You may have already considered investing in residential real estate in this Southern California hotspot. After all, Century City has been known to be a solid investment on the residential side for decades. Still, have you considered the vast opportunities for investing on the commercial side in this thriving city?
Let’s explore commercial real estate fully, dive into what prevents investors from moving forward — how to break through barriers — as well as some background on Century City, CA.
History of Century City
If we take a step back in time, it’s easy to see where Century City gets the upscale feeling and glam it has today. It has a rich history tied to the movie scene.
As the name implies, it was home to 20th Century Fox, which sold off 176 acres of its property back in the 1950s after the introduction of television began softening the big-screen movie market.
With new owners in place and a vision to have a new, modern city, beautiful, tall buildings were dreamed up and built. The former exclusive movie business town began to broaden its focus and attract businesses of all types.
Fast forward to today, and there have been great strides taken to create an urban oasis of bustling commerce, a strong flow of residents, and an environment that feels like living the good life.
Century City, CA — The City Within a City
Dubbed “the city within a city,” visionaries succeeded in designing a self-contained community with wide boulevards and a thriving area where people could live, work, and be entertained.
Situated on the Westside of Santa Monica Boulevard and a mere ten minutes from Los Angeles, Century City has lived up to its name to include everything for a high quality of life.
Flanked by towns world-famous in their own right, Westwood, home to UCLA, is less than 15 minutes away. Holmby Hills, known for residential luxury mansions and elite neighborhoods, is also within a short driving distance of Century City.
There is no shortage of wealth in neighboring areas, but there is a shortage of available space. The economic principle of supply and demand comes into play here, and investors are the ones to profit.
CA Commercial Real Estate: Location Is Everything
Savvy real estate investors understand what to look for when investing in commercial real estate, but with any type of real estate investment, the same tried-and-true buying principle stands — location, location, location.
Century City offers a sought-after location that’s evolved over time and earned its place as a hotspot for investors.
Three things make Century City a great location for commercial real estate investing:
- Close proximity to the Los Angeles International Airport
- A strong mix of business and residential tenants
- True neighborhood vibe creates sustainability
Proximity to the Airport
Century City is approximately ten miles from the LAX airport. This makes the city business-friendly for meetings and enticing for visitors flying domestically and internationally.
For residents who call Century City home, a short drive to LAX is convenient for business and leisure travel, adding to its attributes as a desirable place to live and work.
For those who live in neighboring towns, quick access to freeways and major roads brings nearly 50,000 people into Century City for their daily commute to work. Santa Monica Boulevard, Pico Boulevard, and the I-10 and I-405 freeways give commuters plenty of options.
Strong Mix of Business and Residential Tenants
Unlike some cities where commerce is booming but feel like a ghost town at the end of a work day, Century City has a healthy mix of varied businesses outside of the nine-to-five grind.
Century City was ranked #19 out of 112 best neighborhoods for young professionals in the Los Angeles area.
True Sense of Neighborhood Creates Sustainability
Century City boasts an eclectic restaurant scene with plenty of al fresco dining options, thanks to the California weather.
With a robust business culture, a mix of residential properties, and a diverse combination of commerce and services, Century City maintains an urban vibe yet has been described as “right-sized” to feel like a true neighborhood with the conveniences of a downtown metropolis.
Commercial Real Estate Property Types to Consider
Century City offers many different property types to choose from in the commercial real estate sector. Between retail space, shopping centers, industrial space, office space, and multifamily property, there are many options to invest in commercial real estate.
- Retail space
- Industrial space
- Office space
- Multifamily property
Century City offers great shopping and specialty retail right in the city. The growing number of people moving in has prompted more allocation of upscale retail space options for locals.
The retail space includes the Westfield Century City Shopping Center that houses national anchors, such as Nordstrom and Bloomingdale’s and an array of boutique shops. Jewelry lovers benefit from Tiffany’s, located on Santa Monica Boulevard.
Industrial space has a host of use cases, from storage facilities to manufacturing and research and development to distribution. Demand is high for this type of space around the U.S., and it’s no different in the 90067 zip code of Los Angeles and surrounding areas. Commercial business needs are varied with square footage and type of space.
Office space has evolved since the pandemic, with some offices opting for work-from-home or hybrid work schedules, but there will always be a demand for certain types of businesses to conduct in-person commerce.
Some trends within the office space area include shared or coworking space, with some businesses finding great synergy with this type of office workspace.
Private office space will always be needed, with tenants looking for office space for rent. New listings and construction projects have expanded to meet demand in Century City, especially after the success of Watt Plaza.
Multifamily property is split into two categories: residential and commercial. Any property with five or more units is considered commercial, while any multifamily space with four or fewer units is residential.
Century City, with great proximity to freeways, the airport, UCLA, and other prominent neighborhoods like Westwood and Holmby Hills, is an increasingly desirable residential area for investors.
Commercial multifamily property is a great way to invest in the neighborhood, with more residents flowing in each year. Christina offers many commercial multifamily portfolios that can help you break into this market in Century City.
Within the commercial property types, options are endless, and Century City continues to grow, creating an ecosystem of strong investment opportunities.
Why Invest in Commercial Real Estate?
When it comes to real estate investing, the majority of people immediately think of the residential side. This holds true in Century City, California, as much as anywhere in the U.S.
For example, how many people do you know who have invested in residential real estate as opposed to commercial properties? There’s a strong chance you personally know more residential real estate investors, but commercial real estate is a thriving market. In fact, the U.S. commercial real estate market totals nearly $16 trillion, with an abundance of opportunity on the commercial side.
