Hollywood’s Star Yet to Shine
Despite a booming night life and a bright long-term outlook, the Hollywood district’s much- touted turnaround has slowed in the face of a sluggish economy and the complexities and politics of urban development.
The Hollywood office market, for example, is among one of the weakest in the region, with a vacancy rate hovering around 25% and some newly renovated buildings sitting empty. At the corner of Sunset Boulevard and Vine Street, giant piles of dirt and debris mark the spot of one of the area’s many long-delayed retail developments.
Even the giant Hollywood & Highland shopping center, which was to have heralded Hollywood’s comeback, has struggled as foreign tourists remain scarce and locals have been put off by parking rates that run as high as $10 a visit.
Many boosters concede that pinning Hollywood’s comeback on the opening of a single mega project such as the 6-month-old Hollywood & Highland development was naive. It will take several more years before private and public redevelopment efforts begin to pay off with a broader and long-lasting Hollywood recovery, real estate and urban development specialists say.
“Hollywood had suffered for so long that people wanted one project, with the snap of a finger, to turn Hollywood back to the height of its heyday,” said developer Larry Bond, who is building a housing and retail project in the area. “That’s simply not reality.”
Hollywood has gone through this before. In the early 1990s, several massive redevelopment projects were expected to turn the area around but didn’t materialize after the region sank into a deep recession.
Urban renewal “just takes a long time, a lot of money, and then these economic factors come up and blindside you,” said broker John Tronson of Ramsey-Schilling Commercial Real Estate.
Determined business and civic leaders as well as residents have made great strides in cleaning up blight and crime and attracting trendy nightclubs, bars, restaurants and edgy retailers. In recent years, developers seeking to turn the often tawdry and tattered center of Hollywood into an urban playground have built or unveiled plans for nearly $1 billion in major projects ranging from Hollywood & Highland to renovation of the landmark Cinerama Dome. Developer Legacy Partners announced plans in February to build housing and a hotel at the Hollywood Boulevard and Vine Street subway stop.
“Every time I go down Hollywood Boulevard I see new storefronts,” said John McCoy, who oversees the Hollywood area for the Los Angeles Community Redevelopment Agency. “We are seeing significant development of smaller properties.”
Hollywood has a long way to go, though, before it can approach the commercial and economic success of New York’s rejuvenated Times Square or even Old Pasadena and Santa Monica’s Third Street Promenade. Visitors strolling Hollywood Boulevard will be disappointed if they expect to find a wide selection of high-end national retailers, boutiques and restaurants.
“You still have a lot of people in the Greater L.A. community who are not convinced that Hollywood is back,” said economist Jack Kyser of the Los Angeles County Economic Development Corp.
Hollywood’s largest office building owner, Meringoff Equities, last year went from having virtually no vacancies and a waiting list of potential tenants to 200,000 square feet of empty space--about one-third of the company’s Hollywood portfolio. Meringoff has seen leasing pick up lately, but that was partly because it offered tenants up to six months of free rent at one of its largest properties.
“It’s been pretty bad,” said Rob Langer, managing partner of Meringoff. “A lot of the tenants just turned in their keys and went into bankruptcy.”
Problems in the Hollywood office market were compounded by the renovation of several older office buildings in expectation of a boom that has yet to materialize.
“We had all this new space coming online just as the market dried up,” said Leron Gubler, president of the Hollywood Chamber of Commerce.
Meanwhile, many of Hollywood’s major retail projects have yet to break ground years after being announced.
It was five years ago that Beverly Hills-based Regent Properties and city officials unveiled plans for a major retail and entertainment center and renovation of the historic James A. Doolittle Theatre as part of a development at Sunset Boulevard and Vine Street.
Regent scrapped the Sunset & Vine project a few years later after a dispute over parking with a neighboring property owner and movie theater operators pulled out of the project. Bond’s group took over Sunset & Vine--which had been reduced in scope and now included apartments--and planned to break ground last fall.
After a lengthy review of the unique mixed-use project by city inspectors, Bond has postponed construction until next month and plans to open the first part of the center by the end of 2003.
On Hollywood Boulevard, CIM Group, known for successful urban retail developments in Santa Monica and Pasadena, has had mixed results from the numerous properties it purchased in the late 1990s.
Although CIM has leased up most of an office building, the firm is as much as two years behind on its retail projects, some of which have been hamstrung by the shakeout in the movie theater business as well as the economic slowdown.
“I think that the pace and the amount of leasing has obviously gone a little slower on the retail front,” said John S. Given, senior vice president of development for CIM. But, “I think the prospects are still very, very good. We are not terribly concerned.”
Given and others remain confident about the area despite the misfortunes of Hollywood & Highland, the giant that was to symbolize Hollywood’s comeback. Instead, only six months after opening, a few stores have already pulled out of the development and its owner, Canadian real estate firm TrizecHahn Corp., is giving some tenants rent breaks to keep them in place and has reduced the value of the approximately $600-million project by 40%.
Hollywood & Highland officials said they expect conditions to improve as tourism rebounds and a recent decision to lower parking prices attracts more residents.
*
(BEGIN TEXT OF INFOGRAPHIC)
Hollywood Slowdown
(text of infographic not included)
