On a recent weekday afternoon, a dozen students and shoppers quietly milled about an aging shopping center on the outskirts of the USC campus.
Dotted with vacant storefronts, their options were limited to armed forces recruitment centers, an independent movie theater, a grocery, some small shops and a few national retailers, including a Starbucks.
But if the university has its way, this shopping center, named University Village, will soon be forgotten. In its place will be a hybrid commercial-academic development, on a scale never before seen in Los Angeles.
Think the Grove, with student residences and classrooms thrown in – and a lot bigger.
The Village at USC will span 35 acres and include some 5,200 beds, a half-million square feet of classrooms, 350,000 square feet of shops, a multiplex theater, and a hotel and conference center.
“What we are offering here is an opportunity to really transform the area by giving the neighborhood what it needs, what it deserves and what it wants,” said Thomas Sayles, senior vice president of university relations.
Spurring the $900 million development are significant changes to the housing arrangements of USC’s 37,000 students. For decades, most students lived far enough off campus that they drove to their classes. But over the last 10 years, nearly 90 percent of students have moved on campus or nearby, where private developers have built student housing.
The Village at USC would not only provide even more housing close to campus, but allow the university to grab a larger share of the dollars that students spend. USC is funding the project itself through a variety of sources, including donations, bonds and university funds, though it may hire an outside developer to oversee construction and carry out the plans.
USC already owns the property, including University Village, so the project would be a redevelopment.
Hybrid academic-commercial developments have been completed on the East Coast already. The University of Pennsylvania finished a $150 million redevelopment of several blocks near its Philadelphia campus with shops, student residences, a hotel and school. Johns Hopkins University also is moving forward on a project near its medical campus in Baltimore, which would feature a hotel and shops.
“A lot of colleges are looking at what they can do to help their future and help the campus and surrounding area,” said Con Howe, managing director of CityView, which financed a mixed-use student housing development named West 27th Place near USC last year.
Phased development
USC still needs entitlements for the project and is scheduled to go before the city’s Planning Commission in May. Final approval from the City Council could come as early as this summer.
If approved, the university plans to begin construction early next year, with the project built in three phases, each about two years in length. The buildings would typically be four or five stories but some could reach 15.
The fully funded first phase would require the demolition of 200,000-square-foot University Village to make way for half of the apartment-style student residences, a 2,000-seat multiplex and all of the retail, possibly including space for two grocery stores. (With the demolition, there would be a net gain of 150,000 square feet of retail.)
Phase two would demolish three existing student dorms to the west of University Village and replace them with classrooms and other academic space, as well as a 150-room hotel and conference center that will include a swimming pool and restaurant.
The final phase would complete the residential construction.
With all the demolition, there will be a net gain of some 4,000 student beds in the area, but the university has little doubt it can fill them. Nearby, private developers have been building smaller mixed-use student housing projects along the border of the campus.
City View and West L.A. developer Symphony Development built West 27th Place last year and leased up all of its 161 units within a month, then snagged the popular East Coast chain Five Guys Burgers & Fries as one of its ground-floor tenants.
In 2008, downtown L.A.’s Urban Partners built the 421-unit University Gateway student housing project at Jefferson Boulevard and Figueroa Street that now has a Fresh & Easy among its ground-floor tenants. It is nearly fully leased.
“The demand is there and probably growing,” said Howe. “I do think the effort to encourage new construction has really helped lessen pressure in the neighborhoods and that’s frankly to everyone’s advantage.”
The university has surveyed students, faculty and neighborhood residents about the kinds of retailers they’d like to see. There has been a strong preference to get a Trader Joe’s grocery market, as well as multiple requests for low-priced but quality sit-down restaurants, such as a California Pizza Kitchen. Other demands have been for bookstores and moderately priced clothing stores like H&M.
“It is beneficial to students and faculty and to the community, it’s clearly a win-win,” Sayles said.
Steps ahead
But far from everyone is pleased with the proposal.
Existing University Village tenants haven’t been promised a spot in the new development, and many fear that the lease rates, which have yet to be set, may be more than they can afford.
“Everybody’s worried,” said John Urteaga, whose L.A. Bicycles sales and service shop has been at the retail complex for 11 years.
Already, lease rates are rising in the area as tenants start to leave University Village before demolition begins. Urteaga, who did not disclose his monthly square-foot lease rates, said a location he is considering nearby is asking at least 50 percent more than his current rate.
Other shops, including the Magic Machine copy store, which has been there 23 years, may just decide to close. Owner Jerry Zokai, who declined to be directly quoted, said relocating twice – once to move out and again to move back in– may not be worth the trouble.
However, the few national retailers that are there, including Starbucks and Radio Shack, have indicated they plan to reopen in their locations, according to Kristina Raspe, the university’s vice president of real estate development and asset management.
Meanwhile, Paulina Gonzalez, executive director of Strategic Actions for a Just Economy, said her community group is concerned that the project will displace residents by raising the price of housing rentals, despite university assurances otherwise.
The university projects that the new housing it builds will free up almost 900 units in the community, which should lower demand and drive down rental rates. Two-bedroom units in the area rented for an average of about $1,081 a month in the first quarter of 2009, according to an economic study done for the project by USC.
But Gonzalez said local residents on average earn about $35,000 a year and affordable rents would only be about 30 percent of that salary, or around $875 a month. She doubts rents would come down that much, because she believes the massive development will make the area much more attractive.
Instead, her group is asking the university to consider adding affordable housing to the project.
“We are going to continue to be there every step of the way and we are talking to the mayor and City Council offices,” she said.
The university does not want to alter its plans, but it is creating a $2 million fund for local landlords who want to convert homes that have been used by students back to single-family residences. The details are being negotiated with the city in a development agreement, which would also include a local hiring preference for the 4,000 permanent and 8,000 temporary jobs USC said the project would create.
“USC for many years has really been a strong community partner,” Sayles said. “We have over 400 partnerships with neighborhood groups and we invest $30 million a year in this neighborhood and these aren’t relationships we developed for this project. This is good for the neighborhood.”
