DOWNTOWN—Homes, Market Planned Downtown

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Another major downtown L.A. residential project encompassing a full city block and designed to include 500 homes and a long-awaited Ralphs supermarket is in the works, informed sources have told the Business Journal.

The project being pursued by CIM Group LLC, the developer that owns much of the Third Street Promenade in Santa Monica and is active in Hollywood redevelopment is targeted for a 7.2-acre site that CIM has agreed to buy from Shuwa Corp. for $41 million.

The site is bounded by Eighth, Ninth, Flower and Hope streets, and includes three former Southern California Gas Co. buildings.

CIM and Ralphs Grocery Co. officials did not return calls seeking comment last week.

In a recent interview, however, Pat Barber, senior vice president of real estate at Ralphs, confirmed that the company has long wanted to open a grocery store downtown.

Don Spivack, deputy administrator of the Los Angeles Community Redevelopment Agency, said the CRA board has approved kicking in as much as $7 million to help redevelop the former Gas Co. property. The board’s decision, still subject to City Council approval, sets up exclusive negotiations between Ralphs and Shuwa.

“They will work to identify a developer that will do a grocery store, residential development and historical redevelopment,” Spivack said.

If the sale to CIM closes before a deal is worked out with Ralphs, CIM would continue negotiating with Ralphs. The CRA is preparing to reserve money in its 2001-02 budget (to be set this summer) to contribute to the development, Spivack said.

Two of the buildings at the site, which Shuwa has owned for about a dozen years, likely would come down during any redevelopment. The third building, known as the Parkinson’s Building, is protected by historic designation, according to Spivack. That building likely would be converted into apartments.

A good bit of the site is currently devoted to surface parking, Spivack said, which would be lost to grocery store construction. A new parking structure would be a critical component to redeveloping the site, he said.

Shuwa bought the property in the late 1980s for about $105 million and announced plans to erect the world’s’ tallest building there, but never developed the site.

Although there were a handful of finalists bidding to buy the Shuwa property, one source said that CIM leaped to the front of the pack because it expressed a willingness to buy the Shuwa property, one source said that CIM leaped to the front of the pack because it expressed a willingness to buy the property without first securing entitlements for development.

“It’s probably a good time for Shuwa to say, ‘Let’s take this deal and go,'” the source said. “Sounds like a prudent business deal to me.”

If the logistics work out, Spivack said, the development would be another piece in the plan to make downtown a viable place to live.

“The goal of the downtown plan is to substantially increase the residential population,” he said. “As you develop more residences downtown, you develop a sense of community.”

That community does seem to be emerging.


Reaching for critical mass

Spivack pointed out that a block to the south of the Shuwa property are 470 units in the Metropolitan Apartments and Skyline Condominiums in South Park, built by Forest City Residential West.

The targeted property also is six blocks west of the Los Angeles Street property where developer Mark Weinstein is proposing to build a mixed-use project he’s calling Santee Court. Weinstein’s 780,000-square-foot proposal calls for office space, 400 apartments, street-level retail and a swimming pool and fitness club atop one of the 10 buildings in the project.

Upon learning of the CIM proposal, Weinstein suggested that they may want to work together to create a cohesive residential community of buildings linked by skywalks, where residents could move about in a city within a city.

“I think all these projects complement each other,” Weinstein said. “We want to see if we can urbanize all of it, so we can have a master plan. I would say it’s all friendly competition.”

Even if CIM consummates its acquisition of the property and all the approvals and entitlements come through, Spivack said, construction wouldn’t start for 12 to 18 months.

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