Charlie Woo and his brother Peter opened their first wholesale toy business 26 years ago in a neglected quarter of downtown. The district, known then as Central City East, commanded sub-$3-per-foot rents, and vacancy rates were around 50 percent.

But soon after they started Megatoys at 905 East Second St., business was so good that the Woos bought more buildings with the idea they would be expanding. More quickly than Megatoys grew, however, other toy companies picked up on the Woos’ vision and asked to rent some of their excess square footage.

So the Woos kept buying property, and today they own 12 buildings, making them the largest private property owners in what has become the Toy District. The Woos’ 12 properties cover more than 6,000 square feet and 4.2 acres.

“We kept investing and the number of businesses kept growing and it reached critical mass and became a toy wholesaling district,” Charlie Woo said. “The Toy District was really popular and, at one time, demanded more rent than the business district.”

These days, the Toy District is less of a wholesale quarter. Traffic congestion among the area’s labyrinthine streets and alleys, as well as the small size of storefronts available, has pushed the larger operations south and east into Vernon and Commerce.

“The smaller guys who rely on location are still here,” Woo said.

Retail has become the order of the district. Woo said rents in the Toy District are not based on the standard per-foot rates of most commercial property. He said he can get upwards of $4,000 a month for as little as 300 feet of space and has waiting lists of eager toy retailers should anyone default or outgrow the space.

Even so, the district soon will dive into the mixed-used development scene. The Woos are considering the concept at a property they own at Fourth and Los Angeles streets driven by the Midnight Mission’s plan to move from 396 S. Los Angeles St. into a new facility in the 600 block of San Pedro Street.

“The value of land is going up,” Charlie Woo said. “When the homeless don’t line up for food on the sidewalks it might make a more attractive atmosphere.”