History repeating?

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Back in the 1980s, Japanese companies flush with cash acquired a ton of office buildings (and maybe hotels, too?) in LA at very high prices.

In the recession of the early-to-mid-1990s, they got their asses handed to them.

Now, there is a wave of Chinese developers flush with cash buying up office buildings, hotels, and development projects in LA.

But there is a ton of apartment / condo / hotel product getting built right now, especially downtown, where many of the target properties are located.

The question these developers need to ask themselves is pretty simple: Will the current cycle persist long enough for the market to absorb all this new product?

I’m not ready to say that the Chinese money is going to get crushed the way the Japanese money did.

But I’m not sure I’d be making the bets they’re making.

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