Other industries in L.A. might generate sexier headlines, but it’s still real estate that runs the town.
In fact, when it comes to this year’s list of the wealthiest Angelenos, real estate is one of the most common denominators.
Whether they earned their fortunes through property investments or just added to their wealth with the right mix of real estate holdings, a wide swath of the members on the Business Journal’s list boast a strong ground game.
Appreciation of real estate across all asset types helped bolster the net worth of developers and long-term property holders alike.
“Ever since we got out of the last recession, the real estate market has generally fared very well,” said Paul Habibi, a lecturer in real estate at UCLA. “The market is very stable, especially in industrial and multifamily. We’ve seen good growth in value of properties.”
From April 2018 to April 2019, L.A. single-family home values increased 3.3%, according to data from CoreLogic Inc.
From May 2018 to June 2019, the price per square foot of office and industrial buildings increased 21%, according to data from CBRE Group Inc. Retail properties increased 50%, and multifamily units appreciated 9% per unit.
The Wealthiest Angelenos from other fields have gotten in on the game, purchasing a range of properties to pad or diversify their portfolios. One reason is that real estate is seen as a relatively safe asset by most buyers and investors.
“Real estate has generally been a very stable source of wealth for many individuals, Angelenos included,” Habibi said, adding that real estate is a “primary source of wealth generation for many.”
Real estate allows wealthy Angelenos to leverage their assets, use third-party capital and take advantage of an array of tax benefits.
It’s also attractive, Habibi said, because it allows for “passive activity,” meaning that investors can hold onto real estate as a side business that doesn’t require much daily effort.
Developer Rick Caruso had a huge year, thanks to multiple new properties.
In September 2018, he opened Palisades Village, a retail center in Pacific Palisades with more than 40 storefronts.
In March, he opened Rosewood Miramar Beach — his first resort project — in Montecito. The luxury hotel has 161 rooms and seven restaurants and bars.
Caruso’s holdings have grown by nearly $1 billion from the Business Journal’s 2018 Wealthiest Angelenos edition.
In addition to the retail projects with which he made his name, Caruso has worked on multifamily and office properties in recent years. He also has substantial personal real estate holdings.
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