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Thursday, Jun 8, 2023

REAL ESTATE – Huge Area Is Targeted for Modernization of Property

Although industrial vacancy in central Los Angeles is at a record low, new development has been slow in coming. But that’s starting to change.

Plans are in the works to help developers turn around the obsolete industrial base of Central L.A. The Alameda Corridor is also expected to give the area a shot in the arm, leading to development of new distribution and warehousing facilities.

The Community Redevelopment Agency has drafted a plan for a 2,500-acre area bounded by Alameda Street, the L.A. River, Fourth Street and 25th Street. The plan calls for providing developers with technical and financial assistance to redevelop the area’s existing industrial structures into properties suited for modern uses.

“With the proximity of the Alameda Corridor and a large labor force, this should be a very attractive region for redevelopment,” said Donald Spivack, deputy administrator with the CRA. “We certainly will make it cost-effective for developers to come into the area.”

Spivack expects redevelopment to get started within the year, and he is anticipating food processing, garment and toy industry tenants to use the upgraded facilities. The CRA is also working on a similar plan for the old industrial area on the east side of the L.A. River.

Then there’s the Alameda Corridor, the $2 billion rail line connecting the ports of Long Beach and San Pedro with the rail yards southeast of downtown L.A. Old manufacturing and steel plants are expected to give way to new warehouse and distribution facilities.

“Anywhere along the corridor is ripe for development. It’s a wonderful opportunity,” said Mark Schurgin of Festival Cos., which is looking to bid on an industrial property in South Central near the corridor. “To the extent that large tracts can be assembled, everyone would rather be in the inner city. It’s close in, the transportation and infrastructure are there.”

Rocky Delgadillo, L.A.’s deputy mayor for economic development, said the city hopes to attract light manufacturing (high tech, food processing, fashion or component makers) to the site, rather than warehousing and distribution businesses. The CRA earlier this year received proposals from 10 developers interested in acquiring the site for industrial development.

Other inner-city sites that are slated for industrial redevelopment include the Cornfield, a 32-acre abandoned railroad site east of Chinatown, and the Marquardt site, a 24-acre former defense facility adjacent to Van Nuys Airport.

Last month, Trammell Crow Co. acquired the Marquardt site for $23 million and the company expects to spend an additional $23 million to develop a high-tech manufacturing campus there. Meanwhile, Majestic Realty Co. is planning an industrial park at the Cornfield site, although those plans have run into opposition from neighbors who are not keen on having an industrial development there.

All three sites were targeted by Genesis L.A., a nonprofit initiative by Mayor Richard Riordan to promote the economic development of blighted inner-city areas. The program provides federal funding to help clean up the sites, when necessary, and provides the necessary infrastructure upgrades to lessen the cost to developers.

“It is very expensive to develop these older, inner-city sites,” said Genesis L.A. President Deborah La Franchi. “You don’t know what you’re going to find in terms of contamination when you tear down one of these old buildings. Without some kind of financial incentives to bring the costs down, it would be impossible for developers to build there.”

The latest numbers from Grubb & Ellis Co. show that industrial vacancy in downtown and central Los Angeles was a paltry 2.1 percent in the first quarter of this year. Thus, out of more than 262 million square feet, only 5.6 million square feet stood empty. At the same time, just 1.4 million square feet of new space was under construction in the area as of March 31.

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