noted that Uber isn’t the only thing real estate developers are paying close attention to. Savvy developers are also starting to think about how driverless vehicles might impact real estate development.

In Somerville, Massachusetts, developers Federal Realty Investment Trust (FRIT) have teamed up with Audi to explore how self-driving cars might be implemented into FRIT’s new 2+ million sq. ft. mixed-use development project known as Assembly Row. With driverless cars expected to be on the road by 2030, and with the understanding that FRIT’s new development will be around for decade to come, the team is working to design a parking garage that will accommodate the rise in driverless vehicles. Because driverless cars will need less room to park (you don’t need to worry about opening doors, for instance), Audi estimates that the developers could cut parking space by 62% and save the developers upwards of $100 million over the project’s lifetime.

And because land is scare in urban areas (especially in communities like Somerville, the 7th most densely populated city in the U.S.), the space that would have previously been used for parking can be freed up for other uses.

“We can transform those floors into residential, hotel, office and retail uses,” says Amy Korte, a principal designer with Boston-based architectural firm Arrowstreet. “There are a number of uses that will make our cities better.”

Alain Kornhauser, a researcher from Princeton University, echoed that sentiment. The biggest impact of autonomous cars, he says, will be on parking. “We aren’t going to need it, definitely not in the places we have now,” he told Curbed earlier this year. “Having parking wedded or close to where people spend time, that’s going to be a thing of the past. If I go to a football game, my car doesn’t need to stay with me. If I’m at the office, it doesn’t need to be there. The current shopping center with the sea of parking around it, that’s dead.”

As technology advances, we can expect the impact on real estate development to grow. It is important for developers to monitor these trends closely. Planning for the future now will be more cost effective than trying to retrofit properties in the future, particularly given the “future” isn’t all that far away.

MWest and Polaris PM Walk to Make a Change in LA's Homelessness


Our goal at MWest Holdings has always been to offer quality office and living spaces, create thriving communities, and provide our residential tenants with a place to call Home. Paradoxically, we’re located in Los Angeles – a city with the unfortunate distinction of being the nation’s “homeless capital.” This is a painful for reality for us at MWest. We’re a business, but we’re a business comprised of people who live in Los Angeles and who love their city. Every day we see our fellow Los Angelenos living on the streets. Many of them are military veterans who lack the critical care they desperately need and deserve. Others are chronically homeless and have abandoned all hope of finding resources to improve their situations.

That’s why we’ve made it a priority to help eradicate homelessness in LA by supporting the United Way of Greater Los Angeles. UWGLA’s goal is to raise people out of poverty, and, through their Home For Good initiative, they’ve identified eradicating homelessness as being critical to that goal. Their focus is on permanent housing, and support services – two elements which have proven invaluable in helping people to escape poverty.

For the past four years, MWest has chosen to support UWGLA by participating in their annual fundraising event, HomeWalk. HomeWalk is a 5K run/walk. This year’s event was held on November 19th and it marked HomeWalk’s 10th anniversary. More than 15,000 people took to the streets of Downtown Los Angeles and raised over one million dollars to help combat homelessness. The MWest team included our employees and their families, and together, with the help of our incredible supporters, we surpassed our fundraising goal of $35,000 and raised an amazing $56,400. This made us the second-highest fundraising team of the year. MWest president, Karl Slovin, raised $37,840 of that, and for the fourth year running was one of HomeWalk’s top individual fundraisers. There are few causes closer to our hearts than this one, and we will continue to partner with UWGLA’s Home For Good until every one of our fellow Angelenos finds a home – for good.

We encourage all of our local friends and partners to join us next year for this amazing event. You can find more information about HomeWalk, and UWGLA’s Home For Good, here: http://homewalk.unitedwayla.org/

Class A vs. Class B: Which Provides Greater Long-Term Returns?


What a difference a few years makes. The quick and steep rise of real estate prices in cities like Boston, New York and LA has priced out many investors, who are now chasing higher yields in secondary markets like Philadelphia, Seattle and Minneapolis.

