Downtown Projects Point to Heightened Retail Demand
Downtown Los Angeles, long shunned by most major retailers, could support many more shops and restaurants, according to a recent report funded by the city’s Community Redevelopment Agency.
In light of the region’s improving economy, downtown could accommodate another 400,000 square feet of retail businesses during the next few years. And such developments as Staples Center and Los Angeles Center Studios are expected to draw even more visitors to the city’s central business district, says the report by Chicago-based planning firm Urban Marketing Collaborative.
Several new apartment projects set to break ground this year should generate demand for such basic goods and services as restaurants and a supermarket.
But downtown is still a hard sell for most traditional retailers, experts say, because its surrounding population is predominantly lower-income and because few of its 150,000 office workers think of downtown as an appealing place to shop.
“The fact is, we just don’t have enough compelling retail to get most people out of their offices,” says Mark Tarczynsky, a retail broker with CB Richard Ellis Group. And, he says, most retailers won’t come downtown unless they see people walking the streets at all hours.
“It’s kind of a chicken/egg thing,” agrees Amy G. Raine of Cushman Realty Corp. “Some people need to take the risk and commit.” And, she says, landlords need to be willing to give the first new retailers coming into the area a break on rents, until they can build up demand.
Several new shops and restaurant chains are making their moves now. Rite-Aid recently signed a lease for a new 17,500-square-foot drugstore in a vacant ground-floor stretch of 7th Street as part of its renewed push into urban locations. Office Max is negotiating to locate a store nearby.
“We think it’s a vibrant and up-and-coming area” says Allison Costello, a spokeswoman for Rite-Aid. “There are a lot of pedestrians, it’s close to a busy subway station and there are a lot of daytime office workers.” The company has another store a few blocks away on Broadway.
Restaurants Ciudad and California Pizza Kitchen have opened or are opening new restaurants along Figueroa Street. Operators of Robeks Juice are looking at several locations. A new high-end steakhouse that will be operated by Cafe Pinot owner Joachim Splichal will take over Stepps on the Court near Grand Avenue later this year. Several others are scouting the area as well, brokers say.
“Food right now is the one thing that’s growing,” Tarczynsky says. Successful restaurants often lure other shops to a neglected urban area, he says.
CRA officials also contend that most retailers underestimate the purchasing power of the mostly Latino population surrounding downtown. More than 56,000 of the households within a three-mile radius have average annual incomes of more than $50,000, according to the study. The area’s population is estimated at 500,000 and growing.
But to lure shoppers over the long term, experts say, downtown streets will need to be more pleasant and easier for people to navigate. Transportation, signs and sidewalks need to be upgraded between the new Staples arena and its predicted entertainment district--the shops along 7th Street, the Fashion and Jewelry districts, and Broadway. And more people need to live in the city’s central core.
“In terms of long-term stability, we need to get the office space reoccupied after the recession, and get more residential housing downtown,” says Don Spivack, CRA deputy administrator.
Spivack says downtown can differentiate itself from other shopping areas around the city by marketing itself as a “value destination,” and by marking pedestrian routes with points of interest such as famous film-shooting locations.
“I think there is a real potential to see measurable differences in two to three years,” Spivack says.
