What are the key takeaways from this Odd Lots episode?

Key insights include: **Zoning as the binding constraint:** Roughly 95% of Los Angeles is residentially zoned, leaving commercial activity concentrated on a handful of main streets. When those corridors lose independent businesses, surrounding neighborhoods have no fallback — unlike Manhattan, where side streets historically absorbed cultural spillover. Developers and builders consistently rank zoning reform as their single largest operational obstacle.; **ADU policy trade-off:** California's ADU laws removed off-street parking requirements to accelerate construction of accessory dwelling units. The unintended result is severely congested street parking in high-ADU neighborhoods, offsetting density gains with livability costs. Developers building near ADU-heavy corridors should model parking demand independently rather than relying on city projections.; **Product quality replaces financial engineering:** When cap rates fall below interest rates, arbitrage-driven commercial real estate stops generating returns. Lazzari argues developers must now compete on tenant quality and physical design rather than spreadsheet optimization. His approach — curating independent, vision-driven tenants the way A24 selects filmmakers — is producing rent growth where generic new builds are not.

What did Bill Mcbride and Zach Lazzari discuss on Odd Lots?

Recorded live in Hollywood, Odd Lots speaks with housing analyst Bill McBride of Calculated Risk and developer Zach Lazzari of The Western Company about LA's zoning constraints, the collapse of financial-engineering-driven real estate, and what it actually takes to build walkable, community-oriented neighborhoods in a car-dependent city. Key topics include: **Zoning as the binding constraint:** Roughly 95% of Los Angeles is residentially zoned, leaving commercial activity concentrated on a handful of main streets. When those corridors lose independent businesses, surrounding neighborhoods have no fallback — unlike Manhattan, where side streets historically absorbed cultural spillover. Developers and builders consistently rank zoning reform as their single largest operational obstacle.; **ADU policy trade-off:** California's ADU laws removed off-street parking requirements to accelerate construction of accessory dwelling units. The unintended result is severely congested street parking in high-ADU neighborhoods, offsetting density gains with livability costs. Developers building near ADU-heavy corridors should model parking demand independently rather than relying on city projections..

How long is this episode of Odd Lots?

This episode is 21 minutes long. SignalCast provides an AI-generated summary so you can get the key insights in about 3 minutes.

Odd Lots

Why Building a Crosswalk in LA Is Kafkaesque

September 28, 2026

21 min episode · 2 min read

Bill Mcbride,Zach Lazzari

Episode

21 min

Read time

2 min

Topics

Relationships, Fundraising & VC, Design & UX

AI-Generated Summary

Published Sep 28, 2026

Key Takeaways

✓Zoning as the binding constraint: Roughly 95% of Los Angeles is residentially zoned, leaving commercial activity concentrated on a handful of main streets. When those corridors lose independent businesses, surrounding neighborhoods have no fallback — unlike Manhattan, where side streets historically absorbed cultural spillover. Developers and builders consistently rank zoning reform as their single largest operational obstacle.
✓ADU policy trade-off: California's ADU laws removed off-street parking requirements to accelerate construction of accessory dwelling units. The unintended result is severely congested street parking in high-ADU neighborhoods, offsetting density gains with livability costs. Developers building near ADU-heavy corridors should model parking demand independently rather than relying on city projections.
✓Product quality replaces financial engineering: When cap rates fall below interest rates, arbitrage-driven commercial real estate stops generating returns. Lazzari argues developers must now compete on tenant quality and physical design rather than spreadsheet optimization. His approach — curating independent, vision-driven tenants the way A24 selects filmmakers — is producing rent growth where generic new builds are not.
✓Neighborhood aggregation over single-asset development: Lazzari's Western-Melrose project, inspired by Jane Jacobs' sidewalk-ballet framework, involves acquiring multiple adjacent buildings to engineer a coherent street-level experience rather than isolated properties. This strategy creates compounding foot traffic and cultural identity that a single building cannot generate, and it insulates individual asset values even when specific tenants fail.
✓Supply chain workarounds for transformers and materials: Electrical transformers remain constrained enough that developers must identify suppliers through personal networks, purchase units well ahead of project timelines, and warehouse them off-site. This pre-purchasing strategy adds carrying costs but prevents construction delays that erode returns in a high-interest-rate environment where time overruns are especially expensive.

What It Covers

Recorded live in Hollywood, Odd Lots speaks with housing analyst Bill McBride of Calculated Risk and developer Zach Lazzari of The Western Company about LA's zoning constraints, the collapse of financial-engineering-driven real estate, and what it actually takes to build walkable, community-oriented neighborhoods in a car-dependent city.

