On April 1, 2023, the “Homelessness and Housing Solutions Tax” (Measure ULA) came into effect in Los Angeles. Uncover This measure levies a tax on real estate sales over $5 million to fund affordable housing projects and other issues. Colliers Vice Chair Sean Fulp was recently interviewed about Measure ULA’s impact on commercial real estate in the city of Los Angeles.
When asked how Measure ULA affected negotiations for the Union Bank Plaza purchase in DTLA, Fulp stated that it had been underwritten since the measure passed but motivated sellers to bridge bid/ask spread enough to close transactions during a volatile capital market environment. He went on to explain that this additional 5.5% transfer tax significantly impacts property values as it comes directly from equity which could be 16.5% of an investor’s proceeds after they repay their loan – meaning development and value-add investment opportunities are most impacted with transaction activity expected to decline until property values account for this cost increase.
Fulp also discussed how Colliers is navigating recent turbulent economic conditions by focusing on selling & financing office properties throughout Western US while helping clients retain as much value as possible – expecting office markets will find bottom faster than other product types though there may be pain & losses along the way with hope market can use time figure out better formula using & capitalizing office buildings.
