For all the hopes and expectations for the South Central economy, one undeniable fact remains: There are fewer jobs and businesses there than before the 1992 riots.
To be sure, not all of the businesses and job losses relate to the neighborhood or the riots. Many were lost in the recession. And while some of the lost jobs have been recovered over the last two years, South Central’s economy remains below pre-riot levels, according to government data.
Why has anything even approaching economic revitalization continued to elude L.A.’s inner city?
Theories abound, from exaggerated fears of crime to the difficulty in accessing capital. In addition, large industrial swatches of land are not available for development, or even open land enough to support a major supermarket.
Many blame fear, irrational or otherwise, for a reluctance of businesses to locate in South Central.
“Just tell it like it is man: White man has no business on the streets down there after sundown,” said Mark Meraz, an industrial real estate broker with Magnum Properties in South Los Angeles.
Meraz has represented properties along the Alameda Corridor and in South Central’s industrial district for 15 years. Many buildings do have a probem with burglaries and theft, he said.
Monthly rents now run between 10 and 20 cents a square foot for some of the less-expensive industrial space, or roughly one-half to one-fifth the rent charged for similar properties in areas perceived as safer, said Meraz.
He said that, in the daytime, most South Central industrial areas are not dangerous, and that in 15 years, he has never been robbed while working the area. “But I have street smarts,” he said. “You don’t stay in one spot too long. If you stay in one spot too long, sooner or later someone will get you.”
Others found that much of the industrial space in South Central is older, and not configured for modern uses.
Bowne Co. is a financial printer, formerly located just south of the Santa Monica (10) Freeway on Maple Street. With the stock market boom of the 1990s, company officials found they needed more space than the 40,000 square feet it had occupied, and Bowne relocated to Dominguez Hills, just east of Long Beach.
South Central space was just not appropriate, said John Jackson, regional vice president for Bowne, which has corporate headquarters in New York. “We looked all over the area, including South Central,” he said.
In Dominguez Hills, Bowne found a 103,000-square-foot building that was the home and showroom of a printer manufacturer, Heidelberg USA Inc.
The new location has excellent front office space for receiving visitors, and custom wood floors designed for printing presses, said Jackson. “We had to do very little in the way of tenant improvements,” he said.
Industrial brokers concede that much of South Central’s building stock is older, smaller and often not equipped with “dock height” loading doors, which allow for level entry from the back of an 18-wheeler truck.
Still others blame the capital markets for a paucity of real business growth in South Central.
There are entrepreneurs willing to start businesses, but access to capital or lack of it prevent many of them from starting up.
One theory of real estate is that cheaper rents should attract businesses into a depressed area particularly start-up businesses, which, generally speaking, are starved for capital.
But the reality is different, says David Birch, of Cambridge, Mass.-based Cognetics Inc., a think tank.
Birch believes that small, growth companies almost always start up on the edge of cities, where there also are cheaper rents, but not the congestion, delapidation and fear of crime. Better school systems and other quality-of-life issues propel start-ups out of central city areas.
More than anything else, growth companies need employees, and must cater to their work forces, said Birch, in a recent lecture at the Milken Institute in Santa Monica.
Even well-capitalized businesses can find South Central an unpromising place to do business.
Vons Cos., the supermarket chain recently acquired by Oakland-based Safeway Inc., had planned to build a store in South Central, but ended up backing away from the plan.
Company spokesman Brian Dowling was reluctant to discuss the reasons why.
“I can tell you we looked at the site, we looked at it a second time, and I am not going to get into the details of why we made the decision (not to build). I can tell you the costs associated with building the business, and operating it, didn’t match up with the sales potential. It didn’t pencil out,” said Dowling.
Others said that an irrational reluctance or fear of any part of South Central dampens investment interest.
Jon Goodman, executive director of EC2, the Annenberg Incubator Project at USC, said that a too-strong timidity of many Angelenos to drive south of the Santa Monica (10) Freeway stifles some development.
“Study after study after study has found that South Central has the purchasing power to support a full complement of retail establishments, including more grocery stores. But it doesn’t happen. I think some people just don’t want to come down here,” she said.
Goodman added, “When I tell people I work on Adams (Boulevard), and they should come see me, they say, ‘Is it safe to park down there?’ Have these people ever seen a dangerous neighborhood?”