Downtown L.A. 2020: CCA's Titans of Real Estate Prognosticate

Tom Gilmore: It's truly exciting to be moderating a panel with people who have really framed over the course the last 30 years the Downtown we know today. These are the people who have brought us to where we are today and certainly set the stage for what's about to happen over the course of the next ten years. That's what makes our discussion today so exciting; because, when we talk about the next ten years we're actually hearing from the people who will be a part of that change over the coming decade. My first question for the panelists is: In 2020, what kind of city are we going to have here? What kind of progression can we expect to see over the next ten years?

Eli Broad: We're going to have a downtown that's truly the urban center for a region of 15 million people. It's going to have new museums, it's going to have L.A. Live, with the Convention Center, it's going to have Grand Avenue, which I consider a cultural and civic district. People ask me, why should I come Downtown? Come here for all the things we're going to have Downtown. They come here from all over the county and so on. We're going to have a Downtown that's population is going to be a multiple of what it is today. We're going to have great public transportation, with a hub where all the rail comes together. So it's going to be a very different place in 2020 than it is today. There will be far more projects. It's going to be 24/7 everyday.

Tim Leiweke: We'll be living within our realm of expertise and what we're focused on. I would like to see that we have so far to go as a city, if you look at New York, Chicago, and San Francisco, our Downtown area is just beginning to catch up. There is a lot more that we can and will do. I'm glad that we're focused. I appreciate what Carol says about "Before Staples." That's called B.S.-or B.C. or whatever. We need to find a few key, core economic drivers and signals-what you see Eli doing in the arts and cultural area, certainly the office and commercial real estate and the housing.

From our standpoint, we need to be a top five convention market. We have all the amenities. It drives me crazy when you look around and see that Los Angeles is still not in top ten in conventions, even when you consider our weather, our amenities, our golf, our retail, our restaurants, our Universal and Disney, and our transportation. We need to set a vision because tourism and events are going to drive our economy in 2020. And now it's our responsibility for future generations to create not just a vision but also the infrastructure to take advantage of that and have an opportunity, because everything else is set up for us. Now all we have to do is create the infrastructure itself. If we do that, people from all over the world are going to want to come to L.A. and be a part of our city.

Nelson Rising: Something this city has been doing right, going back to 1974-the chairman of Tom Bradley's election committee called me in 1973 and said, "Nelson, I've been trying for a long time to get a convention center hotel Downtown." This was 1974, and Tim, you did this. Thank you very much. The convention center is so important for making Downtown a true destination. Eli talked about that so many times about the Grand Avenue being a cultural tourism destination, and you have to start with hotels that can accommodate that. And when you have the hotels and the convention center, people will be shopping and supporting the retail. And if we can support retail, then we can support residential. To me, it is a vital thing for downtown Los Angeles to have a significant greater number of residential units. That will allows us to continue on the path of the 24-hour community. When that happens, and I hope it could happen by 2020, we will have changed the vision for Downtown, with a combination of the cultural activities, the retail, the restaurants, the tourism, the convention center full throttle, the sports. What L.A. Live is doing is truly transformative, and we have to continue on that course.

I brink it back to transit. We desperately need the subway to the sea. When Tom Bradley was elected mayor he had pledged to do that. In 1974 we had a bond issue up for approval through a voter referendum, it passed in the city, lost in the county. That was a lot of years we lost. But if we have the Subway to the Sea connecting Santa Monica, Century City, Beverly Hills, and Mid-Wilshire, then we really have a chance to be a 24-hour city.

And the other thing we need to do is for people to come here in something other than a single passenger automobile. We have to have a way for them to circulate without driving alone. And that means we have to do something about vehicle circulation. The only answer I can think of is a street car, so you know you're five minutes away from a vehicle arriving that is friendly and useful. If we do all those things, in 2020 this can really be one of the true great cities.

Tom Gilmore: Just this past week we were working on issues with the street car, and I'll ask you about that a little bit later because that is one of the connections that we're all talking about here in downtown.

