Forward-thinking developers are excellent customers. An article in Monday’s Los Angeles Times highlighted NMS Properties’ purchase of the Denny’s restaurant site at Colorado and Lincoln in Santa Monica, and how the property is near the expected end of the Metro Rail to the beach. The train won’t be running for at least four years (and could be more), but NMS will be well positioned with 250 apartments close to the coming station and in a newly zoned commercial corridor along Lincoln Blvd (per Santa Monica Patch).
Our second deal with NMS, Century provided a $9 million acquisition loan, giving them the time to get their proposed development through the city’s approval process. While the price of $300 per foot is close to peak prices from five years ago, the value is generated by the allowable density in the corridor, with residential buildings permitted to have at least one extra floor. More apartments means more residents means more vibrancy on the street, the key amenity for a walkable, sustainable neighborhood, especially when transit is added to the mix.
This project demonstrates, as have others Century has financed over the years (Meta Housing’s Long Beach Senior Artists Colony, for example), that transit decisions are having an increasing effect on development patterns, and upon our customers. This trend is only going to accelerate as the provisions of two state statutes, usually referred to as AB32 and SB375, take hold. AB32 requires the state and all of its cities, counties and regional agencies to plan and actually accomplish a substantial reduction in the production of Greenhouse Gases (GHG or GhG), while SB375 requires that Regional Transportation Plans (RTPs) include a Sustainable Communities Strategy (SCS), and that those two documents will drive the creation of the next round of Regional Housing Needs Allocations (RHNAs).
In addition to creating some new acronyms (a sure sign of progress?), these sustainability requirements will change where investors are willing and able to develop new housing and commercial developments. This will be an important trend for Century to understand and get ahead of, to ensure that our lending business is sustained.