THE REBUILDING OF L.A.

Commercial Real Estate Losses in Los Angeles County

The fires have caused significant damage to commercial properties. Approximately 374 commercial buildings, totaling about 4.5 million square feet and valued at nearly $2 billion, were damaged or destroyed. The affected properties included 143 retail buildings, 135 multifamily properties, 49 office buildings, 2 industrial properties, and 45 unspecified structures.

Impact on Inventory in Neighboring Counties, Particularly San Diego County

The destruction in Los Angeles has led to a displacement of businesses and residents, increasing demand for commercial spaces in neighboring regions. San Diego County, with its robust infrastructure and appealing market conditions, is poised to absorb some of this demand. This influx could tighten the commercial real estate inventory, potentially driving up property values and lease rates.

Manufacturing Needs for Rebuilding

Reconstructing the affected areas will require a substantial mobilization of resources, including:

• Construction Materials: Production of lumber, steel, concrete, and other building essentials will need to scale up to meet the demand.

• Infrastructure Components: Manufacturing of electrical systems, plumbing supplies, and transportation infrastructure materials will be crucial.

• Technology and Appliances: Rebuilding modern homes and businesses will necessitate a surge in the production of HVAC systems, kitchen appliances, and smart home technologies.

The proximity of San Diego County, its port, and its experienced workforce to the affected areas will make it a key player in the rebuilding effort.

Los Angeles' 2028 Olympics and Its Impact

The upcoming 2028 Olympics adds a layer of complexity and urgency to the rebuilding efforts. The city is under pressure to restore and enhance infrastructure to accommodate the global event. This scenario presents a dual opportunity:

• Accelerated Development: Expect an expedited approval process for construction projects, potentially leading to a construction boom in the region.

• Investment Prospects: Investors may find lucrative opportunities in the redevelopment of commercial spaces, hospitality venues, and related infrastructure projects aimed at supporting the Olympic Games.

Conclusion

The aftermath of the Los Angeles County wildfires is reshaping the commercial real estate market across Southern California. For investors in San Diego County, this period presents both challenges and opportunities. Staying informed and agile will be key to navigating this dynamic environment.

Written by Aidan James