4D Development

4D Development4D Development and Investment specializes in multiunit residential projects with retail in Los Angeles and Las Vegas.

By Russ Gager

For 35 years, 4D Development and Investment has been building, renovating and managing mixed-use retail, apartments and condominiums in Los Angeles and Las Vegas. It also has been investing with other companies in projects in Texas and Arizona. “We work with other like-minded developers and value-add investors who share many of the same core principles as us when it comes to identifying and repositioning real property,” President and CEO David Pourbaba says.

Most of the projects that 4D Development originates and builds are in its home city of Los Angeles and in Las Vegas. “We started 35 years ago with small apartment rentals, and now we focus heavily on development,” Pourbaba recalls. “Our biggest development was a 405-unit luxury condominium development, the first project of its kind on the Las Vegas strip, called Sky Las Vegas. At the time of its completion, Sky was the tallest building on the strip at 500 feet and 45 stories tall.”

Another exciting project developed and managed by 4D is in South-Central Los Angeles on Central Avenue and is called Central Village. Boasting a view of the downtown Los Angeles skyline and the San Gabriel Mountains beyond, Central Village’s 85 affordable housing units are located on two acres of land above approximately 46,000-square-foot of retail and offices.

The Central Village project was a reflection of 4D’s core belief that a development should initiate market activity rather than just respond to it. For example, the project brought with it the grand opening of the first full-service supermarket since the 1970s. Shortly after the opening, new pharmacies, health clinics and other neighborhood service businesses opened up shop in a previously blighted area. “Central Village is a great project that really helped transform an underserved part of the local community and I am very proud of it,” Pourbaba says.

The aim of Central Village is to encourage foot traffic and street level activity on a historic block once known as “Bronzeville” that later was considered blighted. The neighborhood was celebrated for the historic Dunbar Hotel – which hosted Duke Ellington, Count Basie, Langston Hughes and Dr. W.E.B. Du Bois – and was the site of the first NAACP convention held in the western United States.

The 270,000-square-foot project was developed with nonprofit affordable housing advocates, progressive Wall Street-based financiers and the Los Angeles City Council’s District 9. All of the two- and three-bedroom units are affordable housing and include free automobile parking and access to Los Angeles County’s light rail network, the Washington Boulevard public transit corridor and the Santa Monica Freeway.

Classy Properties

4D Development also owns and manages many apartments in Los Angeles and in Las Vegas. “We buy and rehab them,” Pourbaba says. The class of an apartment is determined by the dollar amount it rents monthly per square foot. It is easier to describe a project by the number of dollars it will rent for monthly per square foot than to describe the demographics of the area, Pourbaba maintains. “The condition of the neighborhood and the retail dictates the rental market,” he explains.4D Box

Apartments and retail can rent for anywhere from $1 to $25 per square foot monthly. “We have about 2,000 apartments in Las Vegas that we upgraded from C or D to A or B,” Pourbaba says. “We rehab them completely. We redesign living spaces in order to reflect a more desirable and modern sensibility that brings excitement and pride to new and existing tenants.”

4D Development hires a general contractor for the projects it builds. “We put a plan in motion and oversee the project to make sure that they are on budget and schedule,” Pourbaba explains. “We source out much of the work. We try to use the same subcontractors on various projects because we’ve come to trust their work and know we can rely on them. So, for example, we’ve used the same framers over and over again.”

4D Development usually has two or three new projects under construction each year. “It depends on the market,” Pourbaba says. “I think we will be looking at a slowdown in the next year or two. So once we complete our current pipeline of projects, we will hold our development properties and simply work on the entitlements for the next development cycle.”

Construction Slowdown

Pourbaba expects the construction slowdown because of market conditions. “There’s a lot of new product coming on the market, and it will take some time to absorb it,” he predicts. “For example, we have a 112-apartment project on Pico and Grand, and within walking distance there are going to be 3,000 apartments hitting the market within the next two years. That is a tremendous number of new apartments to lease up. And we see this happening in many parts of Los Angeles.”

Pourbaba expects interest rates to increase one-quarter to one-half of a percent but not to rise substantially in the long run. He also does not foresee deflation.

Despite Pourbaba’s expectations of lower construction prices, that is not the case now in Los Angeles. “Right now, one of the biggest challenges is finding bodies to do the work, because there is so much development going on,” he reports. “The economy is very, very good. Finding enough subcontractors is the biggest challenge for us right now.”

Some raw materials are in short supply. “Sometimes concrete is hard to get because there is such demand for it,” Pourbaba continues. “The biggest challenge of concrete is getting finishers of the concrete, because there are not that many people trained to do that work. Sometimes, that can delay your pouring of a slab because you can’t finish it. But all the framers are busy, the electricians are busy, the plumbers are very busy – it is the heyday for construction in Los Angeles.”

Concrete is used in most of his projects. “All the decks are always concrete,” Pourbaba says. “The parking is always concrete. We always have concrete somewhere, if not in the whole project, in 20 or 30 percent of it. So every project is going to take some concrete, because foundations and underground parking are concrete.”

Some of 4D Development’s residential projects are built with concrete, wood and steel or just concrete and wood. Some projects in Las Vegas use exterior insulation finish systems, and ones in Los Angeles frequently have stucco exteriors.

Tight Sites

Working mostly in urban areas, 4D Development’s projects are often higher density ones. “The challenge is to be able to strike the right balance between density and open space while still making sure the numbers pencil,” Pourbaba emphasizes. “Many neighborhoods are also becoming more difficult to build in because of anti-growth measures that are being drafted in order to combat traffic. So the challenge is to work with neighborhoods to make sure you can bring more affordable housing while not adversely impacting a neighborhood with undesirable externalities like noise and traffic.”

Checking local zoning laws to see if a proposed project is within the size range that is allowed is crucial. “Every city is different, and every neighborhood is different,” Pourbaba emphasizes. “Right now, Los Angeles is backed up because of all the construction going on. So it takes about a year to get something approved for Los Angeles. If you go to Las Vegas, it takes you four months to get a project approved. If you go to Texas, it takes you two months. So it really depends on the cities and the changes you want to make to the existing laws. It’s zoning. If you want to build, buy right, but if you want to have any variances, public meetings take much longer.”

In coastal area, hundreds of public meetings might be required. “In more dense areas, if you want to do a high-rise in a low-rise area, it depends on the project,” Pourbaba says. Building a high-rise in an area that includes Hollywood might take 10 years.

To avoid these lengthy delays, Pourbaba recommends matching projects to existing zoning laws. “Make sure you pay the right amount for the land,” he advises. “The land price is based on what you can build on it. So you have to be more careful with pricing and be able to make the numbers work with the existing zoning in place. Of course, you want to maximize your return and complete the project. We want to avoid variances wherever necessary and make sure we can pencil the numbers with the current zoning laws in place. For us, we should be able to make at least $1 per square foot in rent before requesting any variance to the zone.”

That rule of thumb varies, of course, but Pourbaba says it is this expertise that has kept 4D Development profitable for 35 years.

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