To Rebuild Or Not To Rebuild: That Is The Question For SoCal Multifamily Owners

It is early days for owners whose properties were damaged or destroyed in the historic Palisades and Eaton fires that tore through the Los Angeles area last month. Those who have been allowed to return are still sorting through the wreckage and debris.

Roughly 400 apartment properties were located in the fire zones, and 75% of those have fewer than 15 units and are more than 70 years old, according to CoStar. They are also primarily owned by smaller, independent investors rather than large, deep-pocketed firms. The age and size of these properties pose a difficult question for owners: Do I rebuild?

While those who lost their personal residences have emotional and sentimental reasons to rebuild, commercial owners are likely lacking that piece of the puzzle, Colliers Senior Executive Vice President Kitty Wallace said. 

“[Commercial real estate] is less emotional — it's cash flow,” Wallace said. 

Many long-term mom-and-pop owners will be more likely to sell and less likely to want to undertake the arduous process of clearing debris and remediating a damaged property or rebuilding a destroyed one, Wallace said. 

The Palisades in particular is mostly smaller properties with private owners, she said, and while many owners are passionate about the area, it’s unclear whether that passion will translate into them holding on to properties and choosing to rebuild for themselves. 

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Kitty Wallace