City’s Real Estate Market Stays Hot. For Now

Commercial Realtor Colleen Carey walks us through a number of projects planned and in the works

Published : Monday, November 11, 2019 | 4:07 PM

According to one local commercial realtor, the city’s commercial real estate business is booming, but she cautions it won’t last forever.

Colleen Carey, founding principal of commercial real estate firm Lee and Associates Pasadena, was recently asked by Pasadena Chamber of Commerce President Paul Little for an update on commercial real estate in Pasadena.

According to Carey, the commercial real estate market is buzzing because of a robust economy and because interest rates are low and capital plentiful.

Colleen Carey, founding principal of commercial real estate firm Lee and Associates Pasadena. Courtesy photo

“But it’s cyclical,” she pointed out. “We will go into a cycle in the future where it isn’t so rampant, because there’s no capital available for developers to be able to build. If you look at what’s happening right now, this has not happened in 40 years.”

The length and health of commercial real estate’s run in Pasadena can be attributed to a certain insulation it enjoys thanks to considerable sums of money that stay in Pasadena, and considerable sums that come from beyond Pasadena.

Even so, Carey said, “I think we are all feeling that the market has to top out at some point. What goes up has to come down.”
Carey said the city’s local commercial real estate market has been transforming for some time.

“We have very little industrial real estate anymore,” she explained. “What’s here has been gentrified into office and retail. That is primarily what makes up the commercial real estate market in Pasadena.”

More specifically, the type of development is retail on the ground floor. “Retail wants to be where there are congregations of people,” said Carey. “So it’s perfectly appropriate to do it in the central district.”

Development today has much to do with how well-connected cities are to transit because it clusters around transportation hubs, she noted.

The city currently has a number of ongoing high-end projects.

The William Carey International Campus is undergoing a facelift at the hands of EF, a Swiss-based international education company offering study abroad.

An old residence hall was demolished for the construction of a new one consisting of three floors and intended to house 500 students in triple rooms, with shared bathrooms, community spaces, and laundry rooms.

“It will become a very viable place,” she said. “They are building student housing up there and they have a lot of the small homes in that neighborhood that they are fixing up as well. So it’s a wonderful development for the city of Pasadena.”

Alexandria Real Estate leased land on Euclid Avenue and Union Street, just a block North of Paseo, and built a property to serve as their home office as part of an 82,000 square-foot office complex just completed, Carey noted.

Adept Realty, in partnership with Singpoli Investors, is in the early stages of approvals to build a 117,000 square-foot mixed-use development at the southwest corner of North Lake Avenue and Union Street.

It would include 54 condos, and 65,000 square feet of office space and a smaller amount of ground-floor retail facing Lake Avenue.

“It’s a gorgeous property and compliments the city center area very well,” said Carey.

The biggest development in town currently is at 100 West Walnut, she stated. It is on the north side of the Parson’s complex and is currently under construction at Walnut and Fair Oaks Avenue.

Upon completion there will be 400 residential units coupled with 210,000 square feet of commercial office space and 17,500 square feet of retail and dining space. Its anticipated completion is 2025.

“It provides a modern, mixed-use extension of historic Old Pasadena,” said Carey.

“The residential-over-retail construction will be phase two,” she continued. “there will be about 17,000 square feet retail along Fair Oaks with another 200 or so for-rent apartments, 400 residential units, with completion expected in 2025.”

Architect Rob Tyler has designed a property at 711 Walnut Street and the northwest corner of El Molino Avenue that will be going up soon and offer 115 residential units, six stories, and about 10,000-square feet of retail, according to Carey.

“That area between Lake Avenue and Los Robles Avenue had a lot of buildings that frankly needed some attention,” said Carey. “And with densities that are offered there residentially became very interesting to developers over the last few years.”

Lee sees the city’s Playhouse District, where her own company chose to locate its office, and an area with some of the highest densities in town, as particularly attractive to developers.

Her profile of the central city market covers transactions over the past 18 months with exchange values of $10 million or more.

“So it’s obviously attractive to these developers,” said Carey, “and I believe that is where development should take place – in the central district – where there’s good proximity to transportation, light rail stations, et cetera.”

Carey observed that state policy is pushing for just such clusters of housing and transportation and developers would like to take advantage of that wind blowing at their backs by delivering more inventory to Pasadena.

SB 50 would create far-reaching changes in zoning rules across California, preempting local land use controls to allow for swaths of land dedicated to single-family homes to be eligible for bigger developments and requiring cities to allow super-sized housing projects near transit.

The bill comes up for a vote in 2020. The Pasadena City Council has opposed the bill, which is supported by Gov. Gavin Newsom.

“But at the same time,” Carey noted, “there is a large constituency that’s lived here for a long time that doesn’t want Pasadena to change.”

What longtime Pasadena residents want is the low-rise construction, low traffic model they know from years past. Carey doesn’t believe it has to be viewed as an either-or proposition.

“Just because your developing in the central district doesn’t mean that you’re going to create significant traffic issues if you do it right, which I think Pasadena is doing it correctly,” she said.

Carey credited city planning with limiting the amount of parking that developments can offer in an effort to draw a resident that forsakes the automobile for the mobile convenience of the dense urban environment.

“That’s what urban planning is all about,” she asserted. “How do you entice people to live in the central core and walk or take public transportation as opposed to everyone driving a vehicle? And if you look around the country, in general, that has happened in all the urban cores.”

Some developers, she reported, are trying to rush through their permit approvals before the City Council reacts, “to put a damper on development.”

But for now there is no damper, at least not from an economic perspective.

 

 

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