Not only are secondary markets more affordable, but they also offer an opportunity for smaller-scale investors to buy Class A buildings for a fraction of the cost of Class B properties in primary markets.

But in their pursuit for higher yields, are these investors just chasing their tails?

Simply, do Class A properties in secondary markets really provide greater risk-adjusted returns than Class B buildings in primary markets?

Research out of MIT’s Center for Real Estate Development decided to investigate the question further. Students began by using CoStar data to classify a property as either a Class A or Class B asset. Although there’s no universally-accepted definition of Class A and Class B properties, most in the industry consider Class A buildings to be newer with higher quality finishes, amenities and accessibility. Class A properties tend to be located in the urban core, and oftentimes have their own brand or lifestyle associated with them.

Class B properties, on the other hand, tend to be older in age and function. Finishes tend to be in “fair” or “good” condition, and according to CoStar’s definition, offer “more utilitarian space”. They tend to lack any remarkable amenities, and typically command lower rents than their Class A counterparts. As a result, most Class B landlords tend to skew toward locally-based investors versus those with national or international portfolios.

For the purposes of the study, researchers defined “major” or “primary” markets to include New York, Los Angeles, Chicago, San Francisco, Boston and Washington, D.C. “Secondary” markets included Atlanta, Miami, Dallas, Houston, Phoenix, Denver, San Diego, Seattle, Minneapolis and Philadelphia.

The research team then used historical performance data from the National Council of Real Estate Investment Fiduciaries (NCREIF) to evaluate a property’s typical return. Returns were calculated assuming 100% equity and no debt financing, which allowed for an apples-to-apples comparison regardless of financial structure. NCREIF data was collected and analyzed for the years 2005 through 2013, which captures both the peaks and valleys of the most recent real estate cycle. Sharpe ratios were used to assess a risk ratio to each property analyzed.

After analyzing hundreds of properties across asset classes and markets, researchers concluded that both Class B office and multifamily properties in primary markets outperformed Class A office and multifamily properties in secondary markets during the period of 2005 and 2013.

Of note, Class B office buildings in primary markets were hit harder during the recession than Class A office buildings in secondary markets (likely a result of the capital crunch and oversupply in core markets); but Class B buildings in primary markets rebounded much more quickly than Class A properties in secondary markets.

A few other noteworthy findings:

  • During the “growth period” of 2005 to 2007, Class A multifamily properties in secondary markets experienced an average total return of 17.5%; Class B buildings in primary markets produced an average return of nearly 24.5%.
  • During the “trough period” of 2008 to 2010, Class A multifamily buildings in secondary markets had an average total return of 1.35%, compared to an average -2.20% return for Class B multifamily properties in primary markets. This suggests that multifamily housing in primary markets is more susceptible to downturns in the economy.
  • During the “recovery phase” of 2011 to 2013, Class A multifamily buildings in secondary markets resulted in an average total return of 14.17%, versus an average 13.11% return for Class B multifamily properties in primary markets.

    These results came as somewhat of a surprise to researchers; the findings indicate that multifamily housing in secondary markets is faster to recover than housing in primary markets. This may be because secondary markets require less up-front investment and attract a broader range of investors versus institutional investors that focus on core markets, but who are more cautious when re-entering a market after a downturn.
  • Although Class A multifamily properties in secondary markets outperformed Class B properties in core markets for the majority of the study period, the returns produced during the growth phase outweighed slower growth in the other years.

Interestingly, the only real estate asset class to outperform in the secondary markets for the aggregate study period was industrial. Class A industrial in secondary markets provided higher returns than Class B industrial space in core markets over the period of 2005 and 2013.

The authors conclude: “The overall empirical results of our study indicate that a savvy real estate investor, who is dedicated to maximizing his long run returns, would prefer to invest in office and multifamily properties in primary markets, and in industrial properties in secondary markets.”

As the old adage goes – location, location, location!

It’s the mantra we follow at MWest Holdings. Our portfolio consists of more than 2 million square feet of residential and commercial property across the U.S. We specialize in enhancing classic, core-plus and value-add opportunities. Occasionally we’ll pick up opportunistic investments, particularly those that have historic architecture. But regardless of the class and asset type, one thing remains the same: we almost always invest in primary markets. It’s a strategy that’s worked well for us to date, and if research is any indication, it’s a strategy that will help us preserve long-term value for our shareholders.