Key Questions Answered

•Zoning as the binding constraint: Roughly 95% of Los Angeles is residentially zoned, leaving commercial activity concentrated on a handful of main streets. When those corridors lose independent businesses, surrounding neighborhoods have no fallback — unlike Manhattan, where side streets historically absorbed cultural spillover. Developers and builders consistently rank zoning reform as their single largest operational obstacle.
•ADU policy trade-off: California's ADU laws removed off-street parking requirements to accelerate construction of accessory dwelling units. The unintended result is severely congested street parking in high-ADU neighborhoods, offsetting density gains with livability costs. Developers building near ADU-heavy corridors should model parking demand independently rather than relying on city projections.
•Product quality replaces financial engineering: When cap rates fall below interest rates, arbitrage-driven commercial real estate stops generating returns. Lazzari argues developers must now compete on tenant quality and physical design rather than spreadsheet optimization. His approach — curating independent, vision-driven tenants the way A24 selects filmmakers — is producing rent growth where generic new builds are not.
•Neighborhood aggregation over single-asset development: Lazzari's Western-Melrose project, inspired by Jane Jacobs' sidewalk-ballet framework, involves acquiring multiple adjacent buildings to engineer a coherent street-level experience rather than isolated properties. This strategy creates compounding foot traffic and cultural identity that a single building cannot generate, and it insulates individual asset values even when specific tenants fail.
•Supply chain workarounds for transformers and materials: Electrical transformers remain constrained enough that developers must identify suppliers through personal networks, purchase units well ahead of project timelines, and warehouse them off-site. This pre-purchasing strategy adds carrying costs but prevents construction delays that erode returns in a high-interest-rate environment where time overruns are especially expensive.

Notable Moment

Lazzari reveals that city approval for a single crosswalk at Clinton and Western came with a price tag approaching one million dollars — covering engineering, electrical work, and underground vault construction — plus a multi-year build timeline, illustrating how municipal infrastructure costs can rival small construction projects.

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Episode Transcript

00:00:02 Speaker 1: Bloomberg Audio Studios Podcasts Radio News. 00:00:09 Speaker 2: Music Hello, and welcome to another live episode of the Odd Lots podcast. 00:00:22 Speaker 3: I'm Joe Wiesenthal. 00:00:24 Speaker 4: And I'm Tracy Alloway. 00:00:25 Speaker 2: So we're here at the Vermont Theater in Hollywood. And of course, you talk about Hollywood, but you also have to talk about the real estate industry. We know this has always been a hub of booming real estate industry. But what do the changes in economic development and the housing market, how does it manifest itself here? 00:00:42 Speaker 5: That's right. 00:00:43 Speaker 3: So we have a real treat for you. 00:00:44 Speaker 4: We're going to be speaking to an absolute legend in the world of residential real estate, someone who actually called the subprime bubble before 2008, and maybe even more importantly, called the bottom of the housing market after 2008. And then we're also going to be speaking to a relative newcomer in the world of commercial property, someone who's doing new things in L.A. and trying to develop basically a new neighborhood. 00:01:08 Speaker 2: So enjoy our conversation with the legend Bill McBride of Calculated Risk, as well as Zach Lazzari, real estate developer, founder. 00:01:17 Speaker 3: Of The Western Company. Thank you both so much. Zach, what do you what do you do? What's your job? 00:01:23 Speaker 5: I'm a real estate professional. 00:01:25 Speaker 3: Okay, what does that mean? 00:01:26 Speaker 2: Because there are a lot of people who could say those words. 00:01:30 Speaker 1: So my goal with the Western Company, the goal that we have is that being able to say I'm a real estate professional is more exciting than it normally is. So I come from a theater and acting background. And what I noticed was the developments that I was seeing in Los Angeles moved here in about 2014. 00:01:50 Speaker 6: Okay. 00:01:53 Speaker 5: You'd have a really exciting neighborhood. 00:01:54 Speaker 1: Pop up in Silver Lake or Echo Park or Highland Park. And then whenever scaffolding would go up for a new building, there's generally a, oh, oh no, what's that going to be? And that's not the reaction that you should have when a new building is being built. 00:02:09 Speaker 5: There should be some excitement. What is that going to be? 00:02:12 Speaker 1: What kind of new creative spirit is going to enter into that structure? And I just don't think the commercial real estate industry is that inspiring in that way? Those outcomes haven't been so inspiring. So our goal is to sort of infuse development with the art spirit. 00:02:32 Speaker 4: I'm going to ask a very basic L.A. question, and I'd be curious to get both your takes on this. And again, Joe gave the caveat earlier, which is we've been to L.A. a couple of times, but …

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