Over the last five years, the Fashion District in downtown Los Angeles has seen something of a renaissance. Part of that renaissance was spurred, or at least facilitated, by the Fashion District Business Improvement District (BID). TPR is pleased to present this interview with Kent Smith, Executive Director of the Fashion District BID, in which he addresses the recent challenge to the BID's renewal as well as the health of the community.
Kent, the Fashion District of Los Angeles has changed considerably over the last few years. Can you highlight some of the changes? How is it a different place and what is it becoming?
It's really becoming the creative center for fashion, certainly in Southern California, and increasingly in the United States. We've seen the transformation of it from a predominantly manufacturing area to an area that really is wholesale, a place for fashion design, and a place for showrooms. And, it's increasingly a place for the Angelenos to come and shop.
What are the factors contributing to the change? What are the economic forces at work here?
Well, there are a lot of forces at work here. Certainly, the global economy is at the top of the list, with the passage of the North American Free Trade Agreement and the recent favored nation status for countries like China. A lot of the manufacturing has gone offshore and the manufacturing that has remained is moving out of the downtown area. In the process, Los Angeles has become the focal point of the creative and managerial side of the industry. These forces have brought a lot of higher-end jobs to the district.
We've also seen this morphing of wholesale and retail -- the distinctions we had 10 or 15 years ago have virtually disappeared. A great example of that type of business model is Costco, which is really a wholesale that functions like retail. A full 80% of our district still is wholesale showrooms. But, almost all of those showrooms are opening up to the public on Saturdays.
Could you elaborate on the tenant mix in the Fashion District today?
Our whole focal point is women's clothing. About 80% of the tenants are focused on women's clothing, particularly contemporary women's clothing. As I mentioned earlier, about 80% of our tenants are wholesale showrooms and about 20% are retail. We've seen about a 35% increase over the past couple of years in the number of wholesale showrooms also engaging in retail, a significant trend in our ground floor tenants.
Above the ground floor, what used to be manufacturing has increasingly transformed into fashion designer showrooms. We have whole buildings that have been converted to fashion design. Of course, California Market Center is at the center of it all -- the largest apparel showroom in the country continues to evolve. The other thing that I can mention that is a unique aspect of our district and probably illustrates the free market system is that we have clusters of stores within our 90-block area. We have areas that are exclusively for kids clothing. We have a fabric area, where costume designers literally come from all over the country to get fabrics and textiles. Then we have the men's clothing area, even that's divided up into casual and more formal wear. And, the women's clothing is also divided up into the everyday wear, formal wear and special occasions. We are also home to the Flower District, the largest wholesale flower markets in the state.
These clusters make it so friendly for the buyer to come and visit 30 or 40 stores in a couple of blocks to see what's available. The trends that will be in the department stores and boutique retailers in three or four months from now can be seen in our district today.
Kent, before we turn to the BID and more localized issues, with whom in the world of fashion does the Fashion District compete?
We're really competing with cities like New York, Milan, Paris, and London. The sample makers and pattern makers are here, and the clothes are manufactured elsewhere. Even designers who are from outside of Los Angeles are coming to our markets now to show. The New Zealand fashion design group was here in June for the fall market show to showcase their goods because buyers want to be in LA.
This sounds too good to believe. Over the last ten years, with manufacturing moving offshore, the Fashion District clearly took a hit. So, is its health as positive as you're making it sound?
Well, we have five brand new buildings under construction as we speak, with no public money. We have about 35 brand new renovated projects that have been built in the last couple of years, with over $210 million in private sector investment. While manufacturing locally is still very important to the Southern California apparel industry, and losing jobs is not good news, what we've been successful in doing is capturing the design, creative and managerial side of the industry. For our district, we're flourishing.
Let's turn to the effort to create a Business Improvement District (BID) in the Fashion District. First, Is it needed?
Sure, the LA Fashion District is a great example. We were the first property-based Business Improvement District in Southern California. The essence of a BID is to provide a clean and safe environment and to provide the foundation for business to be successful. We're like a residential neighborhood with its neighborhood watch programs. We take care of the basics: we keep the streets clean, we pick up the garbage, we sweep the streets, we wash the sidewalks, we clean up graffiti, and we have a safe team that acts as the eyes and the ears of LAPD and is on the streets 24 hours a day and seven days a week.