To download the full MIT study, visit: https://dspace.mit.edu/handle/1721.1/92606

Transformational Development - MWest Brings out The Heritage Collection

25 years as a leading real estate investment firm, MWest Holdings has always focused on creating lasting and tangible value. Today we specialize in value-add real estate, particularly apartments, with a special expertise in Los Angeles. Most recently, MWest has implemented a new and exciting strategic focus we call "transformational development". This strategy of growth is more than simply seeing returns, it involves acquiring larger, architecturally significant, historic, or iconic properties that are in need of attention to restore them to their legendary grandeur.

Serving the greater Los Angeles area has provided us with amazing and unique opportunities to showcase our talent for creating innovative development solutions which pay homage to history, instill a sense of neighborhood, and preserve community distinctiveness and culture. This strategy not only creates enormous value, but also builds communities and invigorates Los Angeles, something we are extremely passionate about. Everyone at MWest shares a deep commitment to preserving the special beauty and historical integrity of a structure while making the inside more attractive, efficient, and usable for today’s most discerning renters.

History, Architectural Relevance - Value.

We have four recent acquisitions that mark this new era for MWest and belong to our growing ‘Heritage Collection’: The Hollywood Tower, Wilshire Royale, South Park Lofts and Guardian Arms Apartments all 1920’s poured in place concrete buildings by significant architects.

Our most recent addition to the collection is The Hollywood Tower. Built in 1929 and placed in the National Register of Historic Places in 1988, the building is set on a hill in the heart of Hollywood, and topped by its famous art deco neon sign beloved by historians and Hollywood royalty alike. The Hollywood Tower’s three full-floor penthouse units feature large private balconies with a 360-degree sweeping skyline view of the city and Hollywood Hills. The property has served as a set location for numerous film and television shows and former residents include some of Hollywood’s most heralded stars: Humphrey Bogart, William Powell, Errol Flynn, and Marilyn Monroe. This tradition continues today, as the Hollywood Tower remains a popular home for entertainment industry luminaries.

Second, is the Wilshire Royale. This iconic building was constructed in 1927 and first opened as the upscale Arcady Apartment Hotel. The Wilshire Royale, with its classic rooftop neon signage, has retained much of its original 1920’s architecture and neoclassical elements, with a grand lobby featuring a sitting room, impressive columns, high ceilings, and a dramatic marble staircase. This building also caught our attention because it is perfectly situated in one of the most exciting and fast-growing communities in Los Angeles: Koreatown, a neighborhood brimming with restaurants, gastropubs, nightclubs, and businesses. The emergence of the live/work generation, and their desire for locations that feature walkability, easy access to the Metro Line, proximity to downtown LA and three major freeways, speaks directly to the promising future of this property.

Also nearby in east Hollywood is the Guardian Arms Apartments. Situated in an emerging area of the city, this classically designed late 1920’s building has been meticulously restored, with grand entryways, bachelor apartments and wonderful spacious open areas. Situated near Little Thai Town, and Los Feliz, this building is in the heart of the new Hollywood renaissance. Less than two blocks from the Western Blvd Metro station, the building has seen tremendous interest from individuals eager to enjoy the urban lifestyle, but want access to diverse communities.

The last property in our ‘Heritage Collection’ is the South Park Lofts, built in the mid 1920’s it was one of the first modern day parking garages. Situated in the heart of the downtown Los Angeles, South Park continues to have low vacancy rates and a loyal tenant base. The renovations to this building are bold and creative to appeal and attract the growing millennial renter population that is looking for modern loft living and an amenity package that rivals the best buildings in the area.

I plan on growing our ‘Heritage Collection’ in the upcoming months, further distinguishing MWest Holdings as more than just a real estate investment firm, but a company with a passion for great architecture, sense of place, and desire to seamlessly integrate history and culture into our local Los Angeles communities.

I look forward to serving our tenants and investors for the next 25 years.