As real estate developer Rick Caruso explains it, the key ingredient behind his firm’s outstanding success has been his ability to genuinely understand and work with the Los Angeles communities where he’s developed his projects. When you truly collaborate with communities, Rick explains, you get more than reliable financial success — you get momentum behind your project, you get political capital, and you get what he calls “psychic income”: the satisfaction that comes from knowing people appreciate and enjoy the spaces you’ve helped design, establish, and contribute to the city.
In this latest episode of Onward, Rick joins our host and Fundrise CEO Ben Miller for a behind the scenes conversation on the current status of the real estate industry, and how his business principles have helped him navigate multiple past industry downturns, such as the S&L and 2008 crises. Rick shares his thoughts on why the recent Goldman Sachs report — titled “The hard part is over” — is likely to be premature, as the interest rate environment makes him believe that 2024 and 2025 will have their own difficulties for the economy and the real estate sector.
But despite the dizzying explosion in interest rates over the past 18 months, Rick explains the importance of anticipating the market cycle, which affords businesses like his a steady financial anchor, even when other firms are forced to accept interest rates over 10%. The next couple years may be a battle, but with the right approach, you can be a “happy warrior.”
Beyond that, Ben and Rick’s discussion touches on some of the ways real estate has evolved over the years (or, in some important ways, has remained the same):
- Similarities between Los Angeles’ and Washington DC’s cycles of struggle and rebirth, with each city finding rejuvenation through iconoclastic and fundamentally optimistic real estate projects.
- How the Los Angeles political environment of the 1980s differs starkly from the situation today, and why Rick sees that as a cause for concern.
- How managing banking relationships and understanding banks’ priorities can help real estate operators prepare for periods like right now, especially when there’s a shift in management.
- Why the 2028 Olympic Games, scheduled to take place in Los Angeles, could supercharge yet another real estate renaissance for the city, similar to what Rick saw and helped drive 40 years ago.
All this and more, on the latest episode of Onward.
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