Little Tokyo’s New Blossoms : Development: Four big projects will transform the area. They may also affect the sense of community there.

When customers who bought Japanese pastries from the Kito family store in the 1940s return to Little Tokyo in downtown Los Angeles, they frequently are astonished to find Brian Kito baking the same confections that his father created 40 years earlier from the same tiny shop on First Street.

“People who haven’t been down here for a while . . . are surprised we’re still here,” said Kito, 33, continuing a business his grandfather started in 1903. “Frequently we get the question, ‘When are they going to tear this down?’ ”

Kito’s confectionery, Fugetsu-Do, is one of a handful of mom-and-pop businesses--most in a historic district along First Street--that have endured a 20-year transformation of Little Tokyo that has brought towering hotels and exclusive boutiques to the area once dominated by family sushi shops and cafes.

That transformation--orchestrated by the city’s Community Redevelopment Agency and fueled in recent years by the relatively strong Japanese yen and an infusion of Japanese capital--is accelerating.

Four major proposed developments will hasten the transition of Little Tokyo from a tight-knit community with a small-town flavor to the land of the rising high-rise, with expanding tourism and a growing residential element hosting million-dollar penthouses.

Within the next three years, proposed projects will more than double the number of housing units--mostly in the form of exclusive condominiums--and triple the hotel rooms, bringing more sleek towers that will provide a sharp contrast to historic storefronts like Kito’s.

Longtime Little Tokyo residents and business owners expect an acceleration of an already brisk tourist trade and a revitalization of the kind of 24-hour activity that invigorated the area before World War II and is largely absent today from the rest of downtown. Real estate observers see a promising future for an area whose growth in property values has already at least matched that of the core of downtown Los Angeles.

“Little Tokyo certainly is the bright spot on the development skyline downtown,” said Jack Barthell, managing partner with the Los Angeles accounting firm of Kenneth Leventhal & Co. He added that Little Tokyo has yet to suffer from problems of overbuilding that are plaguing the rest of downtown Los Angeles.

But the flurry of proposed developments has stirred concerns about balance between the new and the old, the rich and the poor, subsidized and market-rate housing. It has spurred worries about crime and congestion. And it has rekindled painful memories of earlier redevelopment efforts, when growth displaced longtime shopkeepers and low-income residents.

“You plan for flowers all summer by planting seeds in February, March and April,” said Frank Kuwahara, a Little Tokyo leader and former flower industry executive, describing 20 years of redevelopment. “But all of the sudden you have three months of blooms all at once.”

The proposed projects--three in Little Tokyo and one bordering the neighborhood to the north--have blossomed from a revitalization effort that the city launched in 1970.

The neighborhood had seen its heyday in the 1930s when it was the center of Japanese American life in Southern California. But the internment of Japanese Americans in relocation camps during World War II dispersed its residents, and many did not return after the war. By the 1970s, Little Tokyo badly needed repair.

The idea behind redevelopment was to target urban decay in Little Tokyo--seven square blocks immediately southeast of City Hall. Such decay still plagues neighborhoods to the south and southwest, where buildings are vacant, the homeless sift through garbage cans and the stench of urine taints the air.

Considered by the CRA as a “crown jewel” among its 19 redevelopment projects citywide, Little Tokyo has re-emerged as a strengthened center of cultural, religious, social and business activities for Japanese Americans in Southern California.

Since its inception, redevelopment has yielded 26 projects, either new or renovated, that include 239,500 square feet of retail space, 311,800 square feet of offices, 622 hotel rooms and 614 units of housing, mostly for low- or moderate-income residents. The number of restaurants in Little Tokyo, for instance, has doubled during the past 10 years, one businessman estimates.

Culturally, Little Tokyo has flourished under redevelopment. It hosts the Japanese American Cultural and Community Center, said to be the largest such ethnic center in the nation. The focal point of Japanese and Japanese American culture in Southern California, the center includes an 850-seat theater, a library and a garden with a stream and fish pond.

The Japanese American National Museum is scheduled to open next year in the rehabilitated Nishi Hongwanji Buddhist Temple on First Street. The museum will document Japanese American life in the United States.

