CRE Tied to $1.3B in CMBS Debt in LA Wildfire Evacuation Zones

As wildfires rage through Southern California, an estimated $1.8B in CRE tied to $1.3B in CMBS debt is located within fire evacuation zones in the Los Angeles area, as reported by Bisnow.

According to an analysis from Trepp, these properties include multifamily units, retail spaces, and offices, placing them at high risk as the Palisades and Eaton fires continue to threaten populated urban and suburban areas.

Impact on Commercial Properties

While wildfires typically affect single-family homes, the fires currently sweeping through the Los Angeles area are encroaching on commercial corridors, which are at greater risk due to their proximity to infill locations. 

Among the 152 commercial properties identified by Trepp in the evacuation areas, nearly 60 are multifamily, with the rest spread across retail, office, and mixed-use properties. Affected areas include Altadena, Pasadena, and upscale Westside neighborhoods like Pacific Palisades and Santa Monica.

In Pacific Palisades alone, 177 commercial properties are at risk, including 46 multifamily properties with 765 units. Other properties in the area include retail locations, with notable areas like Santa Monica Place and Third Street Promenade exposed to the fires. 

While some areas are not under immediate evacuation orders, the unpredictability of the wildfires means the situation can change rapidly, causing concern among property owners and tenants.

Most Exposed

• Pacific Palisades: 177 commercial properties, 46 of which are multifamily, totaling 765 units.
• Santa Monica: 5.2 MSF of retail space at risk, with a significant portion outside of malls and strip centers.
• Encino: The largest concentration of office space in Trepp’s analysis, with 653 KSF in office space, including the Encino Financial Center.
• Santa Clarita: The highest concentration of multifamily properties, with 768 apartment units identified in the fire zone.

Clock is Ticking

The Eaton fire, currently burning at nearly 14K acres with no containment, threatens communities in the eastern part of Los Angeles, including small multifamily properties. 

Meanwhile, the Palisades fire, which has already consumed over 17K acres, poses a serious risk to Westside communities.

The damage from these fires could have serious financial implications for property owners, investors, and the broader commercial real estate market in the region. And as containment efforts continue, it’s clear that the impact on these areas could be far-reaching.