Before expanding out of Iran into Europe in the late 1950s, the Bolour family was able to build a thriving textile business in the Middle East. However, with the geopolitical climate in Europe after World War II, it must have been difficult to thrive in that region. Can you discuss the entrepreneurial spirit of the Bolour family and how it transferred to real estate?
The Bolour family moved to Europe in the late 1950s to foster the expansion of our growing textile business. Before this, my father was acting as a buyer in Iran, connecting exporters there with distributors in Europe. After a few years, my father and several of his brothers felt comfortable enough to strike out and build their own supply chain out of the Middle East and into Europe. It took them five years to achieve that goal and required half of my father’s family to move to Hamburg, Germany, where a free trade zone existed. Of my father’s five brothers, three ultimately moved to Germany to build a sales infrastructure in Europe. They had little financial means during their childhood, and it was very progressive to go to another country like they did, but growing up in poverty with so much of their futures unknown, I believe they felt like they had little to lose.
When the Bolour family initially moved to LA in the 1970s, why did they start investing in real estate instead of further expanding the textile business? And what differentiated areas like Hollywood, Downtown and Koreatown?
I love what I do but I actually believe the prior generation of our family made a mistake when they left the textile business. They were on a massive run between 1965 and 1980, with 12 distribution centers in Europe, margins that were very high and the potential for continued growth. But they came from poverty and felt that they had made enough money to retire from actively operating these businesses. They were in a new environment in the United States by then, and wanted to shift to managing an investment portfolio.
I believe they were drawn to urban areas like downtown, Koreatown and Hollywood because they reflect an environment they were familiar with. They had always lived in urban areas –Tehran, Iran and Hamburg, Germany – and witnessed first-hand the power and potential of high-density communities. One of my uncles was in Hamburg after World War II and watched Germany rebuilt itself after its ruination from the war. Living in Europe in the 1950s reinforced their belief that big cities always recover, even after devastating events.
That belief continued when they arrived in the U.S. They remained confident when interest rates spiked in the 1980s and when foreclosures skyrocketed during the Great Recession. They were accustomed to it and knew the market would always spring back.
BOLOUR currently has many projects in the pipeline including The Strand & Pier Hotel in Hermosa Beach, the AMP Lofts in Los Angeles, creative offices in El Segundo and the Decadence mixed-use building, again in Hermosa . What project gets you the most excited, and what unique obstacles have arisen from that project?
I get most excited when BOLOUR can bring numerous intangibles together in a single project – whatever that project may be. Many of the projects you mention have required us to evaluate and resolve complex entitlement challenges, all while we clearly communicate with a broad group of audiences. We have built our business on our strong, established relationships and our promise to always do right by the communities where we invest and build. We always try to bring elected officials, industry experts and grassroot coalitions together to establish zoning, architectural plans and creative project elements that serve their specific community. This is a huge joy for me and is particularly important when we’re working in transit-centric, gateway markets where we have the opportunity to turn a less-than-desirable real estate asset into a new hub for people to live and work and play. Los Angeles is ripe with these types of opportunities, so that makes it a great place for BOLOUR to grow its portfolio and its brand.
Can you please expand on the marketing and branding perspective?
Project branding is a huge factor in today’s commercial real estate market, particularly when it comes to creative urban developments that depend on attracting young professionals. When you give a project an identity – much like the hospitality industry does – you give it a layer of intangibles that can directly impact yields and rental rates. In an office project, young talent wants to go to a lobby where they can play shuffleboard or hang out at an espresso bar. They want to be in an urban area where every amenity is at their doorstep. The same is true in our multifamily communities. As more Millennials work online, we’ve seen their need for community climb sharply. As an investor and a developer, BOLOUR responds to those trends through design and construction, and then markets the results through branding and identity programs.
As an example, we bought a 1980s-built building in Mission Viejo in April 2018. We named it “Cerro” and gave it a cool look and feel that included lobby upgrades and an overall upscale and welcoming ambiance. We spent a lot of time branding the property and it paid off. When I tell people from Orange County that I own Cerro, they immediately know the project. They connect it with an identity, not just another building.
When we approach properties like Cerro, we build with a vision that matches our demographic. This means that everything from building materials to layout to finishes are in harmony in the brand. In our new multifamily buildings, we are targeting young professionals with an even deeper level of intangibles including keyless technology that allows them to control many areas of their residential unit from a phone or key fob. This creates greater security for residents and a very cool intangible for a demographic who loves – even demands – living environments that integrate technology. This would be a different story in a senior living property, since seniors generally want to control their living spaces with their fingertips, not their phones. By identifying all of the potential intangibles and using the best methodologies for our target demographic we are giving every office and multifamily project is its own distinctive success opportunity.
What do you think about co-living? Have you thought about using that model?
I think co-living, if done correctly, can meet a market need but it requires highly structured governance. In the office sector, platforms like WeWork have created this culture of governance for collective groups of strangers wanting to work together in co-working spaces. On the co-living side, Commons has established a similar process of learned governance, with private rooms complemented by well-planned and designed shared spaces.
