Paul DeArmas on the roof of his downtown apartment building

The city of Los Angeles, which defines urban sprawl and a lifestyle built on the automobile, is embracing a new concept: downtown.

LOS ANGELES — The city that defines urban sprawl and a lifestyle built on the automobile has a new idea for itself — it’s called downtown.

The eight-square-mile district that has been an underachieving zone of office buildings, low-end retail shops and cultural institutions is starting to attract developers who view it as one of the last frontiers in this 470-square-mile Southern California metropolis.

Los Angeles, like Atlanta, Dallas and other major U.S. cities, is trying to tap into the desire of young professionals and empty-nesters for an urban lifestyle of residential, entertainment, cultural and retail options that is enriching and frees them from hours of commuting and dealing with home maintenance. Developers and municipal officials see an opportunity for profits, beefing up tax rolls and invigorating the core of cities.

Perhaps nowhere are the possibilities and challenges of downtown redevelopment more formidable than in Los Angeles, the hub of a five-county market of more than 20 million people.

“Downtown might be finally coming back,” said Tridib Banerjee, a professor at the University of Southern California School of Policy, Planning and Development. “The trends are quite good and the market has taken off….There’s a growing number of singles, single professionals and Baby Boomers moving back to the city as it has become very expensive for young professionals to find single-family homes and they are [instead] buying condos.”

Founded in 1781 as a Spanish settlement, Los Angeles has never been known for a thriving urban center. The city morphed into sheer sprawl marked by a system of more than two-dozen freeways. Traffic is perpetually heavy or moving at a crawl. And Beverly Hills, Santa Monica and other affluent nearby cities, as well as Los Angeles neighborhoods like Westwood, are more geared to pedestrians and have flourishing boutiques and restaurants.

Downtown retail growth has been slow, despite an influx of people moving into apartments and converted lofts that start at about $500,000. Luring merchants with renovated spaces, a critical mass of people and myriad consumer services is key to changing perceptions about downtown as a strictly in-and-out destination, experts said.

Paul DeArmas, creative director of Fred Segal Beauty in Santa Monica, the beauty arm of the trendy retailer, rents an apartment downtown near the Fashion Institute of Design and Merchandising and is among the growing number of Angelenos who want to get into what they predict will eventually be a flourishing district.

This story first appeared in the March 22, 2006 issue of WWD. Subscribe Today.

“I’ve done my homework on downtown,” DeArmas said, “and people who don’t see the potential are blind.”

DeArmas said he was particularly bullish after a 2005 demographic study by the Downtown Center Business Improvement District that put the median household income of residents at about $90,000 and pegged the average dweller as single and between the ages of 23 and 34 years old, statistics that are enticing to businesses.

Officials at organizations that promote economic development, such as the Downtown Center Business Improvement District and the Valley Economic Develop­ment Corp., hope that others see the potential as well, and that within the next five to 10 years the area can attract well-known names like Fred Segal.

Even now, the profile of downtown residents is beginning to emerge. Among those who have relocated is David Jansenn, 60, chief administrative officer for the County of Los Angeles. In addition to working in the neighborhood, Jansenn and his wife traded in their Pasadena home for a two-bedroom rental on the 24th floor of a building in the Bunker Hill area of downtown. Bunker Hill in the late 19th century featured stately Victorian houses and is now home to cultural venues such as the Dorothy Chandler Pavilion and the Frank Gehry-designed Walt Disney Concert Hall, which opened in 2003.

Although consumer-friendly businesses, including food markets, are still lacking, Jansenn said, “You don’t have to worry about all the challenges of home ownership…like the roof leaking and yard work. I get to walk by Disney Hall every day…we absolutely love it.”

The greater downtown area is loosely defined as the district that lies within Interstate 10, the 101 and 110 freeways and the Los Angeles River. Much of the new housing has been concentrated in the historic district — from Second Street to Ninth Street and Hill Street to the river. “This is the area that is the most ripe for retail,” said Warren Cooley, project director of the Historic Downtown L.A. Retail Project of the Valley Economic Development Corp., a nonprofit that has a contract with the city to attract retailers.

The housing construction push started in 1999 when the Los Angeles City Council passed the Adaptive Reuse Ordinance, which made it easier for developers to convert older office buildings to loft dwellings by eliminating some zoning requirements and allowing the structures to be upgraded. Since then, at least 4,000 housing units have been built and 6,000 are in the pipeline, officials said.

The Valley Economic Development Corp. estimated that by the middle of this year, there would be 13,000 to 14,000 lofts and condos in downtown Los Angeles with about 20,000 residents. Many retailers are looking for at least double that population before making a commitment. But estimates are that as many as 50,000 people may be living downtown within the next four years.

Yet it isn’t simply more residents that will breathe life into the area, Cooley explained. What’s needed is more nightlife and leisure options coupled with basic services.

“Once you get a critical mass with those two, then you begin to change the retail environment,” he said. “And that’s when things like women’s specialty stores and others become interested in the area.”

So far, courting nightlife and restaurants has been the easier part. The Golden Gopher bar, housed in a former speakeasy, attracts plenty of hipsters, as does the Standard Hotel, a go-to spot for a crowd that loves to sip mojitos and linger around the rooftop pool.

The Gansevoort Hotel, which bowed in Manhattan’s Meatpacking District in 2004, is scheduled to open a 170-room Gansevoort West next year. The hotel will be in a 1914 Beaux Arts building at Grand Avenue and Ninth Street. It will feature a glass-bottom rooftop pool and two rooftop lounges connected by a glass sky bridge, as well as an 1,800-seat amphitheater.

