Why Building a Crosswalk in LA Is Kafkaesque

PodcastOdd LotsBill McBrideSep 28

The discussion focuses on how zoning, permitting, infrastructure costs, and parking constrain housing and commercial development in Los Angeles. The guest contrasts Los Angeles with New York on density, mixed-use neighborhoods, rents, and independent businesses, while identifying California’s housing costs and water supply as major problems. Higher interest rates have also weakened financially engineered commercial real estate returns and pressured build-to-rent, while self-driving cars could eventually reduce parking’s importance and reshape cities.

Real Estate Interest Rates Economic Growth

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Key Takeaways

The guest presents zoning and regulation as central constraints on California housing: ADU laws are expanding supply only modestly, roughly 95% of Los Angeles is residentially zoned, and home builders identify policy, zoning, and regulatory issues as their top concern. These constraints compound the state's housing-cost problem.

The speakers link Los Angeles's spread-out, less mixed-use structure to both housing and retail patterns: although buying a home is expensive, the city can still offer rental opportunities in appealing neighborhoods, while its urban form helps support more mom-and-pop shops than New York's denser model. The guest argues that New York's density also produces higher rent for a particular location.

Parking is described as a practical constraint on Los Angeles commerce and housing: severe parking shortages can cause customers to skip businesses, while large numbers of ADUs without required off-street parking can leave neighborhood streets packed. Valet service may mitigate the problem for businesses, but it does not remove the broader pressure on local streets.

GEO-POLITICS

Zoning Constraints — The speakers identify zoning as a major obstacle to increasing housing supply. California’s ADU laws are expanding the housing stock, but the guest says the increase is small and broader zoning changes remain difficult.

“Well, if you talk to the home builders or the apartment builders, it's the biggest piece. Okay…”—

Mixed-Use Zoning — The guest argues that Los Angeles’s land-use structure limits mixed-use and walkable neighborhoods because roughly 95% of the city is zoned residential. He contrasts this with New York’s more mixed-use structure, where side streets can support independent businesses.

“New York is basically all mixed use…”—

ECONOMY

California Constraints — The guest identifies California’s housing costs and water supply as two major problems that need to be addressed.

“We have we have two problems. One one is the cost of housing, which we need to address, and the other is water. Yeah…”—

MARKETS

LA Housing Gap — The guest says New York’s high costs pushed many talented friends toward Los Angeles. Buying a home there is expensive, but good rental opportunities can still be found in exciting neighborhoods.

“Well, I went to school in New York…”—

Urban Rent Effects — The guest argues that New York’s higher density produces higher rent for a particular location. Los Angeles’s more spread-out urban form, he says, helps explain the presence of more mom-and-pop shops.

“In New York, you have really high density, and therefore you're gonna have high rent for a particular location. Here, we're really spread out.”—

Tenant Risk — The speaker argues that real estate generally retains its value even when a tenant fails because a new tenant can usually replace the failed tenant.

“Well, lucky thing about real estate is even if the tenant fails, which is sad, but the real estate still maintains its value and a new tenant generally will come…”—

FORECASTS

Autonomous Parking — The speakers argue that self-driving cars could make parking less important by taking passengers to work and then driving to centralized lots. They say this could meaningfully restructure cities and how they are organized.

“But I do think with self driving cars, parking will become less important.”—

Los Angeles Development Vision

The hosts introduce Los Angeles real estate and Zach Lazary's effort to bring artistic ambition, independent businesses, and community-oriented design to commercial development.

LA Versus New York

The speakers attribute Los Angeles's independent businesses and creative population to lower rental costs, lower density, and neighborhood economics that differ sharply from New York.

Zoning And Mixed Use

They argue that restrictive zoning is central to California's housing crisis and limits lively mixed-use neighborhoods, while Jane Jacobs's ideas inform a more walkable community model.

Interest Rates And Development

Higher interest rates have undermined financially engineered commercial real estate returns, making distinctive buildings and tenant experiences more important to profitability while pressuring build-to-rent projects.

Parking Constraints

Parking remains a major obstacle for Los Angeles businesses and housing, with ADUs worsening street congestion even as self-driving cars could eventually reduce the need for parking.

Construction Supply Bottlenecks

Developers describe shortages of transformers and other infrastructure components, requiring advance purchases, supplier relationships, and improvised storage to keep projects moving.

LA Housing And Water

The guests remain bullish on Los Angeles's long-term appeal but identify housing costs and California's water supply as the city's defining unresolved problems.