As a company, BOLOUR is an investor, developer and financer, not a community manager, so this is a niche that is different from what the BOLOUR team does. From my perspective, I can say that obtaining financing for a co-living project is more complex. For now, this model is not part of our larger strategic plan but it is definitely something we are noticing more in the marketplace and watching to see how the trend evolves.
BOLOUR recently broke ground on a five-story, 65-unit apartment complex in Silver Lake. However, the entitlements date back to the early 1990s. Why do you think this site has been untouched for so long and why did you decide to revive it?
When we bought this parcel, it was an old, closed gas station that most people didn't want to touch because it required strong design and development leadership to ensure success. It was the perfect opportunity for us to apply our specialized knowledge and track record of community-oriented projects. As we began looking into the land use issues, we realized that the property was entitled in the 1990s. We asked ourselves if these entitlements would allow us to build a product that works today. In coordination with the city’s planning, building and safety departments, we determined that the answer was yes. It can be difficult to entitle in Silver Lake but we were lucky with this project – in part because of its existing entitlements and in part because of the different way that BOLOUR looks at land use. Our acquisition team understands the value-add intangibles and the Los Angeles development environment, and that set us on a path for a successful end product.
Please explain the market research process when identifying “neighborhoods that are on the brink of redevelopment.”
We review hundreds of deal opportunities each year through the lending side of our business. That exposes our team to a huge amount of data that, if you’re paying attention, point to very specific market movement and trends. But that is only part of our formula.
When you evaluate most cities, you see that they evolve the same way. In the early 1900s, industrial and manufacturing was built just outside of downtown centers and railroads followed, creating the hub of a city’s transportation grid. Over the last decade, these transit-oriented areas have become the most likely places for investors and developers to affordably enter a Tier 1 market. Because of that, these are the areas that are quickly being converted into creative office and multifamily projects that are so highly desirable among Millennials. Along with this development comes social phenomenons like the rise of Arts Districts, which we’re now seeing in places like Miami, Phoenix, Dallas and Los Angeles.
I could take you right now to ten different cities in the U.S. where this evolution pattern is the same. Once you understand this pattern, it becomes easier to predict where growth may happen. Many seasoned developers who came to Los Angeles from New York City in the early 2000s saw downtown as a goldmine because they related it to the turnaround (and now prosperity) of New York City. For the same reason, a lot of our focus at BOLOUR is on lending, purchasing and redeveloping in these emerging geographic areas with a value-add mindset.
BOLOUR recently acquired a 52,600-square-foot, single-story commercial building at 21200 Oxnard Street, with plans for 380 residential units. The property is also within the Warner Center 2035 Specific Plan, which allows up to 30 million square feet of dense new development in a 1,100-acre area, including commercial and multifamily development. Walk us through the vision behind the Warner Center specific plan and how your residential development fits within that scope.
What attracted us most to Warner Center was its “live, work, play” approach – a lot like North Hollywood, downtown Los Angeles, Hollywood and Sherman Oaks, where there are nice restaurants, bars, jobs and homes. This concept is not just for Millennials. It’s really for everyone – young professionals, senior citizens and families – because whatever the age, people are attracted to the idea of having tons of amenities right outside their front door.
We have a ten-year plan to develop our site at Warner Center, which is fine since we are very comfortable working in ten-year horizons. If we were to develop this parcel now, we would likely have to build a Texas-style wrap project with above-grade parking. But if we wait we can capitalize on higher future rents, giving us the financial resources needed to build more product space aboveground and move parking underground. Underground parking can be one of the most costly items of an infill project, requiring a lot of dirt removal and representing as much as 20 percent of a new building, so it’s important that you can make this expense pencil.
Waiting to develop could also reduce our need for parking. Already, 30 percent of people in downtown Los Angeles do not own a car, and many expect the need for parking in urban areas to decrease by as much as one third in the next 10 to 15 years. That would make our Warner Center project a much different undertaking, where curbside space is more important than parking because cars will not park – only drop off or pick up at the curb like they already do at places like Century City Mall and LAX.
We also believe the office market in Warner Center will become more important over time. That would open up the opportunity for a specific plan where 50 percent of our floor area is commercial and 50 percent is residential, which doesn’t makes sense today but perhaps will in the future.
In the interim, we plan to remain active owners at Warner Center, leasing our building and waiting as we move toward a development plan that will yield a larger return for us and provide greater benefit to the people who live and work in our project.
Mark Bolour is a Los Angeles based real estate developer specializing in emerging gateway markets across the United States. The Bolour family moved to the United States in the 1980s after operating a successful textile business in Europe. The family subsequently started investing in real estate, specifically in urban areas across Los Angeles. Mark is now focused on growing his company, BOLOUR, in their investment, lending and development platforms. Mark continues to build innovative projects from multifamily to mixed-use, targeting emerging areas in metro Los Angeles like the Arts District, Warner Center and parts of Orange County.