Properties Backing $1.3B In CMBS Debt Are In LA Fire Evacuation Zones

An estimated $1.8B in commercial real estate backing $1.3B in CMBS debt lies within areas under an evacuation order or warning related to fires burning in the Los Angeles area, according to a Trepp analysis obtained by Bisnow.

While most of the properties already burned or in the path of the fires are single-family residential, Trepp identified 152 commercial properties in the evacuation areas. Nearly 60 are multifamily, according to Trepp, but retail spaces, hotels and a few offices are sprinkled into the mix.

These fires differ from those that usually strike the area because they are closer to infill locations, according to Shahin Yazdi, executive managing director for Colliers Mortgage Los Angeles group and a resident of Beverly Hills. That means that although the vast majority of the damage hits single-family homes, commercial corridors are at greater risk.

Altadena and Pasadena are home to five multifamily properties identified by Trepp, though they tend toward the smaller side, totaling just 129 units.

Further still to the southwest, independent property owner and broker Seth Polen is keeping a close eye on a 24-unit apartment complex and extending caution to those who live there. The property is still in a “green” zone, which means it isn’t under an evacuation order or warning, but Polen, remembering the hurricane-force winds that blasted the area Tuesday night, says that can change quickly.

“Some are somewhat in harm’s way, but as each day goes by and the containment doesn’t happen, if you’re an owner or renter or both, even if you’re in a yellow [zone], get out of the area for a little bit if you can,” Polen said. “We’re all in potentially harm’s way, so nerves are tense.”

The Eaton fire that threatens these eastern communities was burning at nearly 14,000 acres with zero percent containment Thursday evening. The larger Palisades fire, at more than 17,000 acres, poses a threat to Westside communities like upscale Pacific Palisades.

In that hard-hit community, 177 total commercial properties stand, according to Kitty Wallace, Colliers vice chair of Los Angeles, though her tally didn’t delineate between the properties in and out of evacuation zones. Forty-six of them are multifamily, totaling 765 units. The remaining 131 properties are retail and office, among other property types, Wallace told Bisnow. 

Santa Monica is home to well-known retail destinations such as Santa Monica Place and Third Street Promenade, but the vast majority of its retail space — about 5.2M SF of the submarket’s total 6.8M SF — is smaller storefronts and shops that exist outside of malls or strip mall-type shopping areas, according to a July 2024 report on the submarket from JLL. 

One 20-unit apartment complex on San Vicente Boulevard is also in the evacuation zone, according to Trepp data.

Encino, on the northern edge of the Palisades fire, has the largest concentration of office space in Trepp's analysis, with 653K SF of office space that backs CMBS debt. That includes the 227K SF Encino Financial Center on Ventura Boulevard.

North of Los Angeles, where the Hurst fire is burning at 671 acres, Santa Clarita is home to 768 multifamily units identified by Trepp, the highest concentration of apartments on the list.

Mark F. Bonner, Catie Dixon and Maddy McCarty contributed to this report.