Roundtable/ Urban 5
Publish Date: 04/26/2004
California Real Estate Journal
Continued from Roundtable/ Urban 4
When You’re Arrived
CREJ: Tim spoke earlier about retail as a bellwether of a renewing community’s success. Is the commitment from Ralphs to build a supermarket downtown that kind of turning point? How about Disney Concert Hall?
WEINSTEIN: The Ralphs was a defining moment. Fifty years ago was the last time Ralphs was here. The Palm Restaurant was a defining event. And the fact that all these retailers are coming down, to even IHOP in the Gas Company building. National retailers are paying $2.75 a foot in the Fashion District, triple net. And I think that shows a pretty strong demand.
Disney is great. It is a great venue. It brings people. It adds to the flare of downtown. But Ralphs, Chili’s, middle level markets, things besides the fancy restaurants and the fancy venues are need to make a vibrant place.
TOSTA: I always felt like they rolled up the sidewalk here at about 7 o’clock. Is there a nightlife?
PEREZ: We are not creating enough places where folks from different income levels can feel welcome. It feels kind of upper crusty.
LINDSAY: If you are successful in getting bodies into those housing units the retail will follow. It is like any retailer anywhere. What are the demographics of 1 mile, 3 miles, 5 miles. How many people are there.
WEINSTEIN: In the Fashion District I have been able to get a lot of retailers, but there are pockets where it is difficult. I was very impressed that [loft developer] Tom Gilmore got Pete’s Café and Quiznos. And we have got Subway. And that is the seedy area where the homeless are out. There is the smell in the area. Yet Gilmore is full in his buildings. And he got national retailers to got there. That is a good sign.
SULSE: How long did it take for that Ralphs to become entitled? Is there any synergy that they planned to create around that?
WEINSTEIN: With the Ralphs entitlement, the issue was the money. The CRA had a pocket of money, and they were looking for subsidies. The city wanted that Ralphs. It couldn’t happen fast enough. And I am not just saying this to win hay with the zoning department. They are awesome. They want to make things happen. They are more willing and ready and able than almost any other place that you would go, to approve anything that makes sense, as long as you have a plan for downtown.
Outlook for Urban Renewal
CREJ: To wrap up, what is your biggest hope or concern for the revitalization of downtown L.A.?
SULSE: I know it sounds like I am the negative one here, but I’m simply cautions. There are a lot of opportunities downtown, and we are involved with a number of them. But my biggest concern is that I really don’t have a good handle on the true depth of this market and what is coming on.
My other big concern, that if you go to workforce affordable, you don’t have the infrastructure of schools and things to support it. Let’s face it, in the $50,000 to $100,000 range, which is what you described as workforce affordable, those are usually the same types of people that are working [downtown] at the Disney Hall or at Staples Center, and they have got kids. There is a complete disconnect between workforce affordable versus what the infrastructure really can support.
WEINSTEIN: I don’t see the downtown market being that kid friendly right now. There happen to be a few schools being built. But I don’t see the market right now incorporating a lot of families.
SMITH: I’m concerned about the sustainability of downtown over time. I think we are excited in the short term about what is happening. It is encouraging to see that large-scale development is occurring.
It is a maturity that has to occur at the very fine grain level, at the level of the street. It is starting to happen in these projects and districts. And that those amenities can start to occur that make people feel good about being on the street, and want to be part of the public life of this community. That will sustain it over time.
PEREZ: My hope is that there isn’t a disconnect between the needs of the greater region, Los Angeles region, and the new development that is happening.
We are building for a certain class of people, when a whole bunch of other opportunities are not being realized. Significant transportation investments are being made in our communities, and we haven’t fully tapped those linkages. We need to think differently about mobility, and about development, and how those two intersect.
Some of the new development really is spearheading us in that direction, with the light-rail and bus rapid transit. That stuff is really pioneering work that we are doing. The project Jay was kind enough to mention is Latino New Urbanism, where we are teaching the public and private sector about different kinds of development models and financing. How to pencil projects in that work for communities in South L.A., in East L.A. so we do have that balance as the investments happen in L.A.
We have the investments because we have got such a large canvas.
STARK: I think a big part of the synergy for redeveloping urban areas is bringing together public sector officials and the private sector and educationing them, so I want to give a little plug for Katherine and what she is doing.
We have a nonprofit partner and fund advisor, the Genesis LA Economic Development Corp. Formed out of the Riordan Administration; they have a long-term vision of harnessing the private sector entrepreneurial spirit and expertise to help revitalize urban neighborhoods.
Our workforce housing fund is one of the first “smart growth” funds to focus intuitional capital on low and moderate income census tracts and redevelopment areas. We see ourselves as a catalyst or bridge between institutional capital and community development, in order to spur the supply-side of the equation. That is the kind of synergy that I think is going to help smooth out some of the bumps that we have been talking about.
LINDSAY: Jay and I are examples of collections of institutional capital focusing on urban cores. I am focused on the commercial side. Notwithstanding my concerns about a lot of the investments that is going on downtown. I think a lot of people are going to move downtown. And regardless of what happens in the macro sense of the economy, they are going to need services. They are going to need commercial support. And the fact of the matter is, the money is going where the opportunity is.
I think that because money is realizing that density produces transactions and opportunity. And so, in the long run, I think it is all going to change over time for the positive.
TOSTA: If you look back over really thousands of years of urban living, there just has always been rebirth of urban centers. And I think that what we are dealing with now is a cycle where people are coming to realize the things, the great benefits that arose from an urban environment.
In Los Angeles, you built an incredible infrastructure from a cultural standpoint. The question is, are you going to be able to get the housing into a critical mass to bring the retail and create the balance, so you can really make use of the incredible draw of the Disney Center and the other features?
It is interesting because people don’t even necessarily have to come here to feel good about being in its proximity. The number of people that talk about going to the opera in San Francisco is not the number that actually attends. It makes them feel better that there are museums and other things that they don’t frequently visit, but become a parrot of how they see themselves.
I think we are having a resurgence of being urban dwellers. Even smaller communities are trying to mass up to the level that the cities have on the natural. So I think there is an enormous opportunity here, and I think you are going in the right direction.
SPONSOR BIOGRAPHIES
MARK WEINSTEIN
Mark Weinstein is founder and president of MJW Investments. He founded the company in 1983 following a brief career as an attorney. Since then, he has acquired approximately $200,000,000 of apartment, commercial, industrial, and self-storage buildings. MJW Investments now owns and manages over three million square feet of commercial and industrial space and nearly one thousand apartment units. The firm has recently completed seven loans including refinance and purchase for over $60,000,000 in a five-month period with three different lenders.
Mr. Weinstein holds a Bachelor of Arts degree from the University of California at Santa Barbara (summa cum laude), and a Juris Doctorate form Loyola Law School (dean’s list). Highly active in civic and philanthropic endeavors, Mr. Weinstein has recently completed a three-year term as the Chair of the Real Estate Construction Division with the Jewish Federation. Mr. Weinstein focuses on serving low-income communities of Los Angles as part of his charitable endeavors.
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