Calvin Coolidge once said the chief business of the American people is business. California’s leadership stopped agreeing a while ago.
I didn’t grow up here.
I grew up dreaming about here.
In the 1990s, everyone wanted the Los Angeles they saw on 90210.
In the 2000s, it was the LA of Entourage.
The palm trees.
The sunshine.
The money.
The lifestyle.
Today, Los Angeles is something much different.
Homelessness on every corner. Wildfires burning through entire neighborhoods. Water mains bursting in the middle of the street.
It’s on the social media constantly, the way Vietnam was on television every night in the 1960s — until people stopped really seeing it and started going numb to it.
That’s the part that matters for real estate.
Perception becomes reality.
Buyers don’t have to personally experience a problem to price it into an offer. They just have to see it often enough on a screen.
And that’s why I think this market deserves attention.
Tires
California just became the first state in the nation to establish replacement-tire efficiency standards that will eliminate some tires from the California market.
New rolling-resistance standards approved by the California Energy Commission could make roughly 70% of tires currently sold in the state noncompliant with the 2033 standard if today’s market were subject to it.
Nobody asked for this.
Not tire shop owners.
Not drivers already keeping older cars running longer because new ones cost too much.
It’s a regulatory requirement landing on a business.
And eventually, that risk becomes a real estate question for the landlord collecting the rent.
Paramount
California’s Attorney General, joined by 11 other states, is challenging the proposed Paramount-Warner Bros. Discovery merger, despite approvals from numerous other jurisdictions around the world.
Paramount isn’t backing down.
The company has said the dispute is creating substantial costs and uncertainty around the transaction, and it has raised the possibility of moving operations out of California if the matter isn’t resolved.
Think about that.
This is the entertainment industry, one of the industries that helped build Los Angeles, with relocation becoming part of the conversation.
That isn’t just a political story.
It’s a commercial real estate story.
Jobs occupy buildings.
Businesses pay rent.
Employees spend money.
And when major employers reconsider where they want to operate, the effects don’t stop at the corporate headquarters.
What Gets Prioritized Instead
Government spending continues to expand around homelessness, housing and drug treatment.
Those issues matter.
But property owners are still paying the mortgage.
Still paying insurance.
Still paying property taxes.
Still paying operating expenses.
And, under Measure ULA, tax dollars help fund legal representation for tenants while owners continue carrying the financial burden of the property.
The pattern is hard to miss:
Business increasingly gets treated as something to regulate rather than something to protect.
This Is Exactly What a Buying Window Looks Like
If your plan is to own multifamily in LA for the next 10 or 20 years, this is when I’d be paying attention.
No one knows the bottom in real time.
You only know it looking back.
Not every deal makes sense.
A lot of them don’t.
But the best buying windows usually don’t feel obvious while you’re in them.
They feel uncomfortable.
The headlines are negative.
The risks are easy to see.
There’s always a reason to wait.
When business is booming, everyone feels confident.
It’s much harder to act when the headlines are negative and everyone around you is getting cautious.
That’s exactly when preparation starts to pay off.
Understanding reality should help you make a better decision, not talk you out of one.
For buyers who still believe in Los Angeles long term, this is the kind of market worth studying carefully.
I think there are people who will look back on this period and wish they’d paid closer attention while it still felt this uncertain.
And that discomfort looks different depending on what you own.
Multifamily
Rent restrictions and tenant-protection rules limit what you can collect, while ULA tax dollars help fund legal representation for tenants, all while you’re covering the mortgage, insurance, taxes and operating expenses.
Strip Centers & NNN
A national brand on the lease isn’t the safety net it used to be.
Rising labor costs, including California’s $20 fast-food minimum wage, have put significant pressure on restaurant operators. One of the state’s largest Carl’s Jr. franchisees filed Chapter 11.
Wendy’s continues closing underperforming locations nationwide.
The lesson isn’t that every restaurant tenant is bad.
It’s that the business underneath the lease matters.
Industrial
New statewide rules affecting warehouse siting and emissions add cost and complexity to new development and expansion.
Different property types.
Different problems.
Same underlying issue: the cost and complexity of owning here keeps increasing.
Buyers waiting for that to stop before they act may be waiting a long time.
But Recovery Doesn’t Wait for Sacramento
Here’s what the “California is broken” narrative misses.
The capital markets don’t have to wait for Sacramento to get its act together.
The SBA expanded the potential combined 7(a)/504 financing exposure to $10 million this year, creating new opportunities for eligible borrowers.
Federal tax law has also restored 100% bonus depreciation for qualifying property under the applicable rules.
And Fannie Mae and Freddie Mac multifamily programs remain active for qualified borrowers.
None of that requires California to suddenly become business-friendly.
It’s happening in parallel.
And that’s important.
Because the question isn’t whether California will suddenly become easy.
The question is whether you can structure a deal that works in the California that actually exists.
What This Means for You
You can’t control Sacramento.
You can’t control interest rates.
You can’t control insurance premiums.
You can’t control the next regulation.
You can control how well you understand your property and how prepared you are to act.
The buyers who do well in this stretch won’t necessarily be the ones waiting for California to fix itself.
They’ll be the ones asking:
At today’s price, does this still make sense to own for the next 10 or 20 years?
And then figuring out how to make the deal work.
That’s underwriting.
That’s where opportunity lives.
And that’s why I believe Los Angeles is still worth betting on.
If you own commercial property in Los Angeles and want to understand how changes in the local economy could affect your tenants, financing, or property value, call me at 818-430-8497.
Gary Mittin Commercial Real Estate Broker | CA DRE #01177574 GaryMittin.com glmittin@gmail.com
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This is not investment, legal, or tax advice. Consult the appropriate professional before making real estate or business decisions.
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