NY Times:
April 18, 2007
In Los Angeles, a Gehry-Designed Awakening
By TERRY PRISTIN
LOS ANGELES — The influx of thousands of new residents has reinvigorated this city’s downtown in recent years, but most of the development has been clustered on its southern end, near the Staples Center, the sports and entertainment arena.
For more than a decade, however, Eli Broad, a billionaire and civic leader, has envisioned a vibrant focal point for the city — “a place where people from all communities want to gather,” as he put it — on the opposite edge of downtown. That section, known as Bunker Hill, is home to some of the city’s leading cultural institutions and architecturally significant structures, but they are scattered amid a hodgepodge of unsightly parking lots and drab government buildings.
Now Related Urban, the division of the Related Companies that developed the massive Time Warner Center at Columbus Circle in Manhattan, is poised to try to fulfill Mr. Broad’s ambitions. By the end of the year, the company expects to begin demolition for the first phase of a $2.05 billion mixed-use project along Grand Avenue, opposite the Walt Disney Concert Hall.
Designed by the concert hall’s architect, Frank Gehry, the Grand Avenue development will echo the Time Warner Center in some respects — the plans call for a five-star 275-room Mandarin Oriental Hotel, luxury condominiums, restaurants run by celebrity chefs and an upscale food market. But it is also expected to feature terraces and rooftop gardens to take advantage of the mild climate, the developers say.
Included in the $750 million first phase, which extends from First to Second Streets and reaches 35 feet from Grand Avenue to Olive Street, are 400 condominiums in two towers, 48 and 24 stories respectively, to be priced at around $1,000 a square foot or higher; 100 apartments devoted to families earning less than $35,000 a year; 284,000 square feet of retail space; and a 16-acre park linking the Music Center and City Hall to replace an unused swath of sloping green space near the government buildings.
As part of an agreement with community groups and public officials, Related Companies is to advance $50 million of its ground-lease rent toward the cost of the park. The agreement also requires Related and its tenants to meet specified hiring and wage goals and to set aside one-fifth of the units for low- and moderate-income residents. In exchange, officials have agreed to just under $100 million in subsidies, principally from hotel tax revenues, said William A. Witte, the president of Related California.
The City Council and County Board of Supervisors recently gave their blessing to the project, and Mr. Gehry said he expects to complete the design in June.
Rather than compete with his concert hall, with its billowing stainless-steel walls, the glassy Grand Avenue development should play a “supporting role,” Mr. Gehry said, adding that “you don’t put a bunch of iconic buildings one next to the other.” With construction costs rising, the architect said he has had to “adjust the project to that reality” by, for example, searching for less-expensive materials.
Unlike the planned Atlantic Yards development near downtown Brooklyn, which is Mr. Gehry’s other major urban project, Grand Avenue has engendered few fireworks. But some opponents maintain that subsidies are not justified for a project intended primarily for wealthy residents. They say the developer is already getting a break on the land.
Joel Kotkin, a Los Angeles resident and author of “The City: A Global History,” also argues that Los Angeles is a decentralized place with a number of lively downtowns, including Santa Monica, Pasadena and West Hollywood. In his view, the city would do better to nurture organic downtown neighborhoods, like its fashion district, “instead of replicating experiences you can get anywhere.”
But Mr. Broad said that piecemeal development of the city- and county-owned sites would have been a mistake. “I was fearful we would have unplanned development there that would create a mess,” he said. He also said that allowing the developer to define the project ensured that it would be economically workable. “You’ve got to find a developer that’s got the experience to make it work from a commercial point of view,” he said. “Without understanding what is going to work financially, you end up with no project.”
Since 1999, when the local zoning ordinance was changed to allow residential conversion of older office buildings, more than 1,500 units of housing have been built or are under construction downtown, said Carol E. Schatz, the president of the Los Angeles Downtown Center Business Improvement District.
About 29,000 people live downtown, many of them young, well-paid single people who walk to work, according to a recent survey. They are also urban pioneers who are undaunted by the many homeless people who camp out downtown. The new residents are also willing to drive five miles or more to shop for groceries. In July, however, a long-awaited 50,500-square-foot Ralph’s Fresh Fare supermarket is to open at Ninth and Flower Streets, said Terry O’Neill, a spokesman for the chain.
For the first time in memory, a number of office tenants, including Perkins Coie, a law firm, and Psomas, an engineering firm, have been migrating from the West Side to downtown, where rents are cheaper, said H. Carl Muhlstein, an executive vice president at Cushman & Wakefield.
These rents are rising, yet vacancies also increased last year, from 11.9 percent to 15.2 percent. Mr. Muhlstein attributed the rise in vacancies to the consolidation of the Los Angeles Unified School District’s headquarters and the merger of Sanwa Bank and Tokai Bank.
In addition to Grand Avenue, another megadevelopment is planned for downtown Los Angeles — a $2.5 billion entertainment and retail complex known as L.A. Live, which is under construction next to the Staples Center. Developed by the arena’s owner, AEG, it is expected to cater to sports and pop music fans and offer some of the flash of Times Square.
The Related project, by contrast, is designed to appeal to older, more affluent residents, including international buyers and others seeking a downtown pied-à-terre offering hotel services and restaurants. “That’s something that L.A. hasn’t seen,” Mr. Witte said.
Related Companies has not announced any retail leases yet, although Kenneth A. Himmel, the chief executive of Related Urban, said two potential anchor tenants for the freestanding retail structures were talking with Mr. Gehry.
Rick J. Caruso, the developer of the Grove, the popular open-air retail and entertainment center near the Farmers Market at Third Street and Fairfax Avenue, said Related was unlikely to have a problem attracting a supermarket and other stores to serve its residents. But he said downtown might not be ready for larger retailers that need to draw from a large base of customers. “The jury is still out on the retail,” Mr. Caruso said.
The Grand Avenue project is getting started at a time when the market for high-end condos appears to be softening. In December, KB Homes withdrew from its partnership with AEG to build a 54-story hotel and condominium project at L.A. Live. A planned condominium tower designed by Thom Mayne at Broadway and 11th Street was shelved after it was unable to attract financing. And Standard Pacific Corporation abandoned plans to buy a new building near Union Station and sell its 272 units as condominiums. But Mr. Witte said projects that faltered were not in desirable locations. “The best-located projects are doing very well,” he said.
Victor B. MacFarlane, a managing principal of MacFarlane Partners, one of Related’s investment partners in Grand Avenue, said he was not worried about the market’s long-term prospects.
“There’s no question that the condo market right now is softer,” he said. “But we believe that in two or three years it will be different. We believe that downtown L.A. is for real and not just a flash-in-the-pan trend.”