DOWNTOWN’S WEST BANK : Developers’ Bet on ‘Wrong Side’ of Harbor Freeway Is Paying Off

The skeleton of steel rising beside the Harbor Freeway in downtown Los Angeles represents something of a gamble for developer Shurl Curci.

For one thing, the Transpacific Center is a “spec” venture--developer jargon for a speculative structure without a major tenant lined up before construction. And the 33-story building is going up just west of the Harbor Freeway.

For decades, a few large corporate residents such as Unocal and Thomas Cadillac were lonely outposts on the west side of the freeway, an area once considered the wrong side of the tracks for development even though skyscrapers were popping up only a few blocks east.

Curci’s $170-million gamble seems to be paying off. Transpacific Center, which will be finished late next year, is 46% leased, most of it to an Atlantic Richfield subsidiary. It’s a “natural extension,” he says, of what has been happening across the freeway.

Indeed, that broad stretch of meandering streets, deteriorating housing and sporadic office development west of the freeway finally is emerging as part of downtown Los Angeles--but not without great problems and some skepticism.

In the last few years, as the financial district has boomed, half a dozen new high-rise office buildings have leaped the freeway to an area that goes by many names such as the bureaucratic “Central City West,” the historic “Crown Hill,” the more tony “West Bank” and even, in the words of one large landholder, “Across the Great Divide.” There is new talk of hotels, housing, retail space and millions of square feet of offices ahead for the area.

“All of a sudden, the freeway that used to be a barrier is now seen as a river,” said R. Kevin Ketchum, real estate director for Thomas Investments, which owns the seven acres at the Thomas Cadillac site. “It’s a hot area.”

But there are also worries about where displaced low-income residents will live, whether West Bank growth will steal development from the east side, and how the crisscross of narrow streets will handle greatly increased traffic.

To answer those questions, the area’s major landowners and the city recently began working on a comprehensive land use and transportation plan for the nearly 400-acre zone. It would, among other things, require builders to pay a fee for every commuter their projects bring to the West Bank.

If the plan is successful, participants say, the West Bank area could become a model of a development that could satisfy some of the concerns of the slow-growth movement as well as the needs of the city.

“I think we have the ability to create a good urban environment that is a livable environment that will establish us as the next growth area of downtown Los Angeles,” said Ken Chang, spokesman for Crown Hill Development, a California corporation controlled by Asian interests that plans a large mixed-used project on its nine-acre parcel. “What we want to do is a serious planning process that is going to create long-term value.”

The West Bank today is far different from the stylish suburbs that once graced the area. The homes on Crown Hill and in Westlake, the far west reaches of the city in the 1880s, rivaled the Victorian mansions on fashionable Bunker Hill. The area was also the site of the city’s first oil strike when Edward L. Doheny and Charles A. Canfield hit it big near the intersection of Glendale Boulevard and West 2nd Street in 1892.

But, like downtown itself, the area deteriorated as residents and businesses moved ever outward. The renaissance of the Los Angeles central business district that followed in the 1970s and 1980s did not extend west of the freeway.

There, dilapidated housing brushes up against dated office buildings. Needed street improvements and other city maintenance have been postponed for years, landowners say.

“No doubt about it, the city has enjoyed a fantastic rejuvenation,” said Nat F. Chavira, assistant counsel at Unocal, which built its headquarters west of the Harbor in the early 1960s. “But there are plenty of areas where if good solid development doesn’t occur, deterioration will set in. It already has.”

Major Landowners

Since 1980, feverish downtown construction has caused a spurt of land speculation in West Bank as investors sought to buy into future growth at lower prices than they would have to pay in the central business district.

“It’s amazing how many things have been bought and sold over there in the last few years,” said real estate broker Joe Faulkner. “The real rub is whether they’re going to allow full development over there or not.”

Some of the largest landowners west of the freeway are obvious and longstanding: Unocal, Good Samaritan Hospital, Thomas Cadillac, the Department of Water and Power, Pacific Telesis and First Interstate Bank. Others are less visible but have big plans. And, as in the central business district, Asian investors are well represented among the landholders.

Some of the possible projects, which will remain vague at least until the area’s plan is finished, include:

- Crown Hill Development’s mixed-use project, which would be a combination of hotel, housing, retail and office space. The company, in which Richfield International Land & Investment Co. of Hong Kong is a substantial participant, first announced the project in 1983 but has yet to break ground.

- A 300-room, all-suite hotel that U.I.C. Group USA, the U.S. arm of a Singapore-based firm, hopes to begin building next year on St. Paul Avenue, west of the freeway.

