Downtown Housing Demand Feeds a Bloom in High-Rises

Downtown Los Angeles -- which hasn’t seen a skyscraper built since Tom Bradley was mayor and the Raiders were playing at the Coliseum -- is in the midst of a growth spurt that promises to significantly alter its skyline in the coming years.

The building boom marks the fourth time since World War II that a spate of construction has altered the downtown landscape. But although previous booms focused on commercial space, this one is different: The vast majority of the new high-rise space is for housing.

The phenomenon mirrors patterns in Chicago, Las Vegas, San Diego and Miami, where residential towers are going up at a rapid clip. Architect Santiago Calatrava recently announced plans to construct the nation’s tallest building, a 2,000-foot residential and hotel tower called the Fordham Spire, in Chicago.

From 1986 to 1992, almost two-thirds of towers 20 stories or more built in the U.S. were for office use, according to McGraw-Hill Construction, which tracks projects nationwide. But recently, said McGraw-Hill economist Jennifer Coskren, “this has really flipped.”

Between 2003 and June 2005, about 84% of new towers were for residential, multifamily use -- an indication, said Coskren, of “this investor and consumer appetite for multifamily condo development. Luxury high-rises are what’s being demanded.”

The return to tall towers will be a marked change for downtown Los Angeles, whose last new skyscraper was the 750-foot, 52-story Two California Plaza, completed in 1992.

At the south end of downtown, two residential towers already under construction near Staples Center will be joined by a 55-story hotel and condominium complex scheduled to break ground later this year.

To the north, near Walt Disney Concert Hall, at least five skyscrapers are slated for construction as part of the Grand Avenue project, including a 40- to 50-story building to be designed by architect Frank Gehry and scheduled for completion in 2009.

The changing skyline should begin to take shape in the next three years, when the first five buildings that have already won city approval are completed. They include a 33-story loft building at 9th and Flower streets.

In all, 32 towers are on the horizon for downtown, though some still need city approval as well as financing.

Twenty are considered skyscrapers because they climb more than 240 feet, or about 20 stories. One of the most talked about is a proposed 50-story Asian-inspired tower at 3rd and Hill streets.

Together, said author and historian D.J. Waldie, they represent “an enormous transformation of the city we know to something unknown.”

Most of the new residential spaces that have opened so far have been quickly swept up by buyers and renters.

But there are lingering concerns that the downtown residential market could suffer the same fate as office space did in the early 1990s, when far more new buildings went up than were needed. Rents plummeted, buildings sat vacant -- and it took a decade for downtown to recover.

Some also question whether downtown’s sometimes narrow streets and limited infrastructure -- everything from its lack of parks to its aging sewer system -- can accommodate all the new towers and residents who will follow.

Waldie says he thinks city planners are “failing to connect the dots.”

“They’re allowing a neighborhood texture to arrive where one had been lost for 50 years,” said the author of “Where We Are Now: Notes From Los Angeles.” “They’re putting in even taller high-rises ... but down on the ground, where are the resources to make that into a place to live?”

The new construction could also push out the underclass that has long called downtown home.

Orlando Ward of the Midnight Mission said he was optimistic that the influx of residents would ultimately help the area, but he thinks it could be a rough transition.

He’s particularly worried that new residents expecting an urban wonderland will instead find social problems like homelessness and crime.

“There are certain streets you can’t go down or won’t go down,” Ward said. “That’s bound to cause resentment or potential backlash.... We’re most concerned that there isn’t a knee-jerk reaction by policymakers to Band-Aid or push the problem out of sight of our affluent neighbors.”

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Downtown Los Angeles has seen several distinct flurries of tower development since City Hall, at 28 stories, became the city’s first high-rise in 1927. It wasn’t until the late 1960s and early 1970s, however, that the city began to have true skyscrapers, such as the 68-story building now called the Aon Center, completed in 1974.

During the last major construction boom downtown, from 1988 to 1992, investors poured billions of dollars into the area. Eight million square feet of office space was added --enough to fill Century City.

