Tech’s Softer Side May Bolster Downtown L.A.

The clustering of high-tech industries in urban areas may spur a revival of downtown Los Angeles and aging business districts in several other U.S. cities, according to a new Milken Institute report.

The report also cites downtown sections of Oakland, Baltimore and Dallas, along with Dayton, Ohio, and the Hudson Valley community of Kingston, N.Y., as potential “comeback cities.”

It joins the growing body of research showing that the Internet and other computer-related technologies--which once were expected to undermine aging cities by prompting workers to telecommute from far-flung locations--are instead rejuvenating urban areas.

The Milken report pointed to the Internet-related boom that has played out in recent yearsin such areas as West Los Angeles, lower Manhattan and San Francisco’s South of Market district.

“Until the early 1990s, cities were on the periphery of the technology boom, with the vast majority of technology-driven activity occurring in suburban and even quasi-rural areas,” said the report by the Santa Monica-based research organization.

“Later in the decade, however, access to the Internet on a mass scale sparked greater demand for entertainment and other creative Web content,” the report said. “It is here, on the ‘soft’ side of the technological revolution, that the traditional strengths of cities in the arts, marketing and graphics have come strongly into play.”

The report suggests that the next round of beneficiaries from the trend could be areas such as downtown Los Angeles, which offers lower rents and an ambience that could attract firms in creative technology and media-related fields.

Although downtown Los Angeles no longer is a magnet for major corporations, the report said there is a growing recognition that the area’s “new mission is not to be powerful, but to be fun, different and interesting.”

“Among its great assets are impressive beaux-arts office buildings, a collection of warehouse and industrial buildings suitable for conversion into artists lofts and digital business locations.”

Ross DeVol, a coauthor of the report and director of regional and demographic studies at the Milken Institute, dismissed the notion that the recent struggles of many dot-com companies would halt the urban development trend.

DeVol said although certain dot-coms are hurting, the shift of business toward greater reliance on digital technology is a long-term trend.

He said businesses that move into areas such as downtown Los Angeles might well be media or Internet-related units of large companies, rather than small dot-com concerns.

Recent real estate reports have shown that rents remain far lower in downtown Los Angeles than in tech- and media-jammed West Los Angeles.

For instance, a recent report by the real estate firm Grubb & Ellis found that top office space late last year was leased for an average of $3.77 a square foot monthly in tech-rich Santa Monica, versus $2.28 downtown.