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Everyone wants to rebuild in accordance with their favorite urban planning theory. Very few want to give developers the profits they need to match the profits

Everyone wants to rebuild in accordance with their favorite urban planning theory. Very few want to give developers the profits they need to match the profits they get rebuilding in accordance with maximizing the return on their investments. People asking for cheap apartments are just not being realistic. Why rent that square footage at less than luxury prices when the market will readily eat up the square footage at prices far exceeding the national luxury median? And that’s before we even get to the people who want condos or luxury homes. You would basically need to make a law that caps how much an owner can make on his land for some of these ideas to work.

bryanlarsen 2y ago
Multiple apartments should be more profitable than a single family luxury home.
- orionsbelt 2y ago
  Not in some of these areas. This was some of the best real estate in the country. $80M homes burned down.
  - whimsicalism 2y ago
    generally “most expensive real estate in country” is where profits from apartments/condos is highest, not the other way around
    - orionsbelt 2y ago
      Not up in the hills or on oceanside lots on the Pacific Ocean next to the PCH. I’m no builder, but my sense is, even if the zoning were relaxed, you are at best building like a quadplex. Four apartments are not going to equal an $80M home. Maybe in the flats of the palisades.
  - ta1243 2y ago
    $70m of that $80m house is the land its on, and that hasn't been destroyed.
    - Ancapistani 2y ago
      It depends. How much of that location value was because of the views, proximity to LA proper, etc.? How much of it was due to the types of houses that were in those specific neighborhoods and the type of people that lived in them? If the "rich and famous" don't return to those neighborhoods and rebuild their multi-million dollar homes, those parcels will be worth significantly less.
- bilbo0s 2y ago
  Multiple luxury condos? Definitely. Multiple luxury apartments? Maybe? Depending on amenities and view. But multiple non luxury apartments for the hoi polloi? Not a chance. I challenge even the politicians championing non luxury apartments to run the numbers and make them work. They just don’t. People are out here advocating that we make multiple apartments available all under 3K. That’s insanity. The same space can easily be rented for much more than 3K. If I’m a developer, what’s my motivation to forgo that ludicrously high return? Being a good guy? I’ll take the return and make a donation to the boys and girls club instead thank you very much.
whimsicalism 2y ago
building up gets you more square feet and is almost certainly going to be the profit maximizing approach delta regulation in an environment like this
- bilbo0s 2y ago
  Sure. And that’s where luxury condos and apartments come in. There is no scenario where building for less than luxury returns makes sense in these areas. Renting a set square footage for 1500 makes no sense when I can rent the same square footage for 3200. And that’s at the bottom end.
  - whimsicalism 2y ago
    i find the word 'luxury' not very useful in these discussions. they wouldn't be luxury compared to a SFH in the same area, they would be lowering price. > Renting a set square footage for 1500 makes no sense when I can rent the same square footage for 3200. uhhh, except for location?
ravenstine 2y ago
It's amazing how many are in denial about this. If it were so self evident that cheaper apartments were worthwhile to developers in LA, then we'd be seeing more new ones being built as opposed to the luxury megacomplexes that have been popping up everywhere.
- ProfessorLayton 2y ago
  It's literally illegal to build anything other than a SFH in most of LA. It's no wonder why cheap apartments aren't being built.

bryanlarsen 2y ago

Multiple apartments should be more profitable than a single family luxury home.

orionsbelt 2y ago
Not in some of these areas. This was some of the best real estate in the country. $80M homes burned down.
- whimsicalism 2y ago
  generally “most expensive real estate in country” is where profits from apartments/condos is highest, not the other way around
  - orionsbelt 2y ago
    Not up in the hills or on oceanside lots on the Pacific Ocean next to the PCH. I’m no builder, but my sense is, even if the zoning were relaxed, you are at best building like a quadplex. Four apartments are not going to equal an $80M home. Maybe in the flats of the palisades.
- ta1243 2y ago
  $70m of that $80m house is the land its on, and that hasn't been destroyed.
  - Ancapistani 2y ago
    It depends. How much of that location value was because of the views, proximity to LA proper, etc.? How much of it was due to the types of houses that were in those specific neighborhoods and the type of people that lived in them? If the "rich and famous" don't return to those neighborhoods and rebuild their multi-million dollar homes, those parcels will be worth significantly less.
bilbo0s 2y ago
Multiple luxury condos? Definitely. Multiple luxury apartments? Maybe? Depending on amenities and view. But multiple non luxury apartments for the hoi polloi? Not a chance. I challenge even the politicians championing non luxury apartments to run the numbers and make them work. They just don’t. People are out here advocating that we make multiple apartments available all under 3K. That’s insanity. The same space can easily be rented for much more than 3K. If I’m a developer, what’s my motivation to forgo that ludicrously high return? Being a good guy? I’ll take the return and make a donation to the boys and girls club instead thank you very much.

whimsicalism 2y ago

building up gets you more square feet and is almost certainly going to be the profit maximizing approach delta regulation in an environment like this

bilbo0s 2y ago
Sure. And that’s where luxury condos and apartments come in. There is no scenario where building for less than luxury returns makes sense in these areas. Renting a set square footage for 1500 makes no sense when I can rent the same square footage for 3200. And that’s at the bottom end.
- whimsicalism 2y ago
  i find the word 'luxury' not very useful in these discussions. they wouldn't be luxury compared to a SFH in the same area, they would be lowering price. > Renting a set square footage for 1500 makes no sense when I can rent the same square footage for 3200. uhhh, except for location?

ravenstine 2y ago

It's amazing how many are in denial about this. If it were so self evident that cheaper apartments were worthwhile to developers in LA, then we'd be seeing more new ones being built as opposed to the luxury megacomplexes that have been popping up everywhere.

ProfessorLayton 2y ago
It's literally illegal to build anything other than a SFH in most of LA. It's no wonder why cheap apartments aren't being built.