After years of proclamations that downtown is about to emerge as a 24-hour destination, the first true test comes with this week's opening of the Staples Center.
It's the first of more than $1 billion worth of mega-projects now in the works that boosters say will lure thousands of additional Angelenos downtown to play, pray, relax, live and spend money.
Each of those projects Staples Center ($375 million), Disney Concert Hall ($235 million), L.A. City Hall overhaul ($273 million) and Cathedral of Our Lady of the Angels ($163 million) is significant in its own right. But can they provide the stimulus to reinvent downtown?
Some of those answers may start to unfold with the opening of Staples Center.
The arena will be a major draw: three professional sports teams, dozens of concerts, and special events like the 2000 Democratic National Convention are guaranteed to pull in thousands of people. In fact, there is little doubt that the arena itself will be a financial success for developers Ed Roski and Philip Anschutz, just based on the sponsorship deals and luxury suite sales that already have been made.
But according to real estate and sports consultants, Staples Center by itself is not going to revitalize downtown. Nor will any of the other big projects. The keys, these experts say, are retail and housing, two vital elements almost entirely missing from today's downtown. Only then could a critical mass be created sufficient to transform downtown into a 24-hour destination to rival Santa Monica's Third Street Promenade or Old Pasadena.
These experts point to thriving downtowns in Denver, Cleveland, Minneapolis and Phoenix all of which got their jump starts from new stadiums or arenas (and in the cases of Cleveland and Denver, both).
"The Staples Center by itself is not going to do much good for downtown if people just drive in and drive out again after the game or concert is over," said Steve Sander, a Denver-based sports and entertainment marketing consultant. "However, by serving as a magnet to draw people into downtown, the arena can become a catalyst to bring in the restaurants, sports bars, shops and theaters."
As for housing, several projects are in the works, most notably Tom Gilmore's conversion of three old bank buildings at Spring and Fourth streets into 240 loft apartments. Other projects include the Medici apartment project on Seventh Street just west of the Harbor (110) Freeway, and the conversion of the old subway terminal building at the bottom of Bunker Hill into apartments.
"These housing projects are a start," said David Dale-Johnson, director of the Real Estate Program at the Marshall School of Business at USC. "But housing really isn't going to jell until people get the impression that there is a livable community downtown. And that means a feeling of comfort, safety and plenty of places to shop, eat and be entertained."
Downtown L.A. boosters and city officials believe that will happen.
"The Disney Concert Hall and Staples Center will bring up to 10 million people downtown each year," said L.A. Mayor Richard Riordan. "That in turn is going to spark interest in future development. Downtown will become a truly 24-hour city. It may not be like New York, but that's only because our downtown is so much smaller to begin with."
Not everyone is so optimistic.
"This is fighting a losing battle," said Jim Moore, professor of public policy and civil engineering at USC. "Of course, there will be some impact from these projects. Any time you make such sizeable investments, there will be some change in people's behavior. But I don't see the Staples Center and these other downtown projects having significant spillover effect. The trend toward decentralization here is just too strong."
A key test will come with the second phase of Staples Center. Roski and Anschutz have ambitious plans for a retail and entertainment center on a 16-acre tract adjoining the north side of the arena. On the drawing board is a 1,200-room hotel and up to 400,000 square feet of retail and entertainment space that would include nightclubs, sports bars, restaurants, a multi-screen cineplex and upscale shops.
At the center of the proposed complex would be a central plaza devoted to civic and sports celebrations. (That assumes L.A. sports teams have seasons worth celebrating.)
"We envision this having the feel of a Third Street (Promenade in Santa Monica) or Old Town (Pasadena)," said Ted Tanner, senior vice president of real estate for the Staples Center development entity, L.A. Arena Co.
"Our top priority is to create a pedestrian environment that will make people want to spend time in the area before and after the events at Staples Center," he said.
But there's one catch and it's a big one: The second phase is still at least four years from completion, maybe longer. Tanner said the master plan has just been finished; ahead lies a two-year entitlement process before construction can even begin. In fact, the plan is so preliminary that Tanner said it has no price tag.
A lot can happen that could cause delays or changes in the project not the least of which would be a cyclical real estate downturn.
"If there is a downturn, there will likely be delays. That is the nature of the beast," said USC's Dale-Johnson. "That would be unfortunate, because I feel strongly that the retail development should occur sooner rather than later. In the best of worlds, the retail development would have taken shape simultaneously with the Staples Center."