In addition, a CRA rule requiring Little Tokyo developers to contribute 1% of development costs to the arts has resulted in art being sprinkled through the area, including three stainless steel and bronze sculptures in Little Tokyo Mall and the “Friendship Knot,” a 21-foot-high fiberglass sculpture in Weller Court.

Weller Court, the Rodeo Drive of Little Tokyo, is a magnet for Asian visitors, who have transformed Little Tokyo into a tourist haven. Tour buses, lined up in no-parking zones outside Weller Court, disgorge visitors eager to satisfy their seemingly insatiable appetite for status symbols.

They snap up Gucci handbags and Chanel No. 5 perfume at prices far above what Americans pay. Mickey Mouse is popular too.

“Americans wouldn’t shop here,” Kito said. “You could go down to Rodeo Drive and get it cheaper.”

Backed by Japanese companies, pending hotel construction--with its accompanying retail space--is a primary reason why tourism should grow. “With the hotels coming in, tourism should accelerate, as long as the yen remains strong,” said Gloria Uchida, CRA’s Little Tokyo manager.

The most recently unveiled development is City Lights Plaza, a $250-million hotel, condominium, office and retail complex that will include a 550-room hotel towering 24 stories. The largest planned development in Little Tokyo, the 1.6-million-square-foot complex will include 134 condominiums in a 31-story building.

All Nippon Airways, Japan’s largest airline, will manage the hotel as a flagship of its expanding U.S. lodging operations.

Also announced is the Sunshine Pacific Center, a 32-story complex to include 300 condominiums and 185,000 square feet of retail and commercial space. Planned for the eastern fringe of Little Tokyo, the complex will include a trade conference and exposition center to display technology developed by Japan and other Pacific Rim countries.

A third development, Miyako Hotel and condominiums, will house hotel rooms and 114 condominiums at Third and San Pedro streets.

First Street North, a fourth development, will straddle the Central Business District and northern Little Tokyo. It will include almost 1 million square feet of office space in two towers, 258 apartments, 400 hotel rooms and about 120,000 square feet of retail space.

Although all the hotels will probably attract Asian tourists, the All Nippon Airways hotel in City Lights Plaza will offer the greatest potential to boost the Little Tokyo tourist trade because the airline will steer passengers to the area, observers said.

“They have a much better chance of succeeding than other independent hotel operators,” said Yukuo Takenaka, a Los Angeles investment banker. “If anybody is going to succeed with a hotel there, it’s got to be a company like ANA or Japan Air Lines.”

While new hotels stand to boost Little Tokyo’s seasonal tourist trade, plans for condominiums and apartments signal a housing renaissance that will revive the year-round residential community that flourished before World War II, when shopkeepers and employees lived and worked in Little Tokyo.

“It creates a core of people who live in the area which stabilizes the community,” said Steve Okayama, owner of Fuji Cosmetics on Second Street. “The more condominiums and apartments you have, the better it is.”

Many former residents returning from internment camps after the war abandoned Little Tokyo for the suburbs. Under the CRA’s coordination, new housing was added in 1975 in the form of Little Tokyo Towers, a government-subsidized complex with 300 apartments for elderly residents. Now, about 800 residents live in Little Tokyo apartments. Most are subsidized.

But about 800 proposed condominiums and apartments--all at market rates--will more than double the number of Little Tokyo housing units, to about 1,400. That represents a dramatic shift toward market-rate housing--most at a price forbidding to the clerks, waiters and others who lived in Little Tokyo before the war.

Instead, Japanese investors and executives are the most likely buyers and tenants, observers said. Condominiums in City Lights Plaza will start at less than $300,000 and average $450,000, a developer involved with the project said. Asking prices in Sunshine Pacific Center will average more than $400,000, and penthouses will list at more than $1 million.

Most area merchants, enthusiastic about the money such housing will bring, welcome the development.

“I would see nothing but good things for Little Tokyo,” said Steve Okayama, owner of Fuji Cosmetics on Second Street.

Little Tokyo’s pending growth spurt will bring markedly denser development to the area. The 26 projects that CRA has coordinated to date house 1 1/2 square feet of space per square foot of land. But the new projects will average a 6-to-1 floor-area ratio. That’s in line with the average ratio for all of downtown Los Angeles, Kenneth Leventhal’s Barthell said.

