Homeless Population Affects Commercial Real Estate, Vigilant Property Management is a Necessity

 

Investors are spending tens of millions of dollars in commercial real estate in West Los Angeles.  A person driving through Santa Monica, Playa Vista, Venice and Westwood will see buildings under construction and cranes everywhere.  In addition, they can also see homeless people everywhere.

The increase in the homeless population is becoming a serious security issue to these properties converted into office and retail space.  Further, property management companies are finding it difficult to remove the homeless people from the property.

For example on July 5th, a security guard asked two homeless men to purchase food or leave McDonalds on Colorado and 2nd Street in Santa Monica.  The two men were sleeping in the restaurant at about 4:30 am.  They started hitting the guard and it turned into a fist fight.  Santa Monica’s homeless population jumped 26% this year compared to 2016.  There are about 1,000 people living on their city streets.

The Los Angeles County homeless population increased 23% this year compared to 2016. About 60,000 homeless people live in Los Angeles County, according to the Los Angeles Homeless Services Authority (LAHSA).  The LAHSA volunteers counted 5,511 homeless people living in West LA.  More than 50% of the homeless are mentally ill or substance abuse addicts and many are military veterans, according to the LAHSA 2017 Homeless Count report.  Numerous vagrant people are living in these new developed areas.

On 3rd Street near Rose Avenue in Venice there is a homeless encampment. Hundreds of tents and personal belongings line the streets on Rose Avenue and 3rd Street.  This street is located two blocks over from the Google Corporate Campus on Main Street and Rose Ave.  Many of the industrial buildings in that area have been converted into office and retail.  There are an estimated 1,000 homeless people living in the Venice community.

Over 14,000 homeless people live in their cars or old recreational vehicles along the streets of Los Angeles County.  That is a 26% jump from 2016, according to the LAHSA report. They park mostly where there are no parking restrictions.

These old RV’s never move unless they are towed away.  Occasionally some people will come out of their vans, set up Barbecues and cook on the sidewalk near these commercial real estate sites.  The city of Los Angeles is creating parking restrictions for RV’s and posting signs in some neighborhoods to help with the problem.

A prospective commercial real estate tenant viewing property to lease can’t avoid the homeless problem.  The homeless population that surrounds the building depresses the desirability of the property.  Many property management companies employ security guards to keep the homeless population away from the area.  Frequently the police are called by the residents to move the homeless population, but they are not effective.  

The Los Angeles Police Department created a Homeless Outreach and Proactive Engagement (HOPE) Team.  The purpose of HOPE is to improve the City’s overall response to the complex and diverse needs of unsheltered homeless residents and to support healthy neighborhoods.

The HOPE Team officers will have 40 hours of Mental Health Intervention Training and the LAPD Mental Evaluation Unit will be available to respond if a mental health crisis is encountered.  They talk to the homeless and help them get into therapy and housing; however, there is not enough therapy for all the mentally ill homeless people or housing in the county.

“Vigilant property management” is the only recommendation I have to keep commercial real estate tenants happy and prospective tenants to lease the property.  Below are some examples of what I mean by vigilant property management:

1.    The management should have an excellent rapport and communication with the local police department.  A direct speed phone line to the police is essential.
2.    Employ security guards to protect the property and keep the tenants secure, check if the guards can use pepper spray.
3.    Encourage local law makers to come up with better counseling, housing and other services for these unsheltered individuals living in the area.
4.    Employ cleaning services to keep the premises clean outside from any trash left behind by the homeless every morning before tenants arrive.

The situation in Los Angeles is very serious.  A management company must bear the responsibility for the security of the building and the tenants until government can provide the necessary services for the needs of the mentally ill and homeless population.

The Sheriff’s Department in Los Angeles is taking on the brunt of treating and housing the seriously mentally ill with 4,000 to 5,000 mentally ill people in custody a day.  Mental Illness is a chief driver of homelessness, according to a commentary in the Los Angeles Business Journal on July 17, 2017;  “Any intellectually honest observer would likely concede that addressing mental illness comprehensively could be the single most-effective step we could take to remedy homelessness.”

“We retained Lee to serve as expert witness for us in connection with a commercial lease transaction. He was very responsive, able to follow and take directions well, and he provided both myself and my clients with valuable insight and guidance. I have complete faith in Lee as an expert and I would definitely recommend him to other attorneys.”
Omar Yassin, Partner, Archer Norris