When weighing out various types of investments, all have merit, risk, and their own set of advantages. Let’s explore the distinct differences between commercial and residential real estate, as well as other investment options.
Residential vs. Commercial Investment Property —What’s the Difference?
Residential real estate investments are limited to single-family homes and residential rental properties with up to four units — think duplexes, townhouses, and condos.
Commercial real estate includes typical property types you may think of, such as retail, industrial, and office space. Note that hotels are included in this class of properties and buildings with five or more units.
Considering the broad range of commercial properties, this provides endless options for investing on the commercial side.
Advantages of Commercial vs. Residential Real Estate Investments
There are a few key advantages of commercial real estate investments:
- Solid rate of return
- Lower turnover of tenants compared to residential real estate
- Less volatility than the stock market
Commercial Real Estate Offers a Solid Rate of Return
Although jumping into commercial real estate can be challenging, the rewards are well worth it for individuals with the right mindset and determination.
With impressive returns in one of the hottest, growing markets, such as Century City, CA, investors reap the long-term benefits of passive income that attracts real estate investors in the first place.
If you’re comparing residential and commercial real estate, as a general rule, commercial real estate tends to yield a higher return over time.
Lower Turnover of Tenants Compared to Residential Real Estate
The typical residential lease is a one-year commitment, whereas a commercial real estate lease can be written for a five-year period or even a 10-year commitment, often with options for renewal.
Longer-term leases associated with commercial real estate mean less marketing costs and less need for soliciting new tenants than with residential real estate.
Commercial Real Estate Is Less Volatile Than the Stock Market
We’re living in an era of unpredictability with the stock market. Stock investors see their portfolios rise sharply and drop drastically, at times, within a few days. High-earners are looking for new, more stable types of investments to diversify.
Some are adding to their existing real estate portfolios with commercial real estate, while others are actively looking to begin their investing journey in real estate but may not know where or when to start.
Investments are Cyclical
All types of investments have some level of inherent risk and are cyclical in nature. However, not all asset classes are created equal when it comes to fluctuating values.
Real estate cycles are longer, and market fluctuation occurs over a longer period of time, sheltered from the dramatic swings we experience with the stock market today.
While the stock market can go up and down in short periods of time, evidenced by recent dips and spikes, real estate investments benefit by having less volatility overall, and real estate is considered a safer investment than putting all of your money into the stock market.
What Prevents People From Investing in Commercial Real Estate?
- Lack of experience in real estate investing
- Lack of local market knowledge
- Fear and self-doubt
- Lack of up-front funding
Lack of Experience in Real Estate Investing
At the most basic level of real estate investing, let’s examine home ownership: Currently, more people than ever are renting rather than owning.
The homeownership rate was 65.5 percent in 2021. In the past, over a lifetime, the average homeowner purchases three homes, but this number is dropping. For example, in Century City, 42 percent of residents rent their homes, while 58 percent are homeowners.
There is always a learning curve with any type of real estate, whether you’re buying your first home or purchasing residential or commercial real estate investment property. Many people buy houses and condos as primary or secondary homes, but most don’t do it on a frequent basis, so how do you get great at real estate investing?
This lack of general real estate experience can hold people back from getting involved on the commercial investing side. Unless individuals have worked in commercial real estate or know a family member in the business, a lack of overall real estate experience can feel like a barrier to entry on the commercial side. But lack of real estate experience doesn’t have to be a barrier when you work with vetted professionals.
Lack of Local Market Knowledge
The Los Angeles, CA area and surrounding cities, such as Century City, are among the best places to invest and remain ripe with opportunities. Once you narrow your options to a location, you must become an expert in the area.
Hypothetically, you could conduct multiple visits and do further market research; maybe you even live in Los Angeles or the surrounding area. You may have a strong understanding of the neighborhoods. However, in the commercial real estate business, this knowledge must go far deeper than that of even the most well-versed local.
Commercial real estate, although lucrative, has nuances. Investment cycles, tax implications, zoning and permitting regulations, local politics, and a host of other factors can make or break an investment.
Savvy investors work smarter, not harder. For instance, you may choose to partner with a firm that has done the hard work and laid the groundwork for a strong investment strategy in your desired area.
Fear and Self-Doubt
With any investment, there are inherent risks, and it’s easy for fear and self-doubt to set in if you’re taking on an asset class that’s new to you. In case you’re wondering if you have what it takes for commercial real estate investing, read on.
The commercial real estate market can be intimidating; this is especially true in high-demand markets such as Century City, CA, and surrounding areas. Pushing through self-doubt and aligning with the right investment firm can significantly impact your wealth-building strategy and outcome.
Lack of Up-Front Funding
Another reason people shy away from investing in commercial property is the amount of cash, otherwise known as capital, needed for an individual to get started.
Commercial property often requires a larger cash commitment than the down payment required for residential properties. This can be a deterrent for the average investor, especially when starting out, but there are options available.
How To Break Through Barriers in Commercial Real Estate Investing
Most people are unaware that many commercial investors partner with an investment firm to launch their commercial real estate portfolio. The challenges mentioned are real, but they don’t need to stop you.
The best way to break into the commercial side is to find a well-seasoned investment firm, such as Christina, who is already tapped into the necessary resources and knows every nook and cranny of the area.
Stop Dreaming and Start Investing.
Christina has helped many investors overcome challenges and break through barriers to get started in commercial real estate investing. If you’re serious about growing wealth and investing in commercial real estate in Century City or the surrounding area, stop dreaming and start investing. Contact the real estate experts at Christina today.