Odd Lots - Why Building a Crosswalk in LA Is Kafkaesque

Episode Date: September 28, 2026

Bill McBride did not just predict the 2008 housing bubble, he helped invent financial blogging with his Calculated Risk newsletter. Zach Lasry, meanwhile, is much newer to the scene, but in his career as a real estate developer, he is already responsible for building one of LA's hottest new neighborhoods — Melrose Hill. We spoke to both of them at our live show at the Vermont Hollywood, for a wide-ranging panel discussion on LA real estate. We talk about the difficulty of sourcing construction components, the Kafkaesque process of getting a crosswalk built in LA, and how self-driving cars might help reshape the city and solve its longstanding issues with parking. Read more:Mortgage Rates at 7% Are Forcing Home Sellers to Slash PricesAI Data Centers Release Heat, Posing New Problem for Cities Only Bloomberg - Business News, Stock Markets, Finance, Breaking & World News subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsSee omnystudio.com/listener for privacy information.

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I'm Joe Wisenthal. And I'm Tracy Allaway. 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? That's right. So we have a real treat for you.

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. So enjoy our conversation with the legend Bill McBride of Calculated Risk, as well as Zach Lazarie, real estate developer, founder of the Western Company. Thank you both so much.

Zach, what do you do? What's your job? I'm a real estate professional. Okay, what does that mean? Because there are a lot of people who could say those words. 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.

Okay. You know, you'd have a really exciting neighborhood pop up in Silver Lake or Echo Park or Highland Park. Yeah. And then all the new, 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. There should be some excitement. What is that going to be? What kind of new creative spirit is going to enter into that structure?

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 arts spirit. So 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 we don't know that much about it. Whenever I come here, I am sort of stunned by the diversity

of independent businesses compared to New York. I think about this all the time. Yeah, there's so many mom and pop shops. Like, I passed by a linoleum emporium on the way over here, which I just don't think you would ever see in New York. And I'm sure the direction of travel

for a lot of independent businesses isn't that great. But how have so many managed to survive in L.A. so far, compared to other places in the U.S. Yeah. Well, I went to school in New York, went to NYU, and a lot of my most talented friends left New York and moved to Los Angeles because New York just got too expensive.

And, L.A., it's, while it's expensive to buy a home in L.A., you can generally find a good rental deal in a really exciting neighborhood. It's a lot harder to do that in New York City. So you have people who are just, dedicated to their craft who can survive in LA and focus on their art versus in New York, it's a lot more difficult to be able to focus on your craft while being able to pay rent. So I think you just have more of an experimental group of people who are moving out here and who exist and trying to start and create new ideas.

Bill, thoughts? I would also address the density issue. In New York, you have really high density, and therefore you're going to have high rent for a particular location. Here we're really spread out. Yeah. Which is an issue, by the way, we should address zoning in L.A.

because we can't stay spread out forever or as spread out as we are. But I think that's a reason that you see so many mom and pop shops, which is great. You know, in my community, I live right off PCH, Pacific Coast Highway, and most of the stores are mom and pops.

There are some chain restaurants and stuff. So, you know, I think it's the dent. I have to say, I've talked about this, I love strip malls, I love, like, seeing, like, the Korean restaurant next to the tooth whitening place, next to the vape shop, next to the karate school, next to the, like, to me, like, that's, like, one of my fate, I love driving by. Truly multi-use development. But, Zach, when you're thinking about, okay, you want this to be, you want to create a building that actually get people excited rather than, uh, another building. What are the ingredients to that? I think you have to be focused on... So the way that we're trying to approach finding tenants,

we like to think of it, like almost like how A24 tries to find filmmakers. Yeah, okay. So how can we find someone who has a vision? We're not trying to find another shake shack. Yeah, thank you. So shake shack's awesome. I love going to shake shack when I'm at the airport, but I don't necessarily need shake shack everywhere else.

So I think people get a lot more excited when people are trying to, new things and are trying to test the limits of even pastries, whatever it is. If you're passionate about a thing, then that passion usually translates into an exciting new result. So that's how we approach trying to find tenants. How do you think about the trade-off, if there is one, between taste and I guess profitability? Because I think about A-24. A-24 makes a bunch of really good movies. There are a lot of good movies out there that don't necessarily make a lot of money. And unfortunately, some of the movies that make a lot of money or, you know, Marvel superhero

things that are the same thing over and over as we were discussing with Hayes. But, like, how do you turn taste into actual profit when it comes to property? Well, the lucky thing about real estate is, even if the tenant fails, which is sad,

but the real estate still maintains its value, and then a new tenant generally will come in. It's not like a movie where if no one sees the movie, you just write off the loss. So the real estate, generally retains its value, even if there's a failure. Bill, you mentioned zoning. And one of the questions, you know, there's, we've had a lot of conversations about zoning,

but, you know, people fight about, oh, is this, is this residential, is this business, et cetera? From your perspective, like when you think about, we want to crack the puzzle, we want to make affordability, et cetera, we want this to be lively. In your research, how important is, like, getting that regular. piece of the puzzle, correct? Well, if you talk to the home builders or the apartment builders, it's the biggest piece. Okay. So I think getting zoning changed, I mean, you know, we've passed some things in California.