The density stems in part from a dwindling availability of land that forces developers to build skyward. Only about three of Little Tokyo’s 67 acres are undeveloped, Uchida said. The dwindling supply is keeping land prices firm at $200 to $250 per square foot, she said.

“That’s another factor that makes Little Tokyo an exciting place in downtown Los Angeles,” Barthell said. “Real estate values have been solid there and increasing, whereas most of the rest of Los Angeles has been flat, with the perception of an oversupply coming on line.”

Adds Takenaka: “There is a special interest in that area which is Japanese-oriented. People who have a particular attachment to that area are willing to pay more than people who don’t have any sentimental attachments.”

One group apparently unwilling to pay more for Little Tokyo land are Japanese businesses opening U.S. offices. Although Japanese businessmen frequent Little Tokyo during lunch and after-hours, they are reluctant to do business there.

They gravitate toward the more prestigious addresses on Wilshire Boulevard or Rodeo Drive, one businessman explained. And with the yen relatively strong by historical standards and the Japanese accustomed to orbiting real estate prices in Tokyo, such prestigious addresses are well within reach.

What’s more, when pitching products and services to U.S. markets, they prefer to work in mainstream America, shying away from what they perceive as the isolation of Little Tokyo, observers said.

Accordingly, many of the larger corporations in Little Tokyo are Japanese-owned businesses serving tourists or Japanese-owned U.S. banks.

Like most changes, Little Tokyo’s redevelopment has drawn criticism, mostly from community activists and small-business owners displaced by redevelopment. To encourage development, CRA relocated businesses to make room for proposed projects.

“The biggest sacrifice that had to be made was made by the small businessman,” Kito said.

Kito is still bitter over a battle he lost in 1981. His family ran a second business, a bakery, in a building near San Pedro and Second streets that developers wanted to raze. The bakery was forced out to make room for an office tower that now houses Mitsui Manufacturers Bank.

“In our area I always thought we owed a little more to the small-shop owners because they always stuck with it through the good and bad times,” Kito said.

But he, like other business owners, have adapted, often in the face of competitors with deep financial backing from Japan and sharper corporate know-how. Those flexible enough to adjust have leased much of the 311,000 square feet of retail space that redevelopment has yielded. For Kito, adapting has meant shifting his business more to wholesale from retail and opening a small shop in one of the malls whose very presence forced him to adjust.

Kito, like other small-business owners and longtime residents, is concerned with the problems that the dramatically denser buildings can bring: parking, traffic, crime.

“Obviously, when you build a project 20 stories high versus five stories, you amplify the parking problem,” Kito said. He added: “If you can’t get a parking space, what the hell is the use coming down here?”

He also notes that pending developments fail to provide affordable housing and encroach on the historic buildings that symbolize Japanese American heritage. “When visitors come down to Little Tokyo, it’s not the new shops that give them insight into Japanese culture. It’s the older ones.”

One area protected from encroaching development is the historic district on the north side of First Street, where Kito operates his confectionery in one of 13 buildings. Placed on the National Register of Historic Places in August, 1986, the buildings have undergone earthquake renovation and rehabilitation with government help.

The CRA acknowledges a demand for affordable housing, predicting that the exclusive condominiums will bring money to Little Tokyo that will help fund housing for those with lesser incomes. That, they say, bodes well for the area.

“I look to see Little Tokyo blooming like the poppies in the spring,” community leader Kuwahara said.

LITTLE TOKYO REDEVELOPMENT AREA 1. Historic district

Includes 13 buildings on the north side of First Street. Placed on the National Register of Historic Places in 1986. 2. Japanese American National Museum

Scheduled to open next year in the rehabilitated Nishi Hongwanji Buddhist Temple (815 E. 1st St.) Proposed Major Projects: 3. Miyako Hotel and Condominiums

114 condominiums and 420 hotel rooms in two 23-story high-rises. 4. Sunshine Pacific Center

300 condominiums in a 32-story tower. Includes 185,000 square feet of retail space. 5. City Lights Plaza

550 hotel rooms in a 24-story high-rise. 134 condominiums in 31-story tower. Includes 124,000 square feet of retail space. 6. First Street North (partially in Little Tokyo)

886,000 square feet of office space, 258 apartments, 118,000 square feet of retail space and 400 hotel rooms. Includes 26-story tower. Source: Community Redevelopment Agency