Zach Lazzari

AI Summary

→ 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 INSIGHTS - **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. 💼 SPONSORS None detected 🏷️ Los Angeles Zoning, Commercial Real Estate, Urban Development, Housing Policy, Walkability