We, California has, but the ADU laws, there, ADUs are really taking off in a lot of parts of California. Yeah. Now, the only problem is, is that's a small increase to the housing stock. But, you know, actual zoning is really, changing zoning is really hard. You know, they have done some things like near transport centers. You can build a lot higher density. One of the things that we're in an official housing crisis in California, so I think we're still in it.

They announced it four or five years ago. And you weren't allowed to reduce density. So if you bought a six-unit apartment building, you couldn't build four condos. or in my community, what was happening was people with all kinds of money were buying two or three homes in a row and building a real mansion, not a McMansion. And they've stopped that because density was actually decreasing in the beach communities, which is kind of the opposite of what we kind of need. And I'm speaking a little bit against my own interest in that because we'll have more traffic and stuff. Thank you for your public business. By the way, just to add to Zach's comment, when I talking with him, I think one of the things that really adds value to what he's doing is he's taking an area and building it into a community and making it kind of like a, you go into that community, it's like a symphony.

And I thought it was an incredibly exciting idea to not just build one building, which is what a lot of people do, but they are taking multiple buildings and trying to build a whole community with new restaurants. and a real vision for that. And I think that will have a real big impact. Right, Zach, say more about that. So what happens when you're buying multiple buildings in a single neighborhood and sort of aggregating those developments versus maybe just like cherry picking a few properties

that are scattered across the city? So yes, the idea for what we're doing on Western and Melrose came mostly from reading this book, The Death and Life Great American Cities by Jane Jacobs. And she was talking about the sidewalk ballet in Greenwich Village. And growing up in New York City, I'd seen that firsthand. And Greenwich Village is one of the most exciting neighborhoods

to just walk around and do nothing because you're experiencing culture by just existing. And that was the one thing I felt like was missing in Los Angeles. There are a few of these great main streets in LA, but there's very few. And generally, when they exist, they end up sort of turning into airport shopping malls

eventually. And that's just very disappointing because speaking of zoning, New York is basically all mixed use. So if there's a street, I mean, Manhattan at this point is so expensive that it's hard to have independent businesses. But for a while, even if there were a lot of chains on one street, you could go to a side street and see something interesting. LA doesn't have the luxury of doing that because roughly 95% of the city is residentially zoned. So if you have a community that has their main street have all of the culture and life taken out of it, then that's it. Yeah. You got nothing because it's just residential around you.

You know, sometimes there are these fights on Twitter where they talk about, like, what are the best most walkable cities? And it's like, oh, New York is very walkable. And then there's like, oh, L.A. is at the bottom. Except it's always so nice the weather out here. I don't mind walking an hour. So I'm actually totally, I actually think L.A. is a great walking city. because I never have to worry about the weather.

I think it's one of the most walkable. It's so pleasant to walk here. But to me, no, I love walking here. But it does not, I guess, suppose. You'll be walking for a long time. Yeah, it's great. I love walking for a long time here, and I've taken many long walks in L.A.

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etc. How much right now is your business being affected or how much when you're thinking about this are you thinking about the headwinds that we talked about with Hayes right before it? The fact that there is this very big industry that is on the decline and how does that make you think about the business, the opportunity set? So I think the commercial real estate industry is having a really tough time because for a long time we've been able to make money by financially and engineering outcomes. And now the financial conditions are not super great for those financially engineered outcomes. You can't get a cap rate and an interest rate arbitrage and make money. You can't throw a bunch of people in a room of 140 IQ and do some spreadsheets and figure out

how to make money when the interest rates are higher than what you bought the building for on a cap rate. So now you actually have to make the product good. I see what you're saying. And I think that's what's really exciting about what we're doing is we're seeing rents increase where we are because I think we've made a really exciting product by investing in talent. There's a lot of new apartment buildings in LA. I don't think many people go around going, wow, that's such a beautiful, cool new apartment building. I think most people are like, oh, God, not another one of those boring, generic apartment buildings. So I think the commercial real estate industry, now we have to actually make good products if you want to make money. Okay. So speaking of making good

products. I read one of the things you're doing as part of your developing is you're building city infrastructure as well. So installing things like crosswalks. What's the process of creating a crosswalk in L.A.? It's like a Kafka novel. It's just horrible. And tell us more. Oh, we got a great email. We got approved for a crosswalk on Clinton and Western, and it said it'll be built in a few years or more. Wait, what's the constraint? Like, what is the actual holdup? What's your sense of the holdup?

There's no really process to get one. You have to pay for it. They're like, oh, yeah, we'll totally approve that for you, but it's going to cost a million dollars. And then we're like, just to put a stop, like a light, And they're like, well, the engineering, the electrical, and then you got to go put a vault underneath for us. So it's like, they're like, what are you going to do for us?

Interesting. It's funny to think a few years are up. It reminds me of when I used to, as a young kid, like, be a vinyl record collector. And you'd see the 99 cents and upbends. And it's like, so this is the bin that contained, you could have a $100 record in the 99 cent and upbends. Yeah. I'm curious, Bill, you talk to the homebook. have they become more of the product mindset?