Jim Thomas: We look forward to that kind of development. I would pick up on one thing that Tim said, what I think about what makes a great city, for how you build a great city, I would look at Paris, New York City, all the great cities in the world, and how they came about and how we make that happen. What I learned through history is that you have take advantage of your competitive advantages. It is about focusing on your niche. When I look at the city of Los Angeles and think about what are the competitive advantages we have that we ought to focus on as a city, there are two places where we clearly have a competitive advantage. One is in sports and entertainment-what Tim has done. We can continue to build on that. We have the Lakers, the Clippers, the Dodgers, and the Kings. We have the culture and business. So we do have a natural competitive advantage in those areas. We need to concentrate on that, and other things will follow if we concentrate on those competitive advantages.

The office market is unprecedented right now with the economy, but we have a very strong competitive advantage in office. When you think about it, our freeways are clogged, especially the 10. You have 350,000 or 375,000 people, some huge number of people, who are traveling from the east side, trying to get to the west side in the morning. The reason that all the things are located there is there is because of who lives on the west side. Some other people have to scramble from all around. Downtown is centrally located. That helps you with the battle. The transportation hub should be Downtown L.A.

These are two areas where we have a very strong competitive advantage. Government can't do it. It has to be done by people like Carol Schatz, with her organization, and other organizations. But we need to figure out as a group how we take better advantage of our competitive advantages. If we did that all the other things will fall into place, the residential will continue to grow, the retail will come when you have the residential. You can't get retail without residential; they just won't do it. All of the other parts will fall into place.

Tom Gilmore: It really is, as Tim said, all about the vision and the focus of downtown. Downtown didn't seem to have components for a long, long time. So much because of the amount of money, program, time, and energy it takes to build a city anew. Our panel here represents all of those issues. Whether office, entertainment, cultural, or residential, we finally seem to be getting the pieces in place, but it takes an enormous amount of effort to push them to the next level.

Eli, you have done something that is extraordinary on so many levels, and we are very lucky to have someone like you here to do something as wonderful as bring the Broad Collection Museum on Grand, which is coming up over the next couple of years. You've made an extraordinary investment in time and energy to create the cultural center that is going to be on Grand Avenue. How do you see that playing out over the course of the next ten years? Will it continue to grow? Is the Broad Museum just one of the next few museums that's going to happen? How does it connect to the rest of the city? Tell me what you see for the next step, with regard to the cultural center.

Eli Broad: Let me start out saying that Los Angeles is truly one of the four great cultural capitals of the world to with New York, London, and Paris. If you look at the performing arts, we don't realize it but we have more theatrical productions than New York or London. And then of course we've got the great museums, the Museum of Contemporary Art and a number of others. What we have on Grand Avenue also, within in two and a half blocks, are five great pieces of architecture. No other city could make that claim. We have the Arts High School, the Cathedral, the Walt Disney Concert Hall, and MOCA.

There is going to be a lot more extension of cultural institutions on Grand Avenue. By the way, we are going to break ground for the Broad Collection-the parking garage portion-in mid-November, and hope to start construction of the museum itself maybe about August or September 2011. If all goes well, mark this date down-the architects think I am a little crazy-the opening would be Dec. 8, 2012...We picked that date because of the great international art exhibition called Miami Basel-we want all the great exhibitors from around the world to come to Los Angeles for the opening.

Tom Gilmore: Well if you say it will happen I believe you. Tim, on the other end, there is this wonderful combination of vision, because now the world comes Downtown. I have to agree with Carol-the history of Downtown is broken into Before Staples and After Staples at this point in the game. You aren't done. You are working on other stuff. What is coming from your organization over the next few years?

Tim Leiweke: That's Tom's way of giving me a few minutes to get myself in more trouble by talking about something I shouldn't be talking about. Thank you very much. I should point out first and foremost that I appreciate everyone saying nice things, but this is about Phil. If he doesn't step up and send us money, especially on the hotel-we went through three different developers, and they all fell out. As it turns out, they were all pretty smart. Phil saw that and decided that we were the only ones who could to it. We have good partnerships with people who could take the risk. That means we are very blessed.

