COMMERCIAL OBSERVER: Markwood’s Aftalion Dreams of a More Urban Future for LA

Parking garages might not be the sexiest real estate assets out there, but Simon Aftalion has found a way to make them a hot topic.

Aftalion is the development director at Markwood Enterprises, a boutique developer with a crop of mostly residential developments across Los Angeles. Aftalion joined the firm in 2014 to help grow the company’s development arm, and is helping introduce automated parking to Los Angeles while revamping a historic downtown L.A. parking garage.

Markwood has projects in several changing corridors, including a 53-unit residential building on Barrington Avenue in Brentwood and a mixed-use development on the corner of La Brea and Melrose Boulevards. Aftalion is a strong proponent of adding more density in a city known for its suburban sprawl. For Los Angeles to be the city of the future, it will need to find ways to build urban nodes that offer the 24-hour lifestyle that other cities offer, Aftalion said.

A key way to increase density is to find more efficient parking solutions, and Markwood has been a pioneer in introducing automated parking. At the moment, Markwood has three projects under construction with plans for either fully or semi-automated parking, including the Barrington development, and two more in the Mid-Wilshire area.

Commercial Observer sat down with Aftalion to discuss Markwood’s projects, puzzle-shift parking, and the path to a denser, more urban Los Angeles. The following is an edited version of the conversation.

Give us some background on Markwood.

Markwood was established as a real estate investment company. The two principals, James and Robert Mehdizadeh, who are from New York, planted their flag around 2010 and 2011. They started selling some of their assets in New York and exchanging the money and buying some properties in LA, with the intention of having a firm that owned and operated real estate in LA.

Soon, it became clear that there was a lot of opportunity being left on the table.

They brought in a gentleman called David Wright, to help them create a development business. I joined about a year after that. I recognized the exponential growth, and the opportunity to create and implement ways to make us into a development arm.

How did you get started in the business?

I was born in San Francisco, moved to L.A. when I was six, lived there all my life, then went to Georgetown for grad school.

Leaving L.A. during the recession, it was a very different place when I came back. When I lived on the East Coast I saw how people were really embracing the live-work lifestyle, to live how they work, because it’s such an urban setting.

On a national level we’ve embraced that sort of lifestyle, and Los Angeles is really starting to see a change in the approach developers take to creating the urban fabric in LA.

Most of your projects are residential. Why did that become your focus?

Our approach is multifamily oriented. We’re apartment guys, I love creating residential communities.

We also have this historic building in Downtown L.A., which is kind of my baby. It’s a historic building, built in 1927, a beautiful beaux arts building. It was built by the May Company (a nineteenth century department store) which needed refrigeration, so that’s why it’s three floors below grade, and five floors above. This asset was one of the legacy properties and once it came into my lap, I thought of it as the jewel of our pipeline.

We needed to do an adaptive reuse…It’s just sitting there, it’s a big parking structure.

The first idea was to add floors and make an apartment community. But eventually we realized that this building called for an office play. To me, creative office, or co-working is kind of like an apartment community, in that it’s small cubes with amenities et cetera. We decided to add a sixth or seventh floor for office, keep the parking and redo the retail, but instead of little stores, put in one contiguous tenant.

As developers, we are in the business of developing, and real estate is our proxy. At this point in the trajectory of development, we’re thinking about what service we’re providing. To me, commercial and residential have become very similar.

Tell me more about the garage. It’s been reported that you’re going to have an Erewhon market as the retail tenant?

Actually, we came to a mutual, amicable decision to part ways because the trajectory of the place being delivered was a year-and-a-half out, so we came to a decision not to do the lease.

I love [Erewhon] and I love their concept. We’re focused on the development of the whole 220,000 square feet. It’s not the type of play that allows for a retail tenant to move in immediately.

Is there a specific type of retail tenant that you’d like to see in that space, as well as in your retail spaces at your residential properties, at Barrington and La Brea?

At Barrington, that was my first development, we have a retail space. And yes, its an amenity to what’s above it, but it’s also an amenity for the neighborhood.

Catty corner across from Barringon, Jeff Appel is building a Whole Foods. As much as his retail is an amenity for us, our retail is an amenity for him. While they’re not giving you cash flow, they’re impacting your cash flow.

All I’m focused on is making sure that the retail tenants are the best they could possibly be, have great access to parking, and are separate from the other uses on the site. It’s not like we have big box malls, it’s a small retail jewel and it should fit into the neighborhood, and be complementary to the other uses on the site.

In three of your residential projects you have automated parking. Tell me how that came to be.

James and Robert acquired this assemblage at Barrington. We wouldn’t buy it today because it has so many obstacles. Because of the city’s zoning laws, our nice beautiful 16,000 square-foot-site became 13,000 square feet.

And in L.A. if you can’t park it you can’t build it. Building a ramp just wasn’t possible; it was not an option to do conventional parking. So I started thinking about alternatives.

I had an obsession with shipping containers and how they move things around at the port. I started to dive deep into what is automated parking — it’s a storage facility essentially, a real estate asset which takes your car and racks and rails it. I went to China and went on a tour of parking. I was recently in Japan. They don’t have ramps, I would just sit for 20 minutes and watch people walk in and out, ask for their cars, wait while talking and using their phones. It was great.