Like, do they, are they going in the same direction where it's like, okay, it's not just good enough to have, like, a master plan community or something? We have to think about the freestanding home as a desirable product rather than just a place to live. Is that a thing yet? Well, you know, most of the home builders that I speak to are infill builders. I do talk to some of the larger builders that the number one thing I've heard from them is they're, they're a concern. They were really into the build-to-rent model. Yes, yes. And that's kind of under pressure right now.

So as far as building a community, I still think they're sticking with their master plan. Got it. So it's interesting to hear him say that about the crosswalk because policy and zoning and regulatory issues are the number one thing I hear from home builders. They all feel right across. Of course, good times, bad times. always their number one issues. I have another basic L.A. question. Despite what Joe says about this being a walkable city,

lots of people drive, right? Which means you have to have parking if you're doing a commercial development, right? Everyone needs to get there. And at the same time, I imagine having huge portions of the city as designated parking lots is not that attractive if you're trying to create a neighborhood or maybe even if you're trying to produce profit.

How do you think about the trade-off between parking versus, you know, creating a beautiful neighborhood with many tasteful buildings. It's definitely my biggest blind spot because I didn't drive for most of my life living in New York. So people who are from L.A. are always asking me what the parking situation is. And I'm like, why do you keep asking me about the parking? Don't you want to know, like, what the restaurants are? And they're like, well, where am I going to park? I had a friend, I have a friend from LA who will park and then we're going half a block north and he'll get out, he'll drive his car and then park half a block north. Wow.

Yeah. But no, it's a thing. It's a thing. Especially if you have kids, like you got to get them in the car seats, get them out of the car seats. So if you can't park, it's like Fairfax is like just horrendous parking. And sometimes you'll just not go to the business if the parking is that bad. But you can make it work with valet. Yeah.

Let me add something here, too. I mentioned the ADUs and that they have picked up a little bit. But one of the rules of the ADUs is you don't have to have off-street parking. So what's happening in a lot of the communities where they are building a lot of ADUs is the streets are just packed. So even worse than they were before. So, you know, parking, until we get real self-driving cars and nobody has to have a car anymore, you know, parking is a huge issue. Korea Town is one of the craziest parking situations. maybe on the planet.

Really? Oh, yeah. People will, there'll be no spots. My wife lived in Korea Time for a little while. And then there's people who are like just sitting there all day. And then once someone leaves, they're like coordinating how to get all the spots.

So Korea Town's pretty rough. But I do think with self-driving cars, parking will become less important. No, I'm fascinated by this question because it's like the car drives you to work and then goes to some centralized lot. Like I want to do like a bunch of episodes. because it could just end up meaningfully restructuring cities and how they're organized.

Let me just interrupt you quickly. It also would change the way houses look. Yeah, right. Because right now in a lot of communities, you've got these garages in front and they're really ugly. Yeah. You know, and it'd be really nice if those all went away. And my brother pointed out to me one of the biggest changes, of course, would be self-driving would be police interactions that go way down.

Yes, right. I'm sorry. It also means lower speeding ticket revenue. for a lot. There are all kinds of, no speeding ticket tickets anymore, which is going to hurt. I hope this happens in my lifetime. Of a lot of times. I have a question, you know, this is a question

that I probably would have asked very first off in like 2021 or 2022, then it faded. But I'm curious now, how hard is it to like find construction materials or like HVAC things or all, or the electricity. Transformers? Yeah, like, because now we know there's incredible competition for a lot of that stuff. Is that showing up

in your development timelines? Transformers. Yeah. So what's happening up with that? You got to fight for it. Yeah. Yeah. What does that actually mean, though? Do you pay a higher price or do you, I don't everyone always talks about building the relationship with the supplier? Do you become their best friend?

How does it fight for it mean? Yeah, you got to find a guy who knows a guy. Find the guy. And then you got to buy it in advance and then store it somewhere. Huh. Yeah, it's like, yeah, it gets weird. So do you have a garage just like full of transformers somewhere. I might.

When you were like, it's a very valuable, Tracy's going to add that to her prepper. I probably. As my fellow prepper, yeah, got to have a garage full of transformers. Yeah, do you?

Long term, people are always going to love living around here. I mean, we can talk about like, yeah, Hollywood, sure, but like, this is like heaven on earth here. This is God's country. Like, in the end, like, It's always going to be great, right? I think Los Angeles has the highest ceiling of any city in the world. I completely agree.

I'm such an L.A. Bowl. We have two problems. One is the cost of housing, which we need to address. And the other is water. Water in California is a huge, huge issue. Another topic we could talk for a long time. Bill and Zach, thank you so much for joining us at Oslox Live. Thank you.

I really appreciate Chanig with both of them. That was our conversation with Bill McBride and Zach Lazarie, recorded live in L.A. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Jill Wisenthall. You can follow me at the stalwart. Follow our producers, Carmen Rodriguez, at Carmen Armad. Dash O'Benet at DashBoot, Kail Brooks and Kail Brooks, and Kevin Lazzano at Kevin Lloyd Lazzano.

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