So for the foreseeable future, Staples and the adjacent Convention Center will stand alone, generating only a modest spillover effect.
New investment downtown
There has been some interest from developers in nearby parcels. About a year ago, Meruelo Properties Inc. purchased the Family Ford property at the corner of Pico Boulevard and Figueroa Street, across the street from the arena. Another property at the same intersection recently was purchased by a West L.A. apartment developer.
But so far, there hasn't been a huge amount of investing or land price inflation.
"As a stand-alone sports arena, you'll maybe see more restaurants," said Ron Bagel, owner of the Donaty Group, a real estate brokerage located not far from Staples. "But I don't see it having the gigantic impact across downtown, improving property values. However, an entertainment center, which has been talked about, would have a gigantic impact."
That's what happened in Cleveland, where a new baseball/football stadium and a new arena recently opened.
"When the stadium and arena opened, there were mixed results for the local economy," said Ziona Austrian, director of the economic development program at Cleveland State University. "You saw an increase in employment in sports and retail industries, but not in other industries.
"But in the year or two since then," she said, "new hotels have sprung up, old buildings have been converted into apartments, and new restaurants and retail centers have opened."
Key to the success, Austrian said, was not having too many parking lots right next to the arena or stadium, thus forcing people to walk through the area.
"If it hadn't been designed for people to walk around, you would probably have seen less businesses come in."
Contrast Cleveland with Portland, Ore., which just built a new arena.
"I visited there and saw people come into the parking lot, cross over a bridge to the arena and come right back out again when the game was over," said Dan Rosenfeld, senior vice president of development services for the downtown L.A. office of Jones Lang LaSalle. "What a missed opportunity that was," said Rosenfeld, a Portland native who until January 1998 had headed up the city of L.A.'s real estate operations.
While an upscale retail/entertainment complex remains a long way off, many of those who come to the Staples Center over the next few months will be getting some of their first after-dark glimpses of downtown life. And those first impressions could be crucial in determining whether they come back.
Chief among them will be traffic and parking, which are expected to be especially rough during the first few weeks.
"People might be willing to cut Staples some slack in the early going," said sports business consultant David Carter. "But if the problems persist, it will create long-term difficulties."
Carter noted that when the new stadium for the Washington Redskins recently opened, "Parking was a total fiasco. The new owners were faced with an emergency situation. They had to and did act quickly to get more parking spaces on line or risk losing fans forever."
Staples Center officials have been working frantically during the last several weeks to complete widenings and other improvements to streets around the arena and Convention Center.
But can downtown freeways, which are already jammed well beyond the traditional rush hours, handle extra traffic from Staples and from the Disney Concert Hall, let alone all the additional traffic that developers hope to generate with their retail and housing developments?
"I haven't heard very much attention being paid to handling increased freeway traffic from Staples Center and all the other projects coming on line," said Dale-Johnson. "When my students looked at the impact of the Staples Center, that was one of their biggest concerns."
While Dale-Johnson believes traffic might deter some people from coming downtown, others said it could turn out to be a positive.
"Look, if you want to go somewhere and avoid the traffic, what do you do? You arrive early and leave late," Rosenfeld said. "And that's precisely what you want to have happen in downtown. If people come early, that means they are going to eat at downtown restaurants. If they leave late, that means they are going to want to stop off at a nearby sports bar. At either end, they will be a captive audience for retail."
The Central City Association has launched a marketing campaign aimed at convincing Staples Center season-ticket and suite holders to come early and eat at downtown restaurants, according to CCA President and Chief Executive Carol Schatz.
But in order to convince people to walk through downtown streets, they first have to feel comfortable doing so. While crime may be down, the fear of crime is not.
"Downtown is one of the safest areas of the city, but people don't recognize this," said Stephan Smith, a principal in the newly opened Los Angeles Center Studios and CCA chairman. "What has been lacking has been the presence of large numbers of people on the streets after dark. Now you are about to have that with the Staples Center. It should help dispel this fear of downtown as a crime-ridden area."
Rosenfeld said more needs to be done, including beefed-up police patrols, improved lighting and cleaning up sidewalks on the streets surrounding the Staples Center.
"The city needs to fine-tune the environment outside the arena. It can be done. Remember, there was a time not so long ago when Third Street in Santa Monica was ugly at night," Rosenfeld said.
Staff Reporter Elizabeth Hayes contributed to this story.
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