The downtown real estate market is hardly in great shape, but it’s positively robust compared to mid-Wilshire an area hit by a series of corporate defections as well as the 1992 riots.

And that’s why the federal government’s decision to move the Social Security Administration’s Teleservice Center from its decades-old home at 3250 Wilshire Blvd. to downtown has sparked the ire of mid-Wilshire property owners and agents.

“This is a loss for the area,” said Frank Morineau, a leasing agent for the building the Social Security office is leaving. “This is an area that could use a shot in the arm from the government. Instead, we’re losing a lot of our government tenants to downtown.”

When the Social Security’s 163-person division moves to the 1139 S. Broadway building next year, it will join the Internal Revenue Service’s examination and tax collection division, the Department of Labor and the Equal Employment Opportunities Commission as federal tenants that have peeled away from Wilshire to downtown.

The General Services Administration, which handles real estate transactions for all federal agencies, has made a push in recent years to consolidate government agencies downtown in an effort to revitalize urban centers. The policy began as an executive order in 1978, and it has been recently re-emphasized by the Clinton administration.

But in Los Angeles, defining an urban center isn’t so simple. Most major cities grew concentrically with a central business district at their core, but L.A. is a galaxy of office markets that dot the city’s 467-mile span.

And of those urban areas, the mid-Wilshire office market which stretches from MacArthur Park to Wilton Avenue has the most slack. While L.A.’s downtown posted a 24 percent vacancy rate for the first half of 1997, the mid-Wilshire office market vacancies hovered around 31 percent.

“It’s an area that’s clearly fallen on hard times,” said Richard Peiser, director of USC’s Lusk Center for Real Estate Development. The district was the city’s premiere retail and commercial center from the 1940s until the early 80s, when the major corporate tenants left for emerging suburban office markets that were closer to their labor pool.

Mid-Wilshire further suffered from subway construction and a relatively high crime rate. Then the riots “drove the nails in the coffin” of the office market, he said.

Mid-Wilshire was probably the type of area that President Jimmy Carter had in mind when he drafted the 1978 executive order, said Michael Dunn, director of Charles Dunn Company Inc.’s corporate services group. He noted that the government agencies had been some of the district’s largest and most stable tenants.

“I’m all in favor of revitalizing downtown,” Dunn said. “But it seems absurd to give it preference when mid-Wilshire is suffering more.”

In theory, downtown doesn’t get preference over the mid-Wilshire office market. The GSA includes mid-Wilshire as one of L.A.’s dozen central business districts, which are the areas where federal agencies can look for office space.

“The whole purpose of the policy is to get federal agencies to work closely with the cities to identify areas that need government support,” said Mary Filippini, spokeswoman for the GSA’s Western region.

But Filippini added that in her experience with L.A., the city government and local GSA office prefer federal agencies to be located downtown.

The Social Security department’s new lease was negotiated by the L.A. GSA office. Andrea Mateer, manager of the local GSA’s real estate division, refused comment.

But Edda Holt, a manager with the Social Security’s teleservices unit, said she and her fellow workers were willing to stay in mid-Wilshire.

The GSA “really seemed to want us to move downtown,” Holt said.

Mid-Wilshire property owners argue that the downtown consolidation is a waste of taxpayer dollars. In addition to the expense of moving, rents are cheaper in mid-Wilshire. Office space that’s compliant with building codes can be had for about $1.10 per square foot in Mid-Wilshire, compared with about $2 for the same space downtown, said Linda Hedden, an agent with Transwestern Property Co.

But Con Howe, director of planning for the city, said the mid-Wilshire advocates are overlooking downtown’s advantages.

“Downtown has more of the benefits that federal tenants want, such as being in close proximity to other government agencies,” he said.

While federal agencies are heading downtown, several private owners have made significant investments in mid-Wilshire. Southwestern University School of Law restored the historic Bullocks Wilshire building and turned it into a law library that opened this year.

Leslie Steinberg, a spokeswoman for the university, said the school “felt like we’ve always been one of the anchors of the mid-Wilshire district, and we wanted to support the area” with their renovation of the art deco building.

Other formerly vacant buildings are undergoing a renaissance as well. The Sheraton Townhouse is being converted into a retail center and the I. Magnum building has become The Wilshire Center, a retail and recreation center geared toward the Korean Community, Dunn said.

Mid-Wilshire property owners also tout the recently opened Metro line and the $6 million-dollar streetscape improvement project, which is currently adding a private security force, more lighting, crosswalks and about 2,000 trees to the district.

The Ambassador Hotel site, however, remains mired in litigation between the L.A. school district and its owner, the Trump-Wilshire Investment Association. The investors planned to build a massive skyscraper on their property, but the school district wanted to use the site to build a new high school. Lawsuits ensued, and the property has sat untouched for almost eight years.

Today, the region’s greatest chance for recovery might be as a retail district rather than an office market, said Cliff Goldstein, a partner at development company J.H. Snyder. Goldstein worked as a leasing agent during the mid-80s at the Metroplex, the last office building to be constructed in mid-Wilshire.

“You can argue that it will never come back as an office market,” he said, noting that dirt-cheap rents in downtown haven’t lured tenants from the Westside. But he added that there’s still a vibrant market to be tapped.

“You have a million people every five feet there,” he said. “And those people have to shop.”