Developers See Belmont Site as Rare Opportunity
Despite its toxic reputation, the large Belmont Learning Complex property near downtown Los Angeles would certainly catch the attention of real estate investors if Los Angeles school officials decide to sell the controversial parcel, say industry observers.
The Los Angeles Board of Education, at the urging of Supt. Roy Romer, this week decided to turn to the private sector for possible solutions to the Belmont problem--including an outright sale of the property. The school’s fate has been in limbo since January when the school board voted to halt development in response to concerns about explosive methane gas and toxic hydrogen sulfide found on the land.
“The private sector sees that site as a great opportunity,” said real estate consultant Larry Kosmont. “It is a rare large, infill site. It’s definitely a prominent opportunity.”
Located in densely populated Los Angeles, where lots available for building are a precious commodity, the Belmont parcel is in many ways a developer’s dream. Located at the corner of 1st Street and Beaudry Avenue, the property spreads out over 35 acres and features downtown views and great visibility from the Harbor and Hollywood freeways. Property nearby with similar methane problems recently sold for about $24 a square foot, or a little more than $1 million an acre, according to one real estate executive.
Potential uses include high-density apartments, a “big-box” shopping center or a low-rise office and industrial park.
“It’s a great site. You could make your own community,” said one broker familiar with the area immediately west of downtown Los Angeles.
Many private builders and developers have substantial experience in cleaning up and monitoring environmental hazards. If the buyers decided to raze the partially built structure and start over at Belmont, the barriers and vents needed to control the methane would cost anywhere from $3 to $5 for each square foot of new construction--a relatively affordable solution, builders say.
“Environmental issues are frequently encountered and addressed,” said Douglas Gardner, who heads the urban real estate group of Catellus Development Corp. “If there was a good compelling, development use, I don’t think the recent history of the site should necessarily be an impediment. A good use could energize the city.”
The site’s attractive physical characteristics have been obscured by the bitter and emotional battle about the school’s fate. Builders, attorneys, architects and developers have all been caught in a legal and political quagmire. The private sector might want to keep Belmont at arm’s length until the wrangling is settled.
“A lot of developers would have great ideas and uses for it,” said Cushman Realty investment broker Carl Muhlstein, “but nobody is going to [devote] their time with the volatile politics.”
A white knight who would brave the heat and take over the site could garner the support and gratitude of an influential group of politicians and civic leaders who have struggled to find a solution to Belmont’s woes.
“It would be considered a service to the city,” said developer Karl Sternbaum of Accord Interests. “You would look like a hero.”
Still, the school district would never come close to recouping the estimated $200 million it has sunk into the project, real estate observers say. And city officials would probably be called on to help defray the cost of acquiring land as well as improving nearby streets, utilities and freeway access.
Even then, private developers and investors would still be taking a financial risk. In fact, the school district acquired the site in 1993 from a private investment group that spent years amassing land only to watch the real estate boom go bust.
Now, with signs of yet another economic slowdown, it might be years before a private development rises on Belmont’s hillside acreage, said real estate attorney Mike Matkins.
“One day it’s going to be a wonderful piece of property,” Matkins said.
