Is There Still Gold Downtown?
Wells Fargo’s pending acquisition of First Interstate Bancorp raises the anxiety level about the future of downtown Los Angeles. A changing business environment demands that local leaders take a fresh look at both the problems and opportunities within the downtown area if it is to prosper in the years ahead.
Downtown office vacancies remain relatively high, 22% in post-World War II buildings with modern air conditioning, heating and electrical systems. The real estate community is anxiously waiting to see how much First Interstate space comes on the market. It could be close to 1 million square feet, which would push the downtown office vacancy rate up to 25%. (The landmark First Interstate World Center, or Library Tower, won’t be emptied, since the bank occupies only 10 floors of the 73-floor structure.)
The downtown retail sector is also experiencing some shrinkage, with a big question mark hanging over the Bullock’s and Robinsons-May department stores at Seventh Market Place. The owner of Bullock’s, Federated Department Stores, has announced it will close that store, transferring store employees to the larger Broadway Plaza store on Seventh Street. A clause in the Robinsons-May lease allows the store to close if Bullock’s pulls out. In the worst case scenario, this key downtown mall could be left with two vacant anchor locations.
Can we find a silver lining for downtown Los Angeles? One big problem is that we don’t really understand the scope of the downtown economic base and tend to see this area in bits and pieces. We need to look at downtown as a cohesive whole. Too often, the effort of one part of downtown to solve its problems has only pushed them into an adjacent area.
Downtown Los Angeles has a great deal of potential, but it will take a lot of hard work and innovative planning to meet the challenges posed by the new economic realities for central business districts. I am convinced that we can do it, since we are starting with a major array of assets.
Among the things we need to do is to build more low-rise residential units as a balance to the past high-rise projects. We also need to locate a major hotel next to the expanded Convention Center so we can take advantage of its full capacity. The South Park area around the center needs to be spruced up. And while we have made enormous strides in cleaning up the central city through the “Downtown Safe and Clean” program, there is much more to be done.
Several major cities have used professional sports facilities as a way to bring new life to downtown districts, Cleveland and San Jose being good examples. We can take similar steps for downtown Los Angeles. A football stadium adjacent to Dodger Stadium is under discussion. And there are multiple proposals for a sports arena in the central area.
Other creative ideas include linking downtown and the area around USC and the county museums by developing a Figueroa corridor, making that street a grand boulevard. With all the movies and commercials shot downtown, it might be feasible to develop a small studio facility. Real estate brokers report that production companies are renting space in old warehouses to use as sound stages. And some people are exploring the idea of a trolley museum and “heritage” trolley line in South Park--they have even acquired some of the streetcars that for years crisscrossed our downtown streets. This would be a nice complement to the restored Angel’s Flight funicular railway on Bunker Hill, due to reopen this month.
People in the suburbs may say that downtown Los Angeles really doesn’t matter any more. But they’re wrong. I have a long list of important downtown business activities that create high quality jobs and vital tax revenue for local government. And the reality is that we can get much more out of this base.
It’s clearly time to think about downtown Los Angeles in a completely new way. The Central City Assn. needs the support of other business and civil groups, as well as the steady attention of elected officials. There is significant latent economic potential in the downtown area that needs to be developed.
