Giving the Big Apple a Taste of L.A.'s Core
L.A. to New York: Our downtown isn’t a joke anymore.
That’s the message that a squadron of heavyweight Angeleno boosters, led by billionaire philanthropist and businessman Eli Broad, will take to the Big Apple this week when they meet with some of the biggest money managers in the world. Their goal: to convince the New York crowd that much of what they think they know about downtown Los Angeles is wrong or outdated, and that it’s now a great place to invest lots and lots of cash.
Confronting the visitors are perceptions such as the one held by New York real estate mogul Donald Trump, who didn’t hesitate to thump Los Angeles from his office on Fifth Avenue.
“The downtown area has heretofore been sort of a depressing place,” said Trump, who recently bought Ocean Trails Golf Club in Rancho Palos Verdes. “It needs people. It needs life.”
L.A.'s emissaries think they can change such viewpoints now that the central city is enjoying a burst of cultural growth accompanying the construction of Staples Center, the Cathedral of Our Lady of the Angels, Walt Disney Concert Hall and thousands of units of housing.
“Lenders should be more comfortable with our city,” said Broad, who has contributed millions of dollars to such downtown cultural institutions as Disney Hall and the Museum of Contemporary Art.
But Manhattan-based lenders and investors often think of the heart of Los Angeles as short on substance and style, and they punish downtown by steering their money to cities such as San Francisco and Chicago, which have more of the street life and culture enjoyed in New York, Broad and other civic leaders say.
“People have looked at Los Angeles and said there is no there there,” Broad said. “That’s all changing. Our job is to show them what’s changing.”
Joining Broad on the trip are Tim Leiweke, president of Anschutz Entertainment Group, which developed Staples Center; John Cushman, chairman of real estate services company Cushman & Wakefield Inc.; Los Angeles City Councilwoman Jan Perry; and Carol Schatz, president and chief executive of the Downtown Center Business Improvement District.
The group will make a two-hour presentation to about 50 financiers at a breakfast meeting Thursday at the posh Plaza Hotel as the high point of a visit Schatz said will cost her organization about $45,000.
“We couldn’t expect people to pay attention unless we took the highest-level group of downtown stakeholders and entrepreneurs to meet with the highest level of the investment community in New York,” she said.
Backing up Schatz and the other speakers will be a handful of other prominent downtowners including Jonathan Kevles, deputy mayor of economic development, and Bob Graziano, president of the Los Angeles Dodgers. They’ll be on hand to chat with guests.
The fact that some of Los Angeles’ most well-connected, wealthy individuals are crossing the country with their hats in their hands is a testament to New York’s position as the financial center of the country.
“Investment spins out of New York,” said Tim Walker, a partner at MaguirePartners, the largest landlord in downtown Los Angeles. “Foreign investment, pension funds -- most of it transfers through Manhattan.”
MaguirePartners has refinanced some of its downtown properties over the last few years, and Walker said some of his New York financial partners didn’t realize that the pace of improvement in central city L.A. has accelerated.
Having two measures on the Nov. 5 ballot to break off parts of Los Angeles didn’t help its image, Anschutz Entertainment’s Leiweke said.
“I travel a lot and so I hear a lot of different impressions,” Leiweke said. “People think L.A. is about the secession battle. In the eyes of others we’re dysfunctional. There is an impression that L.A. is a tough city to get things done in.”
One of Leiweke’s goals in New York is to make a case for funding a large hotel as part of a retail and theater complex. Anschutz Entertainment plans to build a 1,200-room, $280-million hotel next to Staples Center.
“It is the most important piece of economic development that has to be accomplished and realized here” because the convention center, other hotels, retailers and restaurants would all benefit from the big conventions it could support, Leiweke said. “A lot of the financing will probably come from the companies based out of New York.”
At least one New York money man already is bullish on downtown Los Angeles. Peter Ginsberg, a director of fund manager Capital Trust, said that in the last eight months his company has placed $130 million in loans on four office buildings including Library Tower.
Downtown is “a relatively stable to strengthening market, with good relative value compared to the Greater Los Angeles area and other central business districts in the country,” Ginsberg said. It’s also getting more interesting, he said. “When the Disney Concert Hall opens [next year], it will become even more dynamic.”
Even Trump, for all his talk about lack of life in downtown Los Angeles, is evidently taking a look at the city.
In town over the weekend to mark his acquisition of the Ocean Trails Golf Club, Trump said he met with Cushman last week in New York to discuss the possibility of building a residential high-rise in Los Angeles.
Trump didn’t say exactly where he might consider putting such an edifice, but he left little doubt that any project he’s involved with probably would be on a grand scale. “I would not be surprised if I came to Los Angeles and built Trump Tower,” he said, referring to the 58-story luxury residential and retail complex he developed in the early 1980s in midtown Manhattan.
Cushman, who has a reputation as a tireless negotiator, bristled when he learned that Trump had called L.A.'s core “depressing.”
“Remember, he lives in a world full of pizazz and sizzle,” said Cushman, who considers Trump a friend. “Downtown L.A. is much more fundamental.”
Indeed, Cushman, the dean of L.A.'s office brokers, maintains that the center of the city has the highest-quality collection of office buildings on the West Coast.
And someone in the room Thursday may want to buy one of the largest, Arco Plaza, which is on the market with an estimated value of about $275 million.
Councilwoman Perry hopes to draw attention to development opportunities on Figueroa Street between downtown and USC.
She also would like to see more housing projects get underway.
“Investment opportunities are being created in areas that not long ago were not under consideration,” she said.
Broad points to the vast investments already going on downtown as proof of its viability. A combined $1.43 billion has been committed since 1999 on Staples Center, the rehabilitation of City Hall, Los Angeles Center Studio, the cathedral, Disney Hall and the new Caltrans headquarters at 1st and Main streets scheduled to open in 2004.
More than 1,000 housing units are under construction downtown, according to Schatz’s group.
An additional 5,800 units are proposed or in various stages of planning.
“To have this renaissance continue or accelerate, we have to convince investors or lenders in the East that this is the place to be,” Broad said.
“We have to lay that foundation and answer whatever questions they may have.”