Several major mixed-use ventures that meld entertainment and retail are also in the works.

Adjacent to Staples Center, home of the Los Angeles Lakers, Clippers and Kings, will be LA Live. The six-block, $1.5 billion development from Anschutz Entertainment Group is to be completed in stages and fully operational by 2014. It will feature the 7,000-seat, $90 million Nokia Theatre, which is slated to house the Latin Grammy Awards, Espy awards, concerts and more. LA Live will also have a nightclub and a 20,000-square-foot plaza.

Nearby, the $1.8 billion mixed-use Grand Avenue project located east of the Walt Disney Concert Hall is set to launch its initial phase in 2009. Gehry is designing a hotel and condominium tower for space. The project will also feature about 250,000 square feet of retail and a 16-acre park. The entire development is set to be completed by 2012 or 2013.

“It’s premature to say, specifically, but for the first phase, we imagine a mix of a high-end grocery store, health club, bookstore, five or six restaurants, some small gallery and retail space and possibly a nightclub,” said Bill Witte, a partner of Related Companies of California, the project’s developer.

“It’s about creating an identity for downtown and introducing a true mixed-use project, but also a significant amount of public space,” he said. “At the end of the day, I think it will be defined as much by its public spaces as by its signature buildings.”

Downtown is becoming more attractive to architects, interior designers and hoteliers. The prestigious Southern California Institute of Architecture has its headquarters in the area.

“I get calls all the time to do work downtown,” said interior designer Kelly Wearstler, who has put her stamp on fashionable hotels such as the Viceroy in Santa Monica and Maison 140 in Beverly Hills. She is working on the renovation of the Art Deco Eastern Columbia Lofts at Broadway and Ninth Street, which her husband’s company, the Kor Group, is developing.

While hotels, lofts and huge projects such as LA Live and Grand Avenue are under way, wooing the goods and services providers has proved more difficult, said Carol Schatz, chief executive officer at the Downtown Center Business Improvement District, a coalition of 480 property owners.

“But we are starting to see all kinds of interesting signs, such as the construction of a [50,000-square-foot] Ralph’s grocery store at Ninth and Flower Street,” she said. The $110 million project, which is to open next year, will include residential units as well as some smaller retailers.

Schatz said the business improvement district is also courting a Trader Joe’s grocery store, and has received interest from bookstore chains.

“We’re not seeking the Crate & Barrels and the Gaps because we think you can get that anywhere,” she said. “We’re looking for more unique retail.”

Downtown needs merchants who can weather the growing pains, said Jack Keyser, chief economist at the Los Angeles Economic Development Corp.

“Right now, they have to [realize that] if they opened in the next year, they might not see sales, but they are buying into their future,” he said.

There are incentives. A federal empowerment zone encompasses most of the historic district, from about Second Street to Ninth Street and from the east side of Hill Street to Alameda Street. Businesses in the zone qualify for electricity rate reductions, employer wage credits and other benefits.

Rich Reams, co-owner of Loft Living, a 14,000-square-foot furniture store, is one of the independent retailers who decided to roll the dice. He said the city has made doing business downtown almost too good to pass up. But it hasn’t been easy for the former set decorator, who lives in a loft downtown and whose eclectic store carries everything from wall beds to pieces once used by movie studios.

“We pretty much sunk everything we own into this, including our houses,” said Reams who owns a similar store in Big Bear, Calif., 100 miles northeast of Los Angeles, which he is selling.” I lost $100,000 [on the downtown store] this first year.”

But sales have been picking up in the last six months, and the store is already generating sales that the Big Bear location took three years to reach, said Reams, who is considering opening up a second downtown spot.

Another element in growing downtown is Los Angeles’ 73-mile metro rail system, which averages about 253,000 riders per day during the workweek. New York’s subway system, by comparison, spans 660 miles of track and carries about seven million riders daily.

Still, city planners hope that expansion of the system will help to propel downtown’s momentum. There are blueprints for a new light-rail line that would go from Santa Monica into downtown and the gold line from Pasadena to downtown is being extended into the Little Tokyo district and to East Los Angeles. Officials are also exploring the westward expansion of the red line, which runs from North Hollywood to downtown.

In addition, there are discussions about introducing streetcars to the district, said Victor Franco, senior vice president of government affairs for the Central City Association, which represents business and property owners.

“Los Angeles used to have the largest streetcar system in the world in the late 1800s,” Franco said. “So the idea would be to use it to circulate people downtown and activate streets that are dormant at night — such as the fashion district and theater district.”

While downtown’s reinvention may be a boon to many, it is also a source of concern for residents such as Magnus Walker, founder of the alternative apparel line Serious Clothing.

“It’s got an overkill, gold-rush mentality where people just have to be downtown,” said Walker, who has operated his business in the district for 15 years and runs it with his wife, Karen Caid. While Walker and Caid are part of the growth, they hope to help make the area more of a neighborhood by developing intimate dwellings.

“Instead of building monster complexes, we want to build a more boutique loft experience,” he said. “Part of what we feel we have to offer is that we’re not part of this Vegas-style development that they call lofts.”

The pair moved downtown in 1994, relocated to the Hollywood Hills and then moved back. The company’s headquarters also houses their former loft, which they rent out for TV shows such as “America’s Top Model” and music videos.

“What we gain from downtown is the opportunity to do multiple things: clothing, movie-making, development,” Walker said. “Believe the hype now; the buzz is happening.”

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