Redevelopment of downtown L.A. delayed

One of the biggest challenges facing the ongoing redevelopment of downtown L.A. is its sheer size: it dwarfs the downtown areas of many other cities also undergoing revitalization efforts, including Long Beach and San Diego. Consequently, its redevelopment efforts have been a bit spotty and generally focused in specific areas such as South Park (including and surrounding the Staples Center, et al) and Bunker Hill (Disney Hall, The Music Center and the proposed Grand Avenue project).

But since new development is subject to more externalities than just about any other business, things like a declining real estate market or tighter credit can postpone or torpedo the best of projects, the Grand Avenue project among them:

More than a third of the approximately 110 residential projects proposed for downtown -- including the 50-story Zen tower on 3rd and Hill streets, the Mill Street Lofts in the industrial district, the multitower Metropolis off the 110 Freeway and the conversion of the former Herald Examiner building -- have been delayed or put on hold amid the rocky real estate market.

Yet downtown boosters and urban planners are focusing most of their angst on two mega-projects: the Frank Gehry-designed Grand Avenue complex on Bunker Hill and Park Fifth, which would be the tallest residential complex west of Chicago.

Both projects have pushed back their start dates in recent months as developers sought capital and construction loans in an increasingly difficult market and negotiated the various government approvals needed to begin construction...

Though the area has seen an influx of loft dwellers over the last decade -- the population has doubled to 34,000 -- many urban planners see it as a work still very much in progress.

Even the most ardent of downtown supporters agree that the area has not yet reached a critical mass -- in part because most of downtown's rejuvenation is occurring in pockets rather than across the entire zone.

New downtown dwellers still complain about a lack of shopping and that for every newly vibrant street, there are others that still seem dead. The high-end retailers that downtown boosters would love to have in the city center have kicked the tires but still not agreed to put stores there.

Grand Avenue and Park Fifth are seen as crucial because they would bring a new kind of retail -- upscale hotels, gourmet markets, fancy gyms and boutiques that are usually found in high-end malls -- to downtown.

The flagship projects also are going after a segment of the buying market that so far has resisted moving downtown in big numbers: wealthy condo buyers who would be attracted to the architectural significance of their buildings as well as the high-end amenities they offer. Such people would include empty nesters moving in from high-end suburbs as well as people seeking second homes...

The $2-billion Grand Avenue plan calls for building shops, condo towers and a boutique hotel -- as well as a civic park -- on city and county land near the Walt Disney Concert Hall downtown.

The project, now being called "the Grand" by its developer, was originally set to begin construction last fall but was delayed -- and then delayed again. Groundbreaking now is projected for this summer.

Bill Witte, chief executive of Related California, the developer, said the delays in starting construction were more a result of the time it took to develop designs with Gehry and get approvals from government agencies for the developmentthan of the credit crunch.

In addition, Witte said, a lawsuit by Peter Zen, owner of the Bonaventure hotel, sidelined the project's start date by some months. Zen's lawsuit, which was eventually settled, argued that Grand Avenue would violate a previous downtown redevelopment plan by adding too many housing units in the area. Neither party can discuss the terms of the deal.

Related turned to the Dubai fund after CalPERS' financial advisor -- the investment firm MacFarlane Partners -- decided it had already spent enough on downtown projects, including another mega-project, L.A. Live...

But some real estate experts are skeptical, saying the downturn in the economy -- and the falling real estate market -- is making investors skittish about huge new developments.

"The bottom line is, the real estate world is frozen right now," said Homer Williams, a Portland developer who is involved in a number of projects in downtown L.A.'s South Park district. "Unless you have to move -- either you've been transferred, get married, divorced, something that compels you to do something -- you aren't going to do anything."...

The question is whether downtown can persuade those buyers to take a chance on the fledgling neighborhood.

The area might get an answer in coming months with L.A. Live. It's moving forward without the delays that Grand Avenue and Park Fifth have encountered. L.A. Live, which opened its first phase -- the Nokia Theater -- last fall, will eventually include a hotel-and-condo tower, the West Coast headquarters for ESPN, restaurants and a multiplex.

The condominiums, being marketed as the Ritz Carlton Residences at L.A. Live, are selling for at least a million dollars each -- and as much as $1,000 a square foot.

L.A. Live has been boosted by the activity and growing street life around Staples Center. Grand Avenue hopes the nearby cultural attractions of the Music Center and the Museum of Contemporary Art can similarly enhance that project.

"We remain very bullish about this," said Witte, the project's developer. "Especially when times are tough, it's very important you have a story to tell."