2 Deals Could Bring Ralphs to Downtown

Two prime properties in downtown Los Angeles are poised to change hands in separate deals that could result in hundreds of new housing units and the opening of a full-service supermarket in the central city.

Japanese real estate firm Shuwa Corp. is reviewing offers from four developers interested in buying the city block it owns at the southeast corner of Flower and 9th streets. The bidders have indicated an interest in building housing and a supermarket, in addition to other commercial uses.

Bids for the 7.15-acre site, which includes property on adjacent blocks, exceed the $40-million asking price, according to industry observers. Shuwa, which paid more than $100 million for the property in the late 1980s, is expected to make a selection as early as this week. Bidders include Santa Monica-based CIM Group, Legacy Partners in Irvine, Urban Investment Trust in Chicago and Dallas-based Trammell Crow Co.

The city’s Community Redevelopment Agency, which has tried for about two decades to bring a full-service supermarket to downtown, could chip in as much as $7 million toward the purchase price if the buyer includes a market and housing, said Don Spivack, the agency’s deputy administrator.

Development of the site could help link the central business district with South Park, a residential area that includes the Los Angeles Convention Center and Staples Center.

“That’s a big piece of property under single ownership,” Spivack said.

He said a representative of Ralphs Grocery Co. indicated that the block owned by Shuwa is the company’s first choice for what would be downtown’s first full-service supermarket in decades.

But Greg Lukowski, real estate manager for Ralphs, said the property is one of three locations “we’ve identified that would be of sufficient size to put a full-size supermarket downtown.”

Lukowski declined to say what locations are being considered.

A few blocks north of the Shuwa property, the owners of the historic Subway Terminal Building near Pershing Square have tentatively agreed to sell the building to Los Angeles-based Commonwealth Partners, according to several real estate executives. One person familiar with the deal said the sales price exceeds $12 million.

Executives at Commonwealth and the building’s owner, System Property Development Co., could not be reached for comment.

System Property has been working to convert the mostly empty structure into about 200 units of housing and 150,000 square feet of retail and commercial space. The building reportedly is also on Ralphs’ short list of potential supermarket sites.

The subterranean portion of the building, near 4th and Hill streets, once served as the terminal for a Red Car trolley line.

Part of System Property’s plans have been opposed by the Los Angeles Conservancy because they would include the addition of large steel braces on the exterior for earthquake safety reinforcement. Those braces would jeopardize its historic status and prevent any owner from getting a federal tax credit for historic preservation, said Ken Bernstein, the conservancy’s director of preservation issues. “This is an important project to move forward,” he said. “It’s a key location that connects the residential activity taking place in the historic core to the rest of downtown.”