FASHION DISTRICT FACELIFT
THE DOWNTOWN L.A. NABE’S MAKEOVER SPELLS NEW HOMES FOR TECH-SAVVY FIRMS AND GIFT AND HOME VENDORS.
Byline: Katherine Bowers
The once-gritty Fashion District in downtown Los Angeles is planning to try these scenarios on for size: A proliferation of high-tech design studios with CAD systems instead of sewing machines; an influx of gift and home buyers in a poshly retooled CaliforniaMart, and perhaps most radically, resident families shopping at a local Ralph’s supermarket.
Developers are currently working to realize this transformation for an unsung district that garners $8 billion in revenues annually, according to the Downtown Property Owners Association.
In comparison, the state’s largest mall, South Coast Plaza in Costa Mesa, grosses $1 billion annually.
“Literally, if you go down every street, there’s something being built or something being converted,” said Kent Smith, executive director of the Los Angeles Fashion District. “Given the state of the economy, it’s a huge vote of confidence in the district.”
Many say the 82-block district, slammed by recessionary woes and high vacancy in the early Nineties, is overdue for gentrification.
And yes, the neighborhood is finally getting a Starbucks.
Aside from the sea nymph’s symbolic significance, two mammoth projects — the conversion of the apparel-focused CalMart into a mixed-category California Market Center and the construction of a 604-unit residential development dubbed Santee Court — are likely to have the most impact on the district’s complexion.
The newly minted California Market Center is converting its top two floors and entire C-side building, roughly one million square feet, into a gift and home venue. It’s also likely that an additional one-half million square feet, or half the B side, will become gift and home vendors, according to Cindy Morris, executive vice president of marketing for the Dallas Market Center, which manages CMC. Under that scenario, apparel and gift and home vendors will each occupy half of the three million- square-foot space.
Slated for a dramatic remodel, the gift and home floors will be updated with wider corridors, exposed ceilings and terrazzo and polished cement floors. Additional seating, topiaries and potted bamboo are intended to give a serene feeling, said Morris. Remodeled floors will better match the fifth floor, which currently looks a decade younger than the rest of the building. The gift and home market will bow in July.
All of these improvements, while lauded, have left showroom owners throughout the district wondering about rent hikes. No property owner interviewed claimed they would raise rents.
Currently, space at the New Mart goes for roughly $1.75 per square foot, according to tenants there. Rates at the CMC follow the building’s microeconomics, ranging from a high of $2.50 per square foot for the popular contemporary fifth floor to as low as $1.50 per square foot for the “quieter” fourth and seventh floors.
Real estate developer Mark Weinstein, who owns the Gerry Building across the street, speculated that as the gift and home categories assume more space at the CMC, his property could see an overflow of apparel tenants.
He’s banking on it. Weinstein spent $4 million converting the Gerry Building into a showroom facility and giving it a facelift. CMC apparel tenants have already received glossy brochures detailing Weinstein’s plans for the 110,000-square-foot building. Filling the Gerry with apparel companies will return the mid-century building to its original function, added its owner.
CMC’s apparel tenants are taking notice. “I don’t think any buyers would have trouble walking the crosswalk to get over there,” said a 14-year tenant, who in the mid-Nineties witnessed the exodus to another building across the street, the New Mart.
Weinstein said his rental rates will be comparable to those offered at the CMC and New Mart.
The major development on his plate, however, is Santee Court, a $120 million residential project likely to bring new energy and services to a district that empties at 5 p.m.
About two blocks from the CMC are the nine clustered buildings that will be converted into loft residences. The buildings have a combined 100,000 feet of ground-floor retail that Weinstein envisions landscaped and leased as an urban version of the Santa Monica promenade. The project is slated to begin construction this summer and finish by 2004. Twenty percent of Santee Court housing will be low-income; Weinstein characterized the balance as “working-class affordable.” As part of a redevelopment grant, the district is in discussions with several supermarket chains to service the influx of residents.
But will restaurants, dry cleaners and other residential amenities drive up rents and squeeze out the industry’s mom-and-pop suppliers? Numerous textile reps, trim suppliers, cutting houses and sewing contractors have already been forced to pull up stakes because of declining local production.
“There is no question that manufacturing is declining in the district,” said the Fashion District’s Smith. “People are either shutting their shops because of the competition offshore or they’re moving to northern Orange County, where they have modern warehouses.”
Smith noted the district’s vintage buildings lack fast elevators and efficient loading docks.
As is characteristic of a gentrifying neighborhood, rents outside the anchoring fashion buildings run hot and cold.
“A difference of 50 feet could make a two- or threefold difference in rates,” said I. Hassan, who owns a leasing company in the district. But overall, the district has seen annual rent hikes between 3 and 10 percent for several years, Hassan said.
One of the hottest areas is around the San Pedro Mart, a cluster of predominately Korean-American wholesalers, where rents range from $6 to $10 per square foot. A 150,000-square-foot annex that will add 180 new units is currently under construction. Property values, based on recorded sales, have gone up between 5 and 20 percent in recent years, according to the Downtown Property Owner’s Association.
“Sept. 11 created some uncertainty, but if you drive around now, there’s not much available for lease,” Hassan noted.
Weinstein concurred. “In the last year, property values have finally come back and are exceeding where we were in the old days.”
While production is going overseas, design is not. The California scene is the ultimate youth-culture experiment, as well as a study in the affluent-casual national ethos. And companies want to be in the thick of it. Accordingly, design studios equipped with CAD systems and sharp-eyed merchandising teams are becoming commonplace in the district.
A pair of big players from Northern California — Novato-based Blanc Noir and San Francisco-based Bebe Stores Inc. — have set up design studios in the Cooper Building, a Depression-era building located caddy-corner to CMC. Bebe opened a small space a year ago, yet now occupies the majority of a 20,000-square-foot sixth floor, according to building owner Steven Hirsh.
Hip contemporary designers, including Anna Huling and Tom Nguyen, also keep offices in the building.
Not to be outdone, the New Mart will have its first design studio by June. Building owner Joyce Eisenberg has donated a 5,000-square-foot space on the second floor to the nonprofit Fashion Business Incubator for a design studio, co-op showroom and classroom.
FBI founder Frances Harder believes her work giving fledgling designers crucial business skills contributes to the district’s long-term sustainability. “When they are untrained, for instance, they cut a garment wrong,” she said. “There’s a ripple effect, and it’s usually the contractor who gets screwed.”
The Fashion Institute of Design and Merchandising, whose campus borders the district, has taken over the penthouse of 719 Los Angeles Street. Its latest project is a textile lab that allows students, who will be sourcing fabric globally when they graduate, to run yardage through a battery of sophisticated performance tests.
That the district is hopping — and that it remains politically overlooked — is no surprise to many who’ve championed it for years.