By Steve Levy
Property Owners and Developers--What's with all the DemonizingUploaded: Mar 30, 2017
Shortly before my 75th birthday I became a commercial property owner for the first time. When my mom died I inherited 1/8 of a commercial property in Los Angeles along with my sisters. Rge property has been in the family for 50 years and my dad and now I have maintained a friendly relationship with the tenant who has also been there for most of the time,
I see a lot of negative comments about developers on Town Square and in council meetings and it seems off point to me.
In nearly all cases before there was a developer, there was a property owner who decided to sell their property. The children of the current owners of our Los Angeles property may make that decision in the future as have many families here as generations or financial circumstances change.
What happens if the property becomes less valuable to develop--because it takes a long time to get approvals, because there are lots of fees, because the city places other restrictions, etc.
A developer does not lose if they have not yet bought the property. The only losers are the property owners who will get less for the sale of their property. A developer can just move to the next property or city. Imagine if it became more difficult to sell your house. The buyer does not lose, the seller loses.
It is ironic (to me at least) that most people who complain about developers live and or work in buildings built by developers. All of my homes in Palo Alto were built by developers.
Development is a business in which the developers take the risk of development in return for a prospect of profits, just like any large or small business owner.
While recent property values have increased along with rents, this is not always the case and there have been large losses for developers as there have been for stock market picks that went bad, In our old office the rent went up $3 per square foot in the dot com boom and back down in the bust.
Commercial development cycles are the norm and money is made and lost depending on when in the cycle property was purchased.
Finally, developers like any business, survive or not depending on how well they serve customers. No one builds a home or commercial building that they expect no demand for. They build for customers. Customers not developers create the demand for space just like customers create the demand for cars, restaurants and goods and services generally.
One can debate the rules under which development takes place without demonizing the people who do the development.