High-rise condo construction. New rail lines and infrastructure spending. Huge hospitals that cost hundreds of millions to rebuild.
All that and more has given rise to a building boom, the likes of which Los Angeles County has not seen in decades.
Throughout the county there are 50 major projects under construction, each valued at $100 million or more. Just three years ago there were only 11 such projects, according to the Business Journal’s annual survey of Los Angeles County construction.
And while the crumbling real estate market has slowed home construction and may slow the downtown condo boom, most projections indicate that the strong pace of other construction throughout the county will continue for at least more several years.
“There’s definitely more work than there are qualified construction personnel,” said Dale Gold, project manager for Tutor-Saliba-Perini, which is working on the $465 million Ronald Reagan UCLA Medical Center.
The boom is largely the result of three converging trends: the development of pricey condo towers downtown and in other desirable neighborhoods; a state mandate that hospitals rebuild to withstand a hit by a major earthquake; and publicly funded spending on infrastructure, schools and other projects.
The downtown area has been the epicenter of the construction boom, with its skyline dotted by huge construction cranes building high-rise residences. But there is also the gargantuan $2 billion L.A. Live development near Staples Center, with its Nokia Theater, convention center hotel and other attractions.
The total cumulative value of the 50 construction projects with price tags exceeding $100 million is $12.5 billion. And the total value of non-residential construction permits in L.A. County is on pace to surpass $4 billion for the first time ever this year.
The surge in development has propped up construction employment in L.A. County, offsetting some of the steep drop in residential building as the housing market has stalled out. There are now 156,000 workers in the sector as of July, off only 3 percent from a year ago.
Without these gains from major construction projects, total construction job losses would likely have been much greater, with the impacts radiating throughout the local economy.
“The amount of development taking place here is really kind of startling,” said Thom Mayne, principal and founder of Santa Monica-based Morphosis Architects and designer of the Caltrans District 7 headquarters that opened downtown in 2004.
Slowdown unlikely
There’s a fear that the widespread credit crunch could severely curtail the downtown renaissance. In other cities, such as Miami, units in downtown condo towers are going unsold as buyers are having a hard time finding lenders.
However, real estate industry and downtown observers doubt that will happen, at least to such an extent in Los Angeles, where there are 38 condominium and apartment projects under way.
“The developers are realizing that there is no residential and people don’t want to commute anymore,” said Rory DeJohn, senior vice president of Turner Construction Co. “People have finally realized that Los Angeles really is a viable city. I don’t think it’s going to tail off.”
Countywide, there are more than 10 residential projects under construction that are slated to cost more than $100 million. Three years ago not one of the major projects in L.A. was residential.
Moreover, one of the more anticipated condo projects is still on the horizon: Park Fifth towers, which would be among the largest residential developments nationwide. The billion dollar downtown project would be topped by 43- and 76-story towers.
Also yet to even start is even the larger Grand Avenue project near Walt Disney Concert Hall, which will include entertainment, restaurants, retail, a hotel and up to 2,600 housing units another $2 billion development.
And even if some of these ambitious projects are scaled back or at least slowed by the economy, the construction sector in the county will continue to be boosted by big spending on hospitals and infrastructure.
In fact, five of the county’s nine largest projects are hospitals, which as a whole are being forced to rebuild their campuses because of a law passed after the 1994 Northridge Earthquake. That temblor shuttered St. Johns Health Center in Santa Monica and damaged other facilities throughout the region.
Los Angeles County/USC Medical Center is being replaced with almost $600 million in funds, not including millions in soft costs for medical equipment and other furnishing. Besides the Reagan UCLA Medical Center, there are other pricey projects: Kaiser Permanente Los Angeles Medical Center at $600 million and Childrens Hospital Los Angeles at $414 million.
These larger hospital projects will likely be far more expensive than others that have yet to be completed, but still many more hospital buildings need to be reconstructed.
Of the county’s 665 individual hospital buildings, more than half were found to require seismic retrofits or total replacement under the state’s criteria, said Jennifer Bayer, director of public affairs for the Hospital Association of Southern California.
“There are an awful lot of projects in the pipeline,” she said.
Infrastructure boom
But for all the work being done on hospitals and in downtown, a renewed investment in infrastructure is driving the construction boom as much as anything.
Public transportation projects are the two largest in-progress developments: the $868 million Eastside extension of the Gold Line and the $640 million Expo Light Rail line Phase 1, filling the No. 1 and No. 2 spots respectively. There is also $167 million being spent on high-occupancy-vehicle lanes on the San Diego (405) Freeway.
Other publicly funded projects under way include half a dozen Los Angeles Unified School District schools part of the district’s $19 billion building program that will continue until 2010. Also a target of big public money: the reconstruction of Los Angeles International Airport. Currently $576 million is being spent renovating and expanding Tom Bradley International Terminal, with entirely new terminal planned at an estimated cost of $1.2 billion.
Many of the transportation-related construction projects such as the Gold Line Eastside rail project and various HOV lanes have been on the books for years or even decades, but only in the last few years have they received government funding.
The pace of transportation construction projects will likely increase over the next several years as funds from the $20 billion transportation infrastructure bond approved by California voters last fall begin to hit the streets.
Daniel Mitchell, a professor at the UCLA Anderson School of Management who writes an annual chapter in the state budget, said a push to rejuvenate the state’s infrastructure has spurred new investment in a way not seen for decades.
The renewed interest, he said, stems from the fact that most infrastructure investment tailed off in the middle of the 20th century. Much of the freeway construction stopped in the 1970s while the big water projects ended even earlier.
“Most of the big infrastructure investments were made quite some time ago. In the meantime, you’ve got a lot of traffic congestion and the concerns ramp up and you get to a breaking point,” he said. “The state is kind of on a kick of infrastructure. That seems to be the era we are in.”
Staff reporter Howard Fine contributed to this story