The city’s tallest building, the 1,018-foot structure now called the US Bank Tower, was finished in 1990. But demand for office space dwindled, and companies that had long had a foothold in downtown, including Security Pacific and Bank of America, fell victim to corporate restructuring. Commercial real estate prices dropped nationwide. And even as new buildings went up, downtown property values plunged. Buildings sat vacant. Landlords lost money on their rents.

When the commercial real estate market began to recover in the mid-1990s, tall buildings sprang up in other parts of the city, especially Century City and other Westside areas. But downtown building activity remained dormant -- until now. The recent rebound is due in large part to a renewed interest in downtown living that comes amid a hot housing market.

While vacancies for office space downtown remain at 15.9%, higher than the national average, there are waiting lists for many downtown lofts and condos.

The area’s population has risen from an estimated 18,652 residents in 1998 to about 24,600 today, according to estimates from the Los Angeles Downtown Business Improvement District. And based on developments in the pipeline or under construction, that number could double in the next decade.

Engineering and seismic considerations often make building skyscrapers a financial gamble, said Bill Witte, president of Related Cos. of California, which is developing 25 acres downtown -- including a number of skyscrapers -- on behalf of the city and county as part of the Grand Avenue project, as well as two 15-story structures in Little Tokyo.

Buildings more than 240 feet high require different seismic reinforcements, Witte said, and cost dramatically more.

“Even we had to think long and hard about whether to do something at that height,” he said. “You have to believe that you can sell or rent for enough to justify that cost.”

But as housing prices continue to climb, and buyers swoop up high-rise living spaces like those being created in former downtown office towers, building bigger and taller structures has become less of a financial risk for developers and the financial institutions that back them.

“The most vigorous market for new buildings is residential,” said Carol Willis, founder and director of the Skyscraper Museum in New York City. “And that’s just because the prices are phenomenally high. It’s more profitable, and it reverses the historical trend” that most tall structures should be office buildings, she said.

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While 32 buildings between 11 and 55 stories have been proposed downtown, experts question the viability of some of the grander designs.

Still, city officials and developers expect at least half to be completed by the end of the decade, barring a major shift in the economy.

Even in 2010, the 73-story US Bank Tower, formerly known as the Library Tower, would remain the skyline’s pinnacle. But gone would be the gap that now exists between the Transamerica building to the south and the stretch of tall towers beginning north of 9th Street.

That area, called South Park and near Staples Center, is the hub of most of the initial construction, where cranes and crews are already turning former parking lots into high-rises.

This district has far more open space than other parts of downtown, so residents and city planners expect it to be more dramatically transformed. It is also where many amenities for downtown residents will open in coming years, including a Ralphs supermarket -- set to open late next year -- and movie theaters.

To the north, downtown will see the completion of Bunker Hill’s decades-long transformation from a slightly seedy residential quarter into a zone full of high-rises.

Because almost all of the new construction will be residential rather than commercial, the look of the towers will be different from the rest of the skyline.

Expect thinner, more angular structures.

Office buildings, said urban planner Doug Suisman, who consulted on the Grand Avenue project, often look like boxy slabs, in part because of the nature of what happens inside. While residential towers require significantly more plumbing, for example, and higher ceilings than office space, they also need less ventilation and fewer elevators.

In places like Vancouver, Canada, where high-rise residential towers have proliferated in recent years, buildings are “less bulky and more pleasing.... They tend to read more as true towers rather than walls,” said Suisman, whose firm, Suisman Urban Design, is based in Santa Monica.

In addition, he said, the buildings are staggered in their placement along the street so not all of them hug the sidewalks. This allows views -- or slivers of views -- from other points in the downtown to be preserved.

“That valuable commodity, the view, is distributed and fairly shared.... You see this pretty clearly when you are there,” he said.

It’s unclear whether some precious views, often a selling point for pricey condos, will be preserved as downtown’s new towers spring to life. With the wall of downtown buildings being extended north and south, it seems certain, however, that the new projects will further obscure City Hall and shorter landmarks like Disney Hall.

Councilman Tom LaBonge, long a fan of City Hall’s iconic placement in the landscape, said he felt that the building “will always stand tall.”

But, he admitted, “it has already been dwarfed.”

“I don’t mind,” he said, “as long as the postcards show the city from the east to the west, and show off that great big beacon.”