While there are still sceptics who believe that Downtown revitalization is a passing fad, developers Chris Hammond, David Damus, Paul Novak and Mark Newman not only envision opportunity, but are walking the talk. TPR is pleased to present this excerpt from a Central City Association panel moderated by Tom Gilmore which updates us on the status of Downtown development and unveils some of the new projects helping to infuse L.A.'s Historic Core with life, vigor and most of all-people.
Tom Gilmore, Moderator
About a year ago we had a meeting where we talked about the possibility of housing Downtown. I have to admit that there were as many snickers as there were applause lines in that meeting. I think while we were all talking a good game and about what should happen, the overriding question on our minds was: Who the hell really wants to live Downtown?
[The Old Bank District] actually has people moving from Texas, Santa Barbara, West Los Angeles and Orange County-so it turns out it isn't who wants to live in L.A. but who doesn't want to live in downtown. [L.A.'s] in a really good place; we just have to keep our heads down and make sure that the rest of this City knows that part of its future depends on our future.
Let's have each of you bring us up to speed on your project. What is the concept? And how is it progressing?
System Property Development
In a nutshell, we want to create a residential community .
The Subway Terminal Building-located between 4th and 5th on Hill and Olive-is 500,000 sq.-ft. with 150,000 sq.-ft. of retail and 330,000 of residential. It will be approximately 180 units [with] ground floor retail. It has high floor to ceiling heights and an internal garage so tenants can pull into the building and go directly up to their units. And we're close to Grand Central Market and the MTA portal so our tenants can walk across the street and go shopping or jump on the subway .
Phase 2 will start shortly after the housing component and will include retail and entertainment. When you walk into our building we have marble floors covering [the] 50,000 sq.-ft. footprint with 23-foot floor to ceiling heights. We believe that this is a great candidate for a restaurant, a sports bar, a cabaret, or live theatre-we'd like to see some 99-seat theatres. Basically what we're doing is creating a synergy between the residential [component] and the ground floor-creating a community within the building to help build a neighborhood on 4th Street.
G.H. Palmer Associates
We're developing the Medici project. We're in the process of completing the first of two buildings, and two weeks ago we received a temporary Certificate of Occupancy for the first phase of the building-94 units. We're doing pretty well, and we have a waiting list for the balance of the project.
It's a rather unique project, not just [because] it's a residential project [but because] it's the first 100% capitalist development in the City-no tax increment or any other kind of subsidy went into the development of this project .
Capital Vision Equities
I wish I could tell you that we have some great vision for the Pacific Electric building. Our initial goal was to build affordable housing, but we concluded that affordable housing didn't make a lot of sense.
Again, we're not trying to pioneer Downtown; we're really just trying to follow those people who know more about what's going on. We're very interested in preservation, and the Pacific Electric building represents a great opportunity to do a good preservation project.
We also believe in trying to assemble neighborhoods. As these buildings are being put together I think we have to start thinking about what neighborhoods start to look like. So we're in the process of trying to assemble our little block in this world of Downtown and are hopeful to close on the Pacific building in the next 30 to 45 days.
We've independently made a determination that people will in fact come if we build it. That's why we're here. Otherwise, we wouldn't be taking this risk; we're relatively risk adverse people when it comes to doing this kind of development.
We're a little different from these guys-we're doing a hotel in Downtown Los Angeles. Let me give you an idea of what we're trying to do. Our building is at the corner of 6th and Flower-what we consider to be the heart of Downtown. It's a beautiful building built in 1955 by Superior Oil, but one that has sat vacant for the last nine years.
We're surrounded by nothing but demand. The title of this panel is "Build It and They Will Come." I really have to disagree with that. I think the people are here. There are people everywhere in Downtown. [The title should be]: "Build It So They Can Stay."
We're coming into Downtown with a hotel that has a younger attitude than currently exists Downtown today . The City's Adaptive Reuse Code has created some great opportunities to take old buildings and breathe life back into them. We're able to take the mechanical space-presently located on the roof-and put it into a three-story penthouse, and build a swimming pool and an outdoor bar on the roof. It will be the equivalent of the Skybar at the Mondrian, but it will be here in Downtown This is truly a spectacular space and we're happy to be able to bring some life back to it.
We have one other challenge that these guys don't have: they sign a monthly if not a yearly lease, and we have to bring in tenants every day. Again, we're not worried; we think they're all here and they're looking for something new.
Let's take a step back, [Peter Novak]-why now?
We were looking at Downtown in the 80s. At that time everyone wanted to build office towers, so the land became pretty expensive. But we did build a residential project overlooking Downtown in Chinatown. So we were close to the market.
But for me, Downtown was a no-brainer. You can't have 80,000 white collar work stations in Downtown Los Angeles with only 3,000 comparable units. If you were to capture only a small percentage of that workforce-not to mention the students at Cal State, UCLA and USC-any project would be successful.
[Has] the image of Downtown is finally changing? Are we better off than we were 4 years ago?
We're better off than we were four years ago-absolutely Downtown is cleaner; it's safer; there's more activity; the restaurants are fuller, etc. But we still have a way to go. [W]e all need to be ambassadors and tell people what a great place L.A. can be.
What can the City do both politically and on the business side to
make this process easier on all of us?
The zoning code of the City of Los Angeles as it relates to multiple residential units is moronic. It's probably suited well for somewhere in Woodland Hills-low-rise garden style apartments on an open parcel-but it sure as hell doesn't fit a downtown setting.
In addition, there are a series of density restrictions on residential construction. Case in point is The Medici. Our site was originally entitled for upwards of a 700,000 sq.-ft. commercial office building. Our project-after pushing the envelope every way possible-is only about 658 units, and that's the maximum the code would allow. Clearly that is substantially lower than would have been allowed under the commercial building code. The question is, Why?
The other issue is the Adaptive Reuse Ordinance. While a very useful tool, it has a restriction with respect to the adaptability of the structure, and again, my question is, Why? Why is there a 1974 cutoff date for adapting office buildings to residential?
What impact do you think Telco is going to have on what we're doing?
Telco replaces people with machines. Telco doesn't bring people Downtown. For the future of the City we need people Downtown We need to find a balance that works well with those interests. You just can't fill up all these older classy buildingswith Telco.
Assuming Telco doesn't kill us, what do you think the future is over the next 5 years?
I'm a developer-by definition, an optomist. My hope is that all the emphasis on the residential will help the lease up for the commercial office activity. Consequently the two elements will key off each other, and to that end I'm very optomistic. But, again, I'm a developer.