Tussle in Garment District
Kennedy and Trammel Crow Clans Vie for L.A. Supremacy
By DEBORAH BELGUM
They are sometimes referred to as the Hatfields and McCoys. But what’s going on these days in downtown’s garment district more closely resembles a Kennedy-Johnson rumble.
This time around, the patrician Kennedy clan is duking it out with another set of Texans, the Trammell Crow family, as they try to fill millions of square feet of L.A. real estate with furniture sellers, apparel marketers and giftware firms.
The Kennedys, who control the L.A. Mart, and the Crows, who operate the California Market Center, each want to become the dominant player in the growing gift and accessories showroom market and they’re sparing no expense to make that happen.
“It’s gotten rather nasty,” observed Michael McGilvray, one showroom tenant who has been watching the fracas from both sides.
The dustup commenced last August, when it was announced that Trammell Crow’s Dallas Market Center, one of the country’s largest showroom operators, and two other partners were taking over leasing of the 2 million square feet of showrooms in the three California Market Center buildings.
The California Market Center, whose three buildings until recently housed primarily apparel and textile showrooms, is in the midst of an overhaul, both physical and competitive. All 13 floors of one building are being gutted and renovated into gift and furniture showrooms.
The Kennedys’ Merchandise Mart Properties Inc., based in of Chicago, also came to town in 2000, when it took over management of the 54-year-old L.A. Mart building, for years the home of the city’s gift and accessories showrooms.
The L.A. Mart, whose 720,000 square feet of space encompasses 275 showrooms, is located a few blocks from the California Market Center, which has more than 1,200 showrooms.
New management at the boxy L.A. Mart building, owned by MMPI’s parent company, Vornado Realty Trust, was quick out of the gate. The Kennedys were confident they would make a nice profit off the lucrative gift and accessories market that peaks every January and July when retailers flood into L.A. for the behemoth California Gift Shows held at the Los Angeles Convention Center.
The contentment was short-lived.
Shortly after its arrival last summer, the Dallas crew started calling L.A. Mart tenants about the possibility of moving to the California Market Center.
The connections are not tenuous. Many of those with L.A. Mart showrooms also have showrooms at the Dallas Market Center and for years have done business with the Trammell Crow people. Crow Holdings, owner of the Dallas Market Center, is a diversified investment company that owns and directs the investments of the Trammell Crow family.
“I was contacted in November about moving over from the L.A. Mart to the California Market Center,” said McGilvray, president of Anne McGilvray & Co., whose showroom was in the Dallas Market Center for years until he built his own showroom in Dallas.
As the management agent, Dallas Market Center has signed 40 tenants to the California Market Center, once known as the California Mart, in the last six months. Half have been yanked from the L.A. Mart, said Shari Mobley, a spokeswoman for the California Market Center.
The top five floors of the Center’s Building C have been renovated and are 90 percent leased. The rest will be renovated throughout the year.
The Kennedy clan isn’t ready to roll over, however. MMPI has launched a campaign to retain and attract tenants with lower lease rates. The reminders are seen in the elevators of the L.A. Mart, where large plastic signs showcase new tenants that have come to the building or who have signed up for new leases.
“We will fight tooth and nail to win,” said Christopher Kennedy, president of MMPI and the eighth of 11 children of slain Sen. Robert Kennedy and Ethel Kennedy. “When you combine our tremendous financial resources and the level of focus we can bring, it is going to be a tough battle for them to win.”
L.A. Mart renovations
Despite Trammell Crow’s earlier successes, the Kennedy side has gained some traction. The L.A. Mart, for years a sleeping giant, has been reawakened with a 92 percent occupancy rate.
MMPI has spent $5 million to recarpet and repaint the hallways, upgrade the elevators and tear down a showroom on the main floor to create a lobby area where buyers can relax. The air conditioning system also is being upgraded.
It even expanded the one restaurant inside the building to compete with the assortment of eateries that operate at the California Market Center a city within a city that houses a drugstore, gift shop and banks. In the process it has been churning out press releases about everything from food services that abound at the building to the Internet Caf & #233; and buyers’ lounge.
But success or failure on each side may be determined in part by the personalities and management styles of the officials at both companies.
True to stereotype, the Kennedy group is seen by some as standoffish, giving an East Coast flavor to their business dealings. The Dallas group knows how to win friends with their “aw shucks” drawl and accommodating demeanor.
“Chris is very dry, very WASPy and very impressed with the fact that he is a Kennedy,” said one source who has dealt with both mart operators. “You can see his mind is made up, and you can’t budge him.”
When Kennedy comes to town, he stays at the staid California Club. Bill Winsor, president and chief executive of Dallas Market Center, checks into the more pedestrian Omni Los Angeles Hotel.
“The Dallas people handle things in a warmer, fuzzier way,” said Dick Firestone, whose Firestone Associates spent 20 years at the L.A. Mart before leaping recently to the California Market Center.
“I can imagine (Bill Winsor) being the Marlboro man,” said Hal Kaltman, president of Hal Kaltman Textiles and chairman of the CalMart Tenants Board.
Like Winsor, Paul Lentz, the new general manager at the California Market Center, is originally from Texas and speaks with a soft drawl.
George Bant, president of D & #233;cor Collection Ltd., has dealt with both mart operators. As an L.A. Mart tenant, he met with Christopher Kennedy and the mart’s board to suggest that they provide complimentary shuttle buses to retail buyers who wanted to stop off at both mart buildings during the big California Gift Shows.
“Chris said I didn’t know what I was talking about,” said Bant, who has since moved over to the California Market Center. “There wasn’t any dealing with him.”
Bant has had a different experience at his new California Market Center home. “When I moved into our showroom at the California Market Center in March, they put down the wrong carpeting,” said the giftware representative. “At the L.A. Mart, it would have taken years to fix that. At the California Market Center, these people had it changed in 24 hours, bringing in people overnight to get it done.”
But L.A. Mart tenants praise Kennedy and his company for being more responsive to their needs than the previous management team. “It’s much better than it used to be,” said Lance Hanshaw, a partner in Fine Lines Co., which decided to renew its five-year lease at the L.A. Mart. “They’ve thrown an awful lot of money into the building.”
And they are concerned about keeping tenants. When McGilvray notified the L.A. Mart he would be moving to the California Market Center, he received a personalized note from Christopher Kennedy expressing his “extreme disappointment” that McGilvray’s company, which also has a showroom at the Kennedy’s Merchandise Mart in Chicago, was leaving.
Dallas Market Center executives were diplomatic when it came to talking about their L.A. Mart competitors.
“The simple answer is we felt the market was underserved,” Winsor said by phone while fishing for speckled trout along the Texas coast. “We’ve never felt it was an us or them situation. We are really more focused on what we are doing.”
The lines are drawn. Said Kennedy: “This battle will run a while.”
Battle of the Marketplace – The two showroom operators vie for the same customers only blocks from each other.
California Market Center
Address: 110 E. 9th St.
Size: 2 million square feet of showrooms in three buildings
Year Built: 1964
Owner: Hertz Investment Group of Los Angeles
Leasing Agents: Dallas Market Center, George Little Management and DMG World Media
Tenants: Apparel manufacturers, textile representatives, gift and home accessories representatives.
Address: 1933 S. Broadway
Size: 720,000 square feet of showrooms in one building
Year Built: 1958
Owner: Vornado Realty Trust of New Jersey
Leasing Agents: Merchandise Mart Properties Inc.
Tenants: Gift, home accessories and furniture representatives