Downtown/24″/mike1st/mark2nd

By ELIZABETH HAYES

Staff Reporter

What will it take to turn around downtown Los Angeles? A sports arena? Cathedral? More housing?

Try all of the above, at least. Downtown, which has gradually lost its place as the city’s central hub, looms as a major challenge for the city heading into the 21st century.

Over the past few decades, L.A.’s business community has become more dispersed, major corporations have been acquired or downsized, and the Westside has siphoned off several blue-chip employers. Many of the city’s dealmakers simply don’t feel they need to be downtown.

“Broadway and 7th Street was once the busiest intersection in the United States. It will never be that again, but it can be something successful. In trying to figure out the appropriate role for downtown, we can’t look back, we have to look forward,” said Dan Rosenfeld, a partner with the downtown office of LaSalle Partners and former real estate manager for the city of L.A. “What downtown should have are one-of-a-kind features that serve the entire region.”

Boosters tout the coming sports and cultural projects Staples Center, Disney Concert Hall and the Cathedral of Our Lady of the Angels as catalysts that will bring back downtown’s prominence. These venues will undoubtedly attract more people to downtown, and if restaurants and other amenities are developed, those visitors might be enticed to extend their stay.

Cardinal Roger Mahony sees the Cathedral of Our Lady of the Angels as the northern anchor of a cultural corridor along Grand Avenue, which he and others would like to make more pedestrian-friendly. The idea of converting obsolete office buildings into loft-style housing is also generating interest.

But questions remain as to whether such projects will be enough to bring the area back. Several obstacles must be overcome, not the least of which is the perception among some Westsiders that downtown is inconvenient or unsafe.

And while the new sports and cultural facilities will certainly attract people downtown, will they bring them in for business purposes and help fill downtown office buildings?

Downtown’s office sector, which was greatly expanded during the building frenzy of the late ’80s and early ’90s, remains soft. The overall vacancy rate for the central business district was 21 percent in the third quarter, among the highest in the city.

“If you look at a good percentage of major law firms downtown, they’re here for historical reasons, but they’re not coming here because it’s the business address of choice. That should be of concern to people,” said Michael Meyer, chairman of the L.A. office of Pillsbury Madison & Sutro, which specializes in commercial real estate leasing work. “If the only way of getting people to come here is because we have low rents, that’s nice, but it’s not the best way of getting people.”

Also lacking is a strong leader in the political or business arena to serve as downtown’s standard bearer, akin to what NationsBank’s Hugh McColl (now chairman and CEO of BankAmerica Corp.) did to attract businesses to downtown Charlotte, N.C.

“What everyone knows is that for the most part, we lack the commitment from a major financial institution or Fortune 500 company to downtown L.A., and all the good things that that commitment can bring,” Meyer said.

While downtown tends to conjure up images of skyscrapers, a different and more encouraging picture emerges if the parameters are extended to include the industrial areas to the east and south. The vacancy rate for downtown industrial space, for example, is less than 5 percent. Importers, produce operations and garment makers are prominent there, and new construction and upgrades of older buildings has been taking place, said Robin Bieker, vice president at the Donaty Group real estate firm.

But for all of downtown to be bustling, housing is a must. Housing has played a key role in other cities where revitalization has followed the development of a new sports venue, like Staples Center.

But so far, there has been more talk than action. Efforts have been made for decades to establish a larger residential community downtown. But part of the problem has been the lack of amenities in the area, such as grocery stores, as well as competition from other urban, pedestrian-friendly districts, such as Santa Monica’s Third Street Promenade and Old Town Pasadena. Also, the cost of converting older buildings and making them seismically safe can be prohibitive.

Steps are being taken to lay the groundwork for converting older office buildings into loft-style apartments. The City Council is expected to vote next month on a code change that would facilitate such conversions.

“You’ve never been able to get anybody to talk about housing. It’s finally coming of age,” said Christopher Martin, managing partner of A.C. Martin Partners architecture firm.

Several entrepreneurs are eyeing older office buildings, including the Subway Terminal Building and Giannini Building, for conversion to housing. Tom Gilmore of Gilmore Associates is assembling a block of buildings along Fourth Street to convert to 250 rental apartments. And owners of at least five other properties are considering residential conversions as well.

What this all adds up to will become clear in the coming years. Downtown could become a sort of cultural theme park that eventually stimulates the office sector or it could continue to tread water and merely retain the sectors that have traditionally been concentrated there: government and professional services.

Kathy Schloessman, president of the L.A. Sports and Entertainment Commission, believes downtown is already on its way back. She points to the example of downtown Denver, where Coors Field opened in 1995. A range of housing and numerous restaurants have also opened in the area since then.

“That’s exactly what I see happening in L.A.,” Schloessman said. “If you give people something to do, they will come downtown.”