- A 2.3-million-square-foot mixed-use project and a 4,000-car parking garage on eight acres next to the Beaudry Center building housing the Pacific Stock Exchange. The project will be built by IHR America/Hequest.

Other owners--among them, Unocal and textile manufacturer John King--intend some sort of as yet unspecified commercial development on their large holdings.

The investors say they were attracted by the proximity to the central business district, land prices that are half or two-thirds the price of land on the east, and the relative ease of getting around the area.

The problems are as easy to catalogue as the advantages, and No. 1 is transportation. West Bank lacks major north-south streets. Existing streets are narrow and aren’t laid out in a grid pattern as in the central business district. Most of the Harbor Freeway’s off-ramps are directed to the east, not the west.

Some Designs Criticized

What’s more, the northern section of West Bank is densely residential. Los Angeles City Councilwoman Gloria Molina, in whose district part of the project falls, said the creation of affordable housing is “absolutely” of critical importance to her. “We’re not going to tolerate for people to just be dismissed as they have in the past in development and redevelopment,” Molina said.

The development picture has been complicated by controversy over the design of some West Bank buildings, including the two Beaudry Center structures and the WCT building on Wilshire.

The Beaudry buildings won “lemon” awards in 1984 and 1985 from the Downtown Breakfast Club, an informal group of corporate and public officials that annually choose the best and worst of new downtown development. The unusually shaped WCT office building, which is square at the bottom but becomes a triangle part of the way up, was a runner-up for the lemon in 1986.

The look of some existing development as well as concerns about traffic congestion and other things prompted calls for a moratorium on new West Bank development. That was headed off, and business and city officials began to push for a comprehensive plan for the area.

The transportation and land use plan is being paid for primarily by the landowners, said David Grannis, executive director of Center City West Associates, a nonprofit organization composed of about 22 landowners who hold about 130 acres immediately west of the Harbor Freeway.

But the ordinances governing the area will be written by a steering committee representing both city and developer interests and then sent to the City Council. The plan will cover transportation and housing needs and will include requirements for open spaces, among other things, he said.

In the meantime, many landowners have pulled back their building projects until the plan for the area is completed, a process that is expected to take about 18 months.

So that development is able to continue until the plan is adopted, an interim ordinance is being drafted that would assess builders about $5,000 for every commuter brought into the area. The final ordinances will also assess a fee to pay for transportation improvements, Grannis said.

Real estate brokers said that at least in the near future, successful development probably will be limited to the parcels closest to the freeway. “There isn’t a lot of depth right now going out five, six, seven blocks from the Harbor,” said Don Hudson, a senior sales consultant with Coldwell Banker. “I can’t characterize it as the next hot area. It’s an area . . . that’s emerging as a viable alternative.”

Ray Lepone, senior marketing consultant at Grubb & Ellis real estate brokerage, said that some tenant resistance remains to the thought of jumping west of the Harbor Freeway despite rents that are 10% to 15% lower than in the central business district.

“Some people, if you give them the space, won’t go over there,” Lepone said. “That’s not to say it isn’t a good location and won’t get better.”

But there are difficulties, particularly in some of the areas farther from the freeway, he said.

Grubb & Ellis itself was a few blocks west of the freeway on Wilshire Boulevard until earlier this year. “We had offices there for 10 years and we hated it,” Lepone said. “It was close to downtown but not in downtown. Our cars were always getting broken into. Our offices were broken into.”

There is also some fear that building west of the freeway will sap development to the east.

“Not taking an agency position, but the general sense is it could create an unhealthy competitive situation between sites on the west side of the freeway and sites on the east side,” said Donald Spivack, chief of the Los Angeles Community Redevelopment Agency’s central business district redevelopment.

Although West Bank does not come under the authority of the powerful CRA, the agency is involved informally in the planning process. “We would like to see it scaled back,” Spivack said, with substantial residential construction and more limited commercial development.

“We’ve got some unique challenges and some opportunities,” Grannis said. “We think there’s some opportunity we can learn a little bit from downtown” and its development problems.

Eventually the West Bank investments will pay off, experts say.

“Los Angeles is finally maturing as a city where people are saying commercial development is fine as long as it’s not in my neighborhood,” said Christopher L. Stewart, president of the Central City Assn., which represents downtown business interests. “The other reality is that the city has come to the conclusion, and rightly so, that it can’t afford to put in the infrastructure in a bunch of centers.

“Downtown will be the only place for the smart money to go.”