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Monday, May 29, 2023

PAGE 3: There’s No Place Like LA

This week’s issue features our first Real Estate Quarterly of 2019. The overarching theme is that Los Angeles remains one of the premiere destinations in the world for companies and institutions – and that appeal means real estate premiums are rising, even amid larger economic uncertainty. Construction in the city continues to build out new spaces for more corporate denizens to set up shop, and there is little sign that incursions into the region from top-tier companies will diminish any time soon. All this flies in the face of the oft-repeated adage that Los Angeles is hemorrhaging firms to places such as Texas because of burdensome regulatory requirements and steep state and local taxes. Hannah Madans’ story on the declining number of large office space sites available for lease in L.A. points directly to the region’s appeal for big business. While companies may shy away from putting headquarters here – or an “HQ2,” in the case of Amazon.com Inc. – the Southland will always have a magnetic pull for firms that want to be in the nexus of dealmakers… Space Exploration Technologies Corp. had a rough go of it last week, announcing a 10 percent staff reduction and pulling the plug on a planned Long Beach manufacturing facility for its Starship rocket in favor of a Texas plant. The Elon Musk-backed company also is facing some competition from another local aerospace firm. Inglewood-based Relativity Space Inc. announced it received final permission from the U.S. Air Force to set up a dedicated station at Cape Canaveral, Fla., for its satellite array rocket launch system. The venture-backed company has raised $45 million so far – a far cry from SpaceX’s estimated $2.5 billion in funding – but still a substantial amount. No word on whether Relativity Space plans on getting into the tunnel digging game, however… I noted in November the upset election victory of L.A. County Sheriff Alex Villanueva over incumbent Jim McDonnell, who had taken over after former Sheriff Lee Baca’s scandal-plagued years. Villanueva, who is barely a month on the job, is already facing his first political firestorm after reinstating a deputy who was fired from the department during McDonnell’s tenure after allegations of domestic abuse and stalking were raised by another deputy. The deposed deputy also happens to be a supporter of Villanueva’s and worked on the sheriff’s election campaign. The community of business should be concerned by this development; a safe and secure marketplace is integral to business operations and top local law enforcement officials should set examples. Villanueva’s actions here do the opposite… There’s been plenty of talk about strikes in L.A. recently, but the one impacting a prominent local business has flown under the radar. Farm workers staged a walkout at Wonderful Co.’s Halo orange fields earlier this month and were successful in getting a pay cut rescinded. Wonderful Co. – not to be confused with Jeffrey Katzenberg’s shortform video firm WndrCo – is owned by billionaires Lynda and Stewart Resnick… The Los Angeles Lakers seem to be weathering the absence of superstar LeBron James though there’s a slim margin for error in the National Basketball Association’s competitive Western Conference. James injured his groin nearly a month ago during a Christmas Day game against the Golden State Warriors. Since then, the Lakers have gone 4-7 (Jan. 17’s results against the Oklahoma City Thunder are pending as we head to press) and James will still likely be out for several more contests. What say you, readers? Will the Lakers make the playoffs for the first time since the Kobe Bryant era ended?

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