Old Way of Doing Business in L.A. No Longer Applies

With homebuyers calling for more intelligent use of space and entitled land an increasingly rare species, regional developers are setting their sights on urban infill projects with significantly greater density than has been seen in the past. While the average housing density in Los Angeles is typically four to 12 units per acre, new projects are now coming in between 14 and 24 units per acre.

By David Silva

Developers in Southern California today are a disparate bunch.

Some are based in the Southern California cities in which they operate. Others cross state and even international lines to take advantage of the Southland's booming real estate market. Some are family-run concerns, others are investment partnerships and still others represent giant corporations.

The "Broadway at Hollywood and Vine" project is developer Kor Group's first mixed-se development in the heart of hollywood. Planned as high-end loft condominiums in the former Broadway Department Store, the project will be one of the first new multi-story condominium developments in Hollywood, West Hollywood or Hancock Park in decades (rendering courtesy of Kor Group).

But today's top developers in the Los Angeles area share something in common aside from a desire to make money. They understand that the old way of doing business in the City of Angels no longer applies.

"Developers in an urban environment are faced with public policy issues that haven't been dealt with for many years: public education, public park space, traffic, housing, jobs and politics," said Steve Soboroff, a former L.A. mayoral candidate and president of Playa Vista LLC.

"What we're doing is approaching development from a public-policy perspective, dealing with these issues on a priority basis instead of as an annoyance."

The fruits of Soboroff's "development-as-public-policy" approach can be seen in Playa Vista, a 1,087-acre, mixed-use project straddling Marina del Rey and Westchester that officially opened in September 2003.

For almost two decades, plans by Hughes' Summa Corp. and later Maguire Thomas Partners-Playa Vista to develop the property foundered under the weight of lawsuits by environmental groups and other organizations concerned about traffic congestion and the loss of open space.

Soboroff's investment group, Playa Capital, acquired the property in 1997. After meeting with neighbors, civic leaders and holding focus groups, the group put together a $4-billion-plus master plan calling for a high-density community of 5,846 low-rise residential units closely situated around 180,000 sq. ft. of retail and restaurant space and 575,000 sq. ft. of office space.

Caruso Affiliated Holdings, a Los Angeles development firm that created The Grove in the Fairfax district of Los Angeles, is building the 11-acre Village at Playa Vista Retail Center, bringing 195,000 sq. ft. of retail and 175 apartments to the heart of Playa Vista.

Soboroff also targeted millions of dollars to improve streets within the project site and up to a 5-mi. radius around it, adopt 16 nearby schools and restore wetlands and sage scrub in nearby Westchester Bluffs.

The result of all these efforts: With opposition to the long-stymied Playa Vista project a ghost of its former self, construction began in 1998 and the development is coasting toward an anticipated final build-out in 2010. As of late October, 1,222 of the 1,227 residential units released for sale have been sold.

Soboroff's Playa Vista, combining what developers describe as "elegant density" with a more inclusive approach to community concerns, reflects a dramatic shift in philosophy among Southern California's most influential developers.

According to several of the region's top developers and Los Angeles economist Jack Kyser, the days of wide-open sprawl, when L.A.'s most desirable residential properties were considered the ones farthest away from the urban centers are fading fast. What city dwellers appear to value now over big backyards is convenient access to work, shopping and recreation.

"Many developers in L.A. have in recent years focused on high-density, mixed-use developments partly to satisfy demand from traffic-weary home buyers and partly because L.A.'s adaptive re-use ordinance of 2001 makes it easier for developers to do so," Kyser said.

With home buyers calling for more intelligent use of space and entitled land an increasingly rare species, regional developers are setting their sights on urban infill projects with significantly greater density than has been seen in the past.

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While the average housing density in Los Angeles is typically four to 12 units per acre, new projects are now coming in between 14 and 24 units per acre.

Another example of civic-minded, high-density urban developments are Elleven at 1111 S. Grand Ave. and its sister tower, Luma South at 11th Avenue and Hope Street in the suddenly red-hot South Park district of downtown Los Angeles.

Developed by The South Group-a joint-venture partnership of Oregon-based developers Williams & Dame and L.A.'s Gerding/Edlen-Elleven and Luma South represent downtown's first ground-up condominium development in more than 20 years.

The $100-million Elleven, encompassing 400,000 sq. ft. of housing, parking and retail in a 13-story tower, is more than 50 percent complete. It will house 176 studios, one- and two-bedroom and penthouse loft units, and four two-story live/work town homes.

Steve Soboroff

Ground broke in August on the 475,000-sq.-ft., 19-story Luma South, which features ground-floor retail, secured parking below and above ground and 236 one- and two-bedroom soft lofts, penthouses and live/work town homes. Soft lofts are units specifically designed to emulate the "open plan" attributes of traditional lofts. The units will range from 750 to 3,500 sq. ft. each, with home prices beginning around $400,000.

Both Elleven and Luma have already sold out, with Luma's inventory reportedly going in just seven hours. A third South Group residential tower, Evo, is planned for the same site.

Luma and Elleven share common areas and are located blocks from the Staples Center and the neighborhood's soon-to-be-opened first supermarket, and both projects show an impressive level of environmental sensitivity.

Elleven boasts a 92 percent recycling rate for construction material and Luma is poised to achieve the same rate. Both are certified as green buildings by the U.S. Green Building Council's Leadership in Energy and Environmental Design for their recycling and energy conservation efforts.

"Our biggest challenge is trying not to build projects, but build a neighborhood from scratch," said South Group principal Tom Cody. "That to us is mixed-use projects that create a legacy of great places to live and to play and are environmentally responsible buildings. We're enormously invested in building sustainable neighborhoods."

