CRE Leaders Looking For Different Development Attitude From LA's Mayoral Hopefuls

In the past two weeks, three new contenders have officially thrown their hats into the ring to be Los Angeles’ next mayor. The primary election — the first hurdle for the candidates — is in June, and many election watchers think at least one more major candidate will jump into the fray. 

The lineup now includes two active council members, the leader of a Downtown business association and the city attorney. Commercial real estate industry groups and individual leaders are already watching the race carefully, eager to see progress on issues including homelessness and the eviction moratorium, and a shift in city hall’s attitude toward development and developers. 

Los Angeles’ mayor wields the power, directly or indirectly, over a number of issues that matter to the commercial real estate industry, and leaders in CRE want to see the next mayor use that power, often in different ways than the last mayor did. 

The past 18 months have put the mayor’s powers during an emergency on display. Outgoing Mayor Eric Garcetti issued orders for people to stay home, for businesses to close, and for moratoriums on commercial and residential evictions. But during calmer times, the mayor is still in a position of power over commercial real estate.

Pat Brown Institute of Public Affairs Executive Director Raphael Sonenshein said that, in many ways, the reason why there are 88 independent cities within Los Angeles County is because of the strong desire for land use control through mayors and city councils. 

Often when people talk about city government, they talk about a mayor and a city council being either weak or strong. Having to share power with the city council leads many people to think that means LA has a weak mayor, but actually, Sonenshein said, both LA’s mayor and city council are strong.

Though the council is the one voting to approve many large projects and land use policy, the mayor sets the tone for the city departments that CRE interacts with by exercising his or her power to appoint department heads and commissioners, including planning commissioners. 

The mayor can also guide attitudes toward the industry, CRE leaders said. 

“The mayor has a huge influence on how the development and real estate market is perceived by the language the mayor uses about that industry,” Primestor Development CEO Arturo Sneider said.

For instance, he or she has the ability to frame developers and development as part of the cause of some of the issues the city faces, like density or homelessness or the need for more revenue, or the mayor could frame them as part of the solutions, Sneider said. 

“It does set the tone for the way that the media and the industry as a whole responds to that during their tenure,” Sneider said. 

As the mayor of the second-biggest city in the country, Garcetti is a familiar face even to people he doesn’t directly represent. That recognizability is a powerful tool. 

“Big things don't happen without the mayor of LA,” Shonenstein said. That includes all sorts of big projects and proposals in the region, he said, and particularly played out in the 2016 passage of the transportation initiative Measure M, which Garcetti supported. “The mayor is recognized. People have expectations of the mayor that are bigger than the mayor's actual power. But if you play it right, you can get a lot of things done that really are not in your formal job description, because people think it is.” 

Concerns over the city’s growing homelessness crisis were raised by all the CRE leaders who spoke with Bisnow — they said headway on the issue is critical for the next person to hold the office. Although they admit the complexity of the issue is beyond the reach of a mayor alone to solve and did not criticize the outgoing mayor’s approach, industry figures who spoke with Bisnow all agreed that what has been done so far has not yielded meaningful results. 

“​​I'm really focused less on the past,” NAIOP SoCal CEO Tim Jemal said. But he added, “I would say that we think clearly the issue of homelessness needs to be addressed in a different way.” 

Figures from the annual countywide point-in-time homeless count show homelessness in 2020 had increased in the city of Los Angeles by 14% over 2019's count, with the city’s homeless population totaling an estimated 41,290 people, the Los Angeles Times reported in June 2020. The 2020 count took place before the onset of the coronavirus pandemic in 2020. Anecdotally, the homeless population seems to have grown again since the last count, and since the 2021 count was canceled due to concerns about spreading the coronavirus, it might be a while before the growth of the city’s unhoused population after the start of the pandemic can be quantified. 

BOMA Greater Los Angeles Director of Government and Public Affairs Aaron Taxy said addressing Los Angeles’ homelessness crisis is essential for any long-term recovery along the city’s commercial corridors. He called it both a humanitarian crisis and top priority issue for BOMA GLA as it looks at candidates. (BOMA GLA has previously endorsed candidates running for elected office.) 

“People are going to be reluctant to return to Los Angeles' various commercial corridors and urban cores until our city figures out this homelessness issue. We are hearing it over and over again from our tenants and from our strategic partners,” Taxy said. “We're done with piecemeal solutions. We need our next mayor to have a plan to act boldly and quickly on day one.” 

Commercial real estate leaders also see an opportunity for a new mayor to frame developers and development as part of a solution to some of the city’s woes instead of a contributor to them. 

There has certainly been an anti-developer sentiment in the broader public that, in LA, has manifested itself in rules aimed at limiting the amount of money that developers can donate to political campaigns for elected officials and campaign platforms for city council positions that involve a refusal to take donations from developers. 

The relationship between developers and elected officials received increased scrutiny in the wake of the far-reaching investigation and indictment of Council Member Jose Huizar, who allegedly took bribes in exchange for helping to smooth the path forward for developers with projects in his district. 

But us-versus-them attitudes only complicate the road to solutions to some of the city’s biggest concerns, CRE leaders say.

“If developers see the community as adversarial, or if the community sees developers as adversarial, it’s very hard to come up with a solution that is cohesive at the end of the day,” Sneider said. “In an environment where both have significant roles to play, I do think that the mayor can be a bridge. In fact, I would say the mayor, whoever that is, has a responsibility to be a bridge for that to happen.”

Further, NAIOP SoCal's Jemal said, it’s important for the next mayor to see the commercial real estate industry as providing value to the city, especially in the form of its expertise. 

“We are part of the fabric of LA,” Jemal said. “To not have a substantial role in designing the future, I think, would be a mistake — it would be a mistake not to include commercial real estate in those discussions.”