REAL ESTATE QUARTERLY: Developers Frame Projects for Artists’ Community

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Lincoln Heights, whose southern tip is included in the city of L.A.’s Cornfield Arroyo Seco Specific Plan, or CASP, is poised to catch the next wave of gentrification as developers seek the next affordable, “undiscovered” market near downtown.

“Lincoln Heights is the next logical proximity,” said Carle Pierose of Santa Monica firm Industry Partners. Pierose is the listing agent for a retail space at Alta Lofts, a 104-unit condominium project at 200 N. San Fernando Road in the CASP zone.

“The Cornfields will develop first,” he said, “but that will connect people to Lincoln Heights.”

There has long been concern about gentrification in Lincoln Heights, though little of the dreaded development has come thus far. The median household income in the area hovers below $40,000. The restaurant scene features an abundance of fast-food chains. There have been signs of change, however, and they’ve picked up since the CASP passed in 2013.

At least three reuse projects have cropped up in the neighborhood – bounded by the Los Angeles River on the west, the 110 freeway on the north, Mission Street on the south and Soto Street on the east – since the CASP went into effect, and brokers expect that more are on the way.

Ben Stapleton, a vice president at Jones Lang LaSalle Inc.’s downtown L.A. office, is selling a Lincoln Heights site that falls within the CASP. He said he has seen interest from developers attracted to the large space and flexible zoning that is hard to find elsewhere in Los Angeles.

“I love Lincoln Heights because it has bigger parcels in general and there’s less of a premium placed on them than there is in Chinatown,” Stapleton said. “Chinatown is already really dense and the parcels are smaller, so it’s difficult to get deals done.”

The three-acre site combines two lots at 405 N. San Fernando and 400 N. Avenue 19, both of which are zoned in the CASP for Urban Innovation, which calls for light industrial and creative office use. There are 90,000 square feet of existing buildings, including storefronts with original tin roofs from the early 1900s. Some of the space is used as rehearsal studios for musicians. An Asian food wholesaler also uses a portion.

The CASP zoning allows for many possibilities for the site, which is across the street from the Lincoln Heights Jail, now vacant. Uses include office and light industrial space, with options for limited retail, hotel and multifamily space.

Stapleton said that downtown firm Rick Moses Development’s Lacy Studios project could be a game-changer for Lincoln Heights.

Built as a textile mill in 1885, the 270,000-square-foot property, at 2600-40 Lacy St., was converted into a movie studio a century later and has been used in the production of “True Blood” and “Catch Me If You Can.”

That studio use is coming to an end, though, as Moses is in the process of converting the property into a creative office campus. It will be able to accommodate tenants looking for spaces as small as 10,000 square feet or as large as the entire campus.

There are other signs the neighborhood is on the rise. The Heights Deli & Bottle Shop, a deli sandwich and craft beer spot, opened at 2927 N. Broadway in April. La Chuperia, at 1145 N. Mission Road, which serves craft beer along with Mexican fare, opened in January.

The conversion of Lacy Studios, though, is being closely watched.

Lincoln Heights has long been home to an artistic community, and the creep of businesses seeking less expensive creative office space could change that vibe.

The Brewery Arts Complex, a residential project at 2100 N. Main St. that opened in 1982 at the site of the old Pabst Blue Ribbon Brewery, is home to more than 500 artists. The landlord, Minneapolis’ Carlson Industries, does not budge on the artists-only policy.

The challenge, Pierose said, is luring developers into a neighborhood before there are major signs of commercial change. That’s especially difficult on the retail front, since restaurants and clothing stores like to cluster in areas where there is a critical mass.

“The challenge is getting good retail when you have a lot of El Pollo Locos and Subways,” Pierose said. “I think when you get sexier restaurants and hipper coffee, it will start to take off.”

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