Also in the South Park neighborhood of downtown, Cleveland-based Forest City Enterprises this month is slated to open Met Lofts at 1030 Flower St. The innovative, high-density project consists of 264 residential loft units and 11,500 sq. ft. of commercial space.

Along with its choice location near the Staples Center and the downtown nightlife, the $50-million Met Lofts project boasts amenities such as a lap pool, outdoor dining area and private high-definition theater room.

Demolition crews at work in November for general contractor Charles Pankow Builders on the office-to-condominium conversion of the Eastern Columbia building on Ninth Street in downtown Los Angeles (photo by Paul Napolitano).

"What's needed in a city like Los Angeles is elegant density," said Gregory Vilkin, president of Forest City Residential West Inc. "L.A. needs mass transportation, a wonderful park system and pedestrian-oriented communities. That can only be achieved through increased density. The hidden cost of sprawl is that the average Angeleno spent 92 hours last year sitting in traffic.

"A new solution is that congestion is your friend. You want to create higher density so people can reach their destinations on foot. You want to create a transit system where people can reach their place of work through mass transit. That has to be the development mantra in Southern California for the next 50 years."

CIM Group, a Hollywood-based development firm, is firmly on the high-density bandwagon with South Village, a $500-million development bounded by Eighth and Ninth, Flower and Hope streets. The first phase of the five-phase development at South Village finished in early 2004 with the opening of the 251-unit Historic Gas Company Lofts.

Its $110-million second phase, the Market Lofts, will feature six levels of loft-style condominiums above a 50,000-sq.-ft. Ralphs supermarket and 6,000 sq. ft. of restaurant and retail space. An additional 267 condominiums will follow completion of the Market Lofts, scheduled for December 2006.

CIM Group has also partnered with the Lee Group, a Los Angeles residential developer, in building the 66-unit Grand Lofts and the 106-unit Olive Street Lofts.

Boutique hotel developer The Kor Group has gotten into the urban-living game with its recent conversion of the Molino Street Lofts in downtown's Arts District from artist-in-residence-zoned rental lofts to live-work condominiums.

The firm is also converting the Art Deco Eastern Columbia building on Ninth Street in downtown Los Angeles from offices to 243 new luxury condominiums.

The Molino Street Lofts have already sold out.

This red brick, 11-story building on Seventh and Grand is another office-to-residential conversion project under construction in downtown Los Angeles (photo by Paul Napolitano).

Dallas-based developer Trammell Crow is bringing mixed-use density to the entertainment world with its 2000 Avenue of the Stars, a redevelopment of the 30-year-old ABC Entertainment Center in the heart of Century City.

The $200-million project consists of a 12-story, 720,000-sq.-ft. office tower, 45,000 sq. ft. of restaurant space, 10,000-sq.-ft. cultural center and 3.75-acre park.

After nearly two decades of delays, L.A.-based City Centre Development plans to build a staggering $800-million residential complex called Metropolis a block from the Staples Center on what is now a collection of surface parking lots between the 110 Freeway, Francisco Street, James M. Wood Boulevard and Eighth Street.

Approved by the Community Redevelopment Agency Oct. 6, Metropolis will include a 30-story, 360-unit condominium tower and about 18,000 sq. ft. of retail, a 46-story high-rise with 388 condos and 17,000 sq. ft. of shops and entertainment venues, and a 42-story tower with 800,000 sq. ft. of office space and 11,000 sq. ft. of retail.

An open plaza will link the towers.

A short distance away, Staples operator Anschutz Entertainment Group has broken ground on its massive L.A. Live! entertainment complex. Drawing comparisons to Times Square in New York, the 4-million-sq.-ft., $1.5 billion complex along the 110 Freeway, Figueroa and Olympic boulevards and 11th Street will cover six city blocks and feature a 55-story, 1,100-room convention center hotel; 7,000-seat, 15-screen Regal theater; nightclubs; and eight new restaurants including Gladstone's, P.F. Chang's and Chaya Brasserie.

The site will also include a 7,100-seat Nokia Theater Los Angeles and 2,400-seat Club Nokia featuring live music and cultural shows; five-story, 70,000-sq.-ft. ESPN television and radio studio and ESPN Zone retail store; museum of Grammy history; and Lucky Strikes bowling alley.

The Federal Reserve Bank building at Olympic and Olive in downtown Los Angeles was designed in a Classic Moderne style in the late 1920s by the father-and-son team of John and Donald B. Parkinson. The seven-story building, unoccupied since 1987, will open this year as a loft-style apartment complex called Reserve Lofts (photo by Paul Napolitano).

"Phil [Anschutz, chairman of the board of Denver-based Anschutz Entertainment Group] really believes in L.A." said AEG President Timothy Leiweke. "L.A. Live! is going to be a landmark project."

The sprawling L.A. Live! complex will provide sorely needed entertainment infrastructure for the anticipated arrival of 29,000 new residents of the 19,500 new high-density units under construction or in the planning stages for the downtown area.

The city of L.A. has already provided $265 million in financial assistance for L.A. Live!, which should be completed in four years.

Jack Kyser, senior vice president and chief economist for the Los Angeles Economic Development Corp., sees the onslaught of development downtown as a natural by-product of the scarcity of entitled land and the city's new adaptive reuse ordinance that allows blighted commercial buildings to be rezoned for residential use.

"L.A. County is essentially built out in the urban core, anything south of the San Gabriels," Kyser said. "When you get into a situation where there's not too much undeveloped land left, people start rolling back into the center of the county looking for opportunities."

Kyser added that the influx of residential units in the city's center as "good for downtown and good for L.A. County as a whole."

"You have a richer fabric developing downtown," he said. "You're getting use out of these buildings. It used to be in downtown that you had retail going on the ground level but nothing happening in the floors above. Now, you have people living there, shopping there and paying taxes."