Everyone said it wouldn't work and that it was a crazy idea-especially outside of the hotel industry. People said, "Downtown will never work as a 24/7 destination for hotels." We are at 87 percent occupancy for the month of October. It works Downtown. Unfortunately for Phil, we live to dream another day.

I truly believe we are at the moment of truth. We have so many things going on for the private sector. Eli has visions for Grand Avenue as the arts capital of the West Coast and the United States. What Jim is trying to do with Korea and the hotel is very brave but hugely important for the future-trying to convince offices to move back Downtown. You are right; that's how you fix traffic in L.A.-don't get in your car. Whether that is light rail or a community wide effort-in every other community that is a capital, people walk to work. It is critical that we establish those thinking patterns within the business leaders of this community.

Our plan is that we need a new convention center or to add onto the convention center. The West Hall doesn't work because it is separated from the design hall. If we build a hall next to that without holes and without construction, unencumbered, 600,000, if we can built an NFL stadium, as an events center, if we can get to 1.4 million square feet, we would be the fifth largest convention center in the United States-we'd triple the convention center. We cannot underestimate what that would mean to Jim Thomas's bank, on whether or not they get that hotel built with Korean Air. I can guarantee you it is a completely different conversation because we can go and say, 87 percent occupancy.

We have lots of conventions in the convention center in the month of October. This isn't brain science here. This is simple. Other people in this community have a vision for a football stadium. I get that and we respect that. But this is simple; if the project is going to require us to spend a billion–and we're going to have to do that, that's the only way it's going to happen here-then shouldn't we as a community spend a billion dollars where it'll have the greatest impact? And if go to the events center for not only ten football games a year, but it does three Super Bowls, two Final Fours, and World Cup in 2022 for the finals. Then you go ask Jim whether or not he can finance his hotel. And if you add that, we double or triple our convention business, and we go from 26th, behind Omaha, to 15th where we are today, to 5th because we have hotel infrastructure. Everything else will come. Nelson is right, retail will come, transportation will come, and people will move back down here from an office standpoint because everything has moved down here. That's our focus, to get that market But in life you're put down here for one reason and that's to try to give it your best shot. And I know that the city of L.A. it's time we start acting like the second greatest city in the United States and one of the greatest markets in the world.

Tom Gilmore: Tim was talking about the Wilshire Grand site. I heard about it, we all saw it; it looks like an extraordinary opportunity. Tell me more about it, Jim Thomas. It does seem-at least at this point, not unlike most of the things all of us have to done during our lives-counterintuitive, because the market isn't ready for it. On the other hand it's going to take years to build. Tell me how that's coming together and how important it is for what Tim is doing and what Eli is doing and what we're doing.

Jim Thomas: Well, we're well along in the EIR process. We hope to complete that in the early part of next year. And we hope to open at least the hotel, if not the whole project, by the first quarter of 2016. We are very fortunate that we have a partner who has a firm resolve, who can move forward, he has the vision to build on what Tim is doing, and Tim is exactly correct, we've been following intensely what he's doing and trying to ease their minds about how successful Tim is. And we're not competitive. We need each other to be successful because to get the conventions you need more hotels. So even though we're in the same business, we want each to succeed. I want him to succeed and he wants us to succeed. So we're talking about a 700-room hotel with condos on top. We haven't decided exactly how many. The hotel, a huge chunk is already approved for the hotel and in my mind it's pretty easy to move forward on that, especially with the partner that we have. More challenging is the office building; we haven't had an office building in downtown Los Angeles in over 22 years. I hate to say this but it's because we don't like the ones that are here. I think we need a new one. We're talking about a 60-story office building. Obviously the challenge is when you're building a new office building is the prevailing rent. In order to build a new office building the rent has to exceed prevailing rent. I won't get into too much detail, but it is a challenge. The last buildings that we built, which were on the cutting edge when Nelson and I and Rob [Maguire] built these buildings, the technology has advanced and so you're able, now, to put out a product that is more efficient, that is green, and has a lot of amenities that were not available when you built these earlier office buildings. I predict here and now to this audience that we will have a new office building in downtown Los Angeles in the next three to five years. And I want to build it.