LAX to Purchase Tiny (but Pricey) Adjacent Lot

LAX's operator, Los Angeles World Airports, is said to be in negotiations to purchase a 21-acre parking lot adjacent to the Southwest Airlines terminal on the east end of the airport, valued at over $100 million. The property, called Park One, is owned by AMB Properties, a San Francisco-based property manager. At over $25/car/day, the lot is said to generate several millions of dollars per annum. It is set to be the largest commercial sale in LA County this year.

For purchases over $150,000, the agency is required to gain permission from the board of commissioners and from the LA city council. While their intended use of the site has not been made public, the agency claims the lot will not factor into their multibillion-dollar plans for renovation and expansion. In a recession economy, parking lots prove a very stable investment, as retail and other tenants will tend to fall back on their payments.

Prior to its parking lot conversion in the 1990s, the spot was an industrial warehouse space that was home to an aerospace manufacturer during World War II. Important then for its proximity to the airport and the rest of the aerospace industry, the lot on the corner of Sepulveda and Century Blvds is exponentially more so today, at the gateway to the largest passenger and cargo airport on the Pacific. Unfortunately LAX received the distinction last week of being ranked the 'nation's worst airport' by Dwell Magazine. Maybe that money can go into the alleged rehab of the airport - lord knows they won't be getting any money from the government anytime soon.

If You Build It, They Will Come

When we first heard those words whispered by a disembodied voice in the 1989 corn comedy, “Field of Dreams,” no one knew it would be endlessly mangled and recycled, cementing itself in our everyday American vernacular. But perhaps more interestingly, it has become the all-too-apt mantra for the real estate development world. It suggests the creation of demand – we don’t know we want the baseball field until we have it. It also reflects on a time in our history when consumer demand, material supply, and available capital were all abundant. Yes, times are hard, but they’re not going to get any better if we just sit back and complain. Observing the pace and frequency of new construction in a given market is a great way to gauge not only the climates for development and construction, but also financials, housing, retail, natural resources, and personal finance.

And Los Angeles is a fascinating market. It is the largest U.S. municipality by area and second largest by population. It is one of the fastest growing large cities and supports a diverse and robust array of industry and demographics. Los Angeles has experienced two major booms, the 1920s oil and aerospace rush and the 1950s postwar housing frenzy, and was one of the biggest victims of the recent real estate collapse. Because of progressive (though overdue) planning, the city’s architecture reflects a number of periods and styles. Historic preservation is increasingly important and popular, not in a stuffy museum way, but in the smart ‘adaptive reuse’ instated downtown. A gross housing shortage means stable and continued growth in that sector and perennially nightmarish traffic means increased density everywhere.

While the timing may not be perfect, this city definitely deserves a second look (if not a new building or too). So NIMBYs and tycoons unite! We’ll be cruising from Downtown out to Santa Monica, and from Culver City up to the Valley. Throw on your hard hats – it’s gonna be a wild ride.