Downtown and the Fashion District were in pretty rough shape in the early 90's. It was a place you didn't feel very comfortable coming to whether you were a shopper, a buyer or even an employee working in the district. The BID, by providing that foundation of a clean and safe environment, has allowed this area to reach its full potential.
Your BID was contested – a competitive BID was offered. Elaborate.
When we first set up the BID we had a very tough time. The rules for setting up BIDS in the state of California are pretty stringent. You need property owners representing over 50% of your assessment to actually sign a petition to get the BID created. Then, you have to go to the Proposition 218 secret ballot and win a majority in order to have the BID established. Then, in five years, that sunsets and you have to do it all over again. This time, one of the things everyone agreed on is that there needed to be a BID in the Fashion District. What we did have was a group of property owners that weren't comfortable with the way the board had been set up. They set up a competing BID proposal, addressing their concerns about how the board operates.
What is the status of the BID today?
We've taken some of the suggestions that were made by the competing group. We've altered our board's governance structure with some of those suggestions and we've brought everyone together. Now, we're ready to go forward for the next five years.
When will the BID process be resolved and finalized?
We're through the petition process and now the Council has just given us the order of intention. The Prop. 218 ballots just went out and are now with all the property owners. They have to vote within the next 30 days. However, we believe, having already received petitions representing over 50% of the assessed value, and with the competing group on our side, it'll be an overwhelming yes vote.
Why is there a need for a BID? Why aren't city services in the Fashion District sufficient without a BID?
The City provides pretty basic services. As we all know, cities are under a lot of pressure and have scarce resources. If you're doing business in an area, you need a level of standards that's normally higher than what the city would provide for basic services. It's just like a shopping center-Rick Caruso of the Grove is a great example of the kind of standards that are set in areas outside the downtown for urban environments. We don't have the luxury of being under one property ownership and we don't have control over the public spaces like you do in a place like the Grove. The BID allows property owners to really invest money in the public realm. About 90% of the money that our BID spends goes to improving the public realm for everybody.
Let's turn back to the Fashion District's evolution and to its future. There's been,over the last five years, a lot of housing developed in downtown, Is this surge in housing development affecting your developments and what's the Fashion District likely to look like by decade's end?
What we're seeing is a combination of a number of development efforts that are really changing every corner of our district. A lot of the former manufacturing spaces, particularly in the southern and eastern parts of our district, are being turned into wholesale showrooms. Five brand new projects are under construction now, taking surface parking lots and turning them into showroom spaces, such as the San Pedro Wholesale Mart Annex. The area that was once a manufacturing district is turning into a very pedestrian-oriented area.
Another trend is that the creative people are moving into our district and we're turning former upper floor manufacturing spaces into designer showrooms. A great example is BeBe, which was based in San Francisco and last year moved their headquarters and design studios into The Cooper Design Space.
The third trend is the conversion of upper floor space to residential. We're going to have over 2,700 residents in the northern part of our district by 2004 in loft-style housing. We've got three projects under way right now, including the 640 unit Santee Court and the Tomahawk Building. It's going to really transform the area. We've seen literally a 20-30% increase in our pedestrian traffic since the mid-1990's. In places like Santee Alley, the traffic counts rival those on the Third Street Promenade, Hollywood Blvd, and some of the biggest pedestrian counts anywhere in the County.
So again, five years from today, what will the Fashion District include?
We have lots of pedestrians and our challenge is to make this area more pedestrian friendly. We've already been successful in getting an MTA grant to do some streetscaping in and around the Santee Alley area. We're in for another MTA grant to look at Los Angeles Street for some pedestrian improvements. What we really need is some investment by the public sector in the pedestrian environment. What we have seen and will continue to see is more investment by the private sector in renovating buildings, constructing new buildings.
We have a large LAUSD property that the school board will shortly be declaring surplus to their needs. We want to ensure that the site is properly redeveloped so that it will add to the vitality of the section of the district. We're going to see more infill development and more build-out of the district.
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