Review//dt1st/mark2nd

By EDVARD PETTERSSON

Staff Reporter

All in all, business news in Los Angeles was pretty positive in 1998.

In spite of pessimistic predictions, Asia’s financial crisis had little effect on the local economy. A glut of cheap imports, the result of weak Asian currencies, kept local distributors working overtime.

For the first 11 months of the year, container traffic at the Port of Los Angeles increased by 14.7 percent over the like period last year. The lopsided flow of goods created problems for shippers, however, as containers that would normally be filled with exports stacked up in the local ports and eventually had to be shipped back empty.

Tourism also prospered, although this is where Asia’s troubles had the most noticeable impact. Visitors from Japan, the single biggest market for overseas visitors to L.A., spent 10 percent less this year than in 1997.

The slack in Asian tourists was picked up by European and domestic visitors. In particular, new local attractions, such as the J. Paul Getty Center and the Long Beach Aquarium of the Pacific, helped draw a record 23.8 million visitors to Los Angeles.

The increased flow of goods and people, as well as the chronic congestion of streets and freeways, made transportation a recurrent theme in 1998. Whereas expansion programs at the ports of Los Angeles and Long Beach progressed on schedule and the new terminal at Ontario airport was completed ahead of time and under budget the Metropolitan Transportation Authority was forced to scale back its subway project.

In January, the MTA suspended construction and shelved expansion plans for the Eastside, Mid-City, and Pasadena lines. In November, voters passed a ballot measure that precludes the use of transit sales taxes for new subway construction.

The area’s other major public works project, the Alameda Corridor, made better progress than the subway. The 20-mile corridor, essentially an underground trench for freight trains along Alameda Street, will connect the ports of Long Beach and Los Angeles to main transcontinental railroad hubs east of downtown. Much of the major construction on the $2.4 billion project will be undertaken by Tutor-Saliba, the same contractor that did the subway work.

In March, the Dodgers officially changed hands when baseball owners approved the team’s sale to Rupert Murdoch’s Fox Group for $311 million. Since then, the club has been much in the news, although not necessarily for their accomplishments on the field.

Under new President Bob Graziano, the team traded away franchise players, fired much of the old-guard management, and broke salary records by signing the first $105 million player, pitcher Kevin Brown. The future of Dodger Stadium at Chavez Ravine remains uncertain, since a complete overhaul of the local landmark will cost more than building than an entire new stadium.

Los Angeles initiated a two-pronged pursuit of an NFL expansion team in April, when a group of investors headed by former super-agent Michael Ovitz announced a proposal to bring football to Carson. Ovitz’s plan to build a new stadium and entertainment complex in the South Bay is competing with a proposal by L.A. Kings owner Ed Roski Jr. to rebuild the Coliseum. By the end of 1998, NFL owners appeared to favor the Coliseum plan, but a third proposal this one out of Houston was also in the scramble. A decision could come by early 1999.

The downtown Staples Center broke ground at the beginning of 1998 and is scheduled for completion in time for the 1999 NBA season. The arena, developed by Roski’s Majestic Realty Co., will host the Lakers, Kings and Clippers. Staples Center is one of several downtown projects that boosters hope will revitalize L.A.’s neglected central city. This month, the Cathedral of Our Lady of the Angels broke ground, and Disney Concert Hall may soon follow.

Hollywood is also targeted for revitalization. In October, TrizecHahn Corp. broke ground on a $385 million retail and entertainment complex on Hollywood Boulevard. The two-block, 640,000-square-foot project is adjacent to Mann’s Chinese Theatre and will house the Academy Awards after completion in the fall of 2000.

The local commercial real estate market continued to improve in 1998. Across L.A. County, vacancy rates fell and lease rates rose. On the Westside, the tightest submarket, rents rose to $2.62 per square foot per month, compared with $2 in the third quarter of 1997.

As a result of economic woes back home, Japanese companies started selling off their sizable local real estate portfolios. Shuwa Corp. and Nippon Life, whose respective holdings include major downtown and Westside properties such as Arco Plaza and the Century City Plaza Hotel, are reported to have put some of their holdings on the market this summer. No deals have been announced so far.

Westfield America Inc., a Brentwood-based subsidiary of an Australian real estate conglomerate, became the largest owner of shopping malls in Los Angeles this year by buying the $1.4 billion TrizecHahn portfolio.

In another major real estate development, DreamWorks SKG finally signed on the dotted line in November, committing the company to build a $250 million studio complex and headquarters in Playa Vista. The agreement came after years of haggling between the studio and developer Robert Maguire. Last year, Maguire was sidelined by a group of lenders and investment bankers who assumed ownership of the development, paving the way for DreamWorks’ long-anticipated agreement.

It was also a banner year for residential real estate brokers. The market for luxury homes was especially hot as a shortage of available properties resulted in a new phenomenon of recent years: higher home prices.

Kaufman & Broad Home Corp. became the largest homebuilder in the nation this year, when the company acquired Upland-based Lewis Homes a $409 million deal indicative of consolidation in that industry. Earlier this year, Miami-based Lennar Homes made further inroads on the local housing front by acquiring Polygon Communities after it had earlier bought Pacific Greystone Corp.

Kaufman & Broad and Lennar Homes will be the two dominating forces in new-home building in L.A. County as well as the Southwestern United States.

Another hot area for consolidation was supermarkets. In October, Fred Meyer Inc. announced that it would merge with Kroger Co. less than a year after Fred Meyer had acquired Ralphs/Food 4 Less. In August, Albertson’s Inc. acquired American Stores Co., parent company of Lucky and Sav-on.

The role of big companies in the local economy continued to diminish, as their numbers continue to shrink through mergers and acquisitions.

Los Angeles lost its two largest thrifts this year. In October, Washington Mutual Inc. completed its $6.9 billion acquisition of Irwindale-based H.F. Ahmanson & Co., parent company of Home Savings of America. In September, First Nationwide Holdings, parent of California Federal Bank, finalized its takeover of Glendale Federal Bank’s parent company, Golden State Bancorp.

In August, SunAmerica, one of Los Angeles’ largest and most successful public companies, agreed to a $16.5 billion buyout by American International Group. SunAmerica is expected to continue its operations in Century City.

One L.A. company did get away. In July, Lockheed Martin Corp. backed down from its intended merger with Pico Rivera-based Northrop Grumman Corp., after the company ran into determined opposition from the U.S. Justice Department. The merger would have meant the demise of the last remaining major aerospace company headquartered in Los Angeles.

Meanwhile, some L.A. companies benefited from Wall Street’s love affair with the Internet, as initial public offerings by GeoCities and Ticketmaster Online-Citysearch went red hot.

As a further sign of the strength in high-tech, El Segundo-based Computer Sciences Corp., last year almost the victim of a hostile takeover, landed a $7.5 billion contract to overhaul the IRS’s computer system said to be the largest non-defense contract ever awarded.

And in entertainment, Canadian entertainment and liquor giant Seagram Co., parent company of Universal Studios, acquired PolyGram Holdings, the world’s largest music company, from Dutch electronics company Philips N.V. for $10.2 billion. Seagram’s movie business is suffering, though, with a slate of expensive films that have bombed at the box office. As a consequence, Universal Studios Chairman Frank Biondi and Universal Pictures President Casey Silver lost their jobs.