Executive Q&A: Building on LA’s Strong Demand
- Mar 19, 2019
As a commanding officer in the Israeli military (ranked Major), Noam Hameiri learned how to guide diverse groups and balance different personalities to achieve common goals. Today, he relies upon those skills, and the MBA he later earned, as senior vice president of Canoga Park, Calif.-based DEELS Properties. At Deels, Hameiri oversees real estate management operations and is responsible for the portfolio’s overall performance. The company currently owns and manages 10 multi-family communities and some commercial, and it has another 3 million square feet under construction or entitlement.
What led you to DEELS Properties? Why were you interested in making this the next step in your career?
Noam Hameiri: I was looking for a place where I could expand my knowledge of the industry and apply my leadership skills in an environment that values creative and innovative ideas. I found that place at DEELS Properties. I was recruited in 2011 as an analyst by Shawn Evenhaim, the firm’s founder and CEO. He has given me the opportunity to define and structure my position, come up with new and unique initiatives to develop and grow professionally and to build and guide a team of professionals that strives for excellence.
What sets DEELS Properties apart from its competitors?
Hameiri: The company began with a simple vision: to change how people live. This vision drives the way we operate and the products we offer. For example, we used advanced property management, revenue management, CRM, energy management, resident portals and marketing systems to offer our residents an unparalleled living experience. While this level of systems is usually seen in large companies, it is atypical for a company of our size to use them.
Second, we offer a unique level of services and amenities to our tenants. For instance, we offer smart home features in one of our small, Class B properties. These features are normally found in new, large, Class A properties, but we believe in offering a high level of services and implementing new technologies to support our vision to change how people live.
Third, the majority of our portfolio was designed and constructed by our sister company, California Home Builders. By designing the projects from the ground up, we can advocate for features that will provide the best living experience for our residents.
How would you characterize 2018 and the growth the company experienced?
Hameiri: The Los Angeles market showed a strong upward trend since the recession, so 2018 was a great year for us. We took advantage of the market conditions to grow the company by adding improvements, services and amenities to our existing communities. We also strategically planned and are excitedly preparing for the opening of the upcoming The Q projects.
What is the company’s development strategy for 2019? What’s on your radar and why?
Hameiri: Shawn Evenhaim recognized an exceptional opportunity in the Warner Center area of Woodland Hills, Calif. Per his vision and execution, we have broken ground on two Class A mixed-use communities, with a total of 600 apartments. We have three additional mixed-use developments in the pipeline, totaling 1,000 additional apartments. These projects allow us to create a new brand, The Q, and to spearhead a new market segment by offering a unique, upscale lifestyle to residents in a resort-like ambiance. The Q projects will offer a high level of services and amenities to residents including exceptional common area spaces, smart home systems, live-work units, concierge and valet services, and a large fitness area and spa.
How do you see the California landscape and why does your company focus on it?
Hameiri: The Los Angeles metropolitan area is one of the biggest metropolitan areas in the country and it is characterized by a shortage of housing coupled with a great and stable demand for housing. Notably, in conjunction with the shortage of housing, the area is characterized by a serious affordability crisis in which many people are rent-burdened and spend well over 30 percent of their income on housing. In my opinion, the fastest way to solve this crisis is to remove regulatory barriers in the industry and allow builders to bring the supply that this market so desperately needs.
Government interventions that include imposing barriers, fees and density restrictions are ineffective and lead to a decrease in housing supply. In 2018, there was a ballot measure to repeal the Costa-Hawkins Rental Housing Act of 1995. It would have allowed cities to enforce rent-control policies. The public voted down the measure, yet different cities found strategies to bypass the public’s decision and are enforcing rent-control policies. Also, Measure JJJ, which was passed in Los Angeles in November 2016, sets affordable housing mandates and hiring restrictions, favoring local laborers, on residential projects requiring a zone change. Since the implementation of Measure JJJ, new construction has almost completely stalled as more than half of the land in the city is zoned exclusively for single-family homes. Building anything other than that would require a zone change and trigger the aforementioned affordability and labor requirements.
Our new projects are in the Warner Center area because of the Warner Center Specific Plan. This plan allows for development without zone changes, offers unlimited height and high-density limits and a programmatic EIR. This area has seen a large influx of development projects since its inception in 2013 and is a great example of how, when development restrictions are loosened, the market will truly thrive.
What are the best local market conditions for DEELS?
Hameiri: There are several interconnecting components that make a strong location. The first, and perhaps the most obvious is a strong demand for the product. Next, a supportive environment including business-friendly city policies and well-developed transportation infrastructure and access are essential. The third is good employment opportunities. The combination of these factors creates live-work clusters or communities that allow people to work and live in the same area. These areas have the infrastructure, services, retail locations and amenities available to residents without the need to commute. In my opinion, live-work areas are the future and are a win-win for residents, developers, businesses and City agencies.
Describe the typical DEELS community.
Hameiri: Our communities have been designed and built to offer residents high-quality apartments with great services and amenities. We strive to offer our residents an experience, rather than just an apartment or services.
What is the company philosophy?
Hameiri: Our philosophy revolves around two main ideas. In addition to changing the way people live by offering excellent products and services, we offer wonderful employment opportunities and, in return, have employees who genuinely care about their clients and the company.
What other growth do you foresee in the years ahead?
Hameiri: I foresee a sustained growth in multifamily housing, specifically in the B and, perhaps, also C Class properties. According to the National Apartment Association, America needs to build at least 4.6 million new apartment homes at all price points by 2030. That would require building around 325,000 new apartment homes each year. Nearly 47.5 percent of the renters nationally are cost burdened, and about 11 million renters household are severely cost burdened, meaning paying more than 50 percent of their income for housing. Add to that some other factors such as the student loan debt, which stood at $1.56 trillion as of December 2018. Due to the affordability crisis and the housing shortage, I predict more people will downsize or move from a Class A property to a Class B or C property. The indicators favoring B and C Class buildings is very clear.