By ELIZABETH HAYES
Despite hundreds of millions of dollars in new projects including a sports arena, cathedral and concert hall the true power center of Los Angeles is shifting to Century City. The shift, which began years ago but is just now accelerating toward critical mass, has been driven by structural changes in the local economy.
"I would say the two major business centers cast their lot years ago. Downtown was institutional and the Westside was entrepreneurial. And with the restructuring of our economy over the last decade, the institutional lost out, got consolidated, outsourced, downsized and distributed," said Steve Marcussen, senior vice president at real estate brokerage firm Cushman Realty Corp.
Meanwhile, Century City has boomed with an expanding number of deal-oriented companies that are the financial engines driving L.A.'s new entrepreneurial economy.
Century City's tenant roster includes Donaldson Lufkin & Jenrette, Merrill Lynch, Bear Stearns & Co., Morgan Stanley, Colony Capital, Houlihan Lokey Howard & Zukin, 20th Century Fox Film Corp. and the Davis Cos.
In recent months, the mergers-and-acquisitions law firm Sullivan & Cromwell and investment banking firm Credit Suisse First Boston have relocated to the Westside from downtown. And now investment banking firm Goldman Sachs & Co. and law firm Skadden Arps Slate Meagher & Flom are looking to relocate from downtown to the Westside.
Each successive move out of downtown acts as an additional enticement for like-minded firms to follow suit. That's because such firms want to be where the action is so much so that they're often willing to pay more than twice as much in office rent.
"We're seeing the investment banking community say they don't have to be downtown," said Howard Sadowsky, executive vice president of Julien J. Studley Inc.
"Our professionals' lives revolve around the Westside of L.A. The town has drifted in that respect very much," said Robert Sacks, a partner at Sullivan & Cromwell. "The core of this city has moved west."
That's not to say downtown has become a ghost town. It retains a heavy concentration of professional-services providers and government agencies the biggest concentration of government outside Washington, D.C., by some estimates. Downtown's tenant roster includes Times Mirror Co., Arthur Andersen LLP, Deloitte & Touche LLP, Latham & Watkins and O'Melveny & Myers LLP.
A few Westside firms are even moving downtown to take advantage of the bargain rents, including Sidley & Austin and Paul Hastings Janofsky & Walker. Insurance company Johnson & Higgins moved earlier this year from Century City to the 777 Tower on South Figueroa Street when it merged with Marsh & McClennan Cos. to form J & H Marsh & McLennan.
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