Article by Danny King
For Meredith Casey, nothing beats getting into the elevator of her West L.A. penthouse apartment and gliding down five stories to pick up her morning nourishment at the Bagelworks Café and Seattle's Best Coffee shop both located in the very same building.
There are no downsides, said the screenwriter and lifelong Angeleno. I wouldn't be able to cope with having to drive to get my latte in the morning,
Casey, who bought a unit at the Wilshire Borgata in 1997, is a pioneer of sorts, one of a growing number of L.A. residents in mixed-use projects.
Once a novelty in Los Angeles, where developers regarded buildings that combined residential and retail functions as better suited for New York and San Francisco, mixed-use projects here are more desirable than ever.
L.A.'s biggest mixed-used project is Bond Capital Ltd.'s $125 million, 600,000-square-foot Sunset & Vine complex, which broke ground in July and will include more than 300 apartment units atop 90,000 square feet of retail space when completed between late 2003 and early 2004.
But there are other examples of the concept all over town, from TriCal Construction Inc.'s Casa Bella project in Brentwood (43 luxury apartment units, 5,100 square feet of retail) to Urban Partners LLC's Del Mar Station in Pasadena (347 apartments over 10,000 feet of retail), to a host of developments downtown.
Spreading the Gospel
While the exact number of mixed-use projects is difficult to determine, L.A. Planning Director Con Howe said the percentage of new multi-family housing units built in commercial zones stood at 45 percent in 2001, up from 27 percent the year before. Howe estimated that about a dozen are in various stages of planning throughout the city.
Where I'm from, they don't even have a name for it, said Johannes Van Tilburg, the Dutch-born principal of Santa Monica-based Van Tilburg Banvard & Soderbergh.
Van Tilburg designed early 90s mixed-use projects like Lee Group's Venice Renaissance (the Clown Ballerina building) and is widely considered the region's foremost practitioner of mixed-use design.
We're very busy, said Van Tilburg, whose firm was hired recently to design mixed-use projects at both the Furama Hotel site in Westchester and the Ambassador College site in Pasadena. We've got a lot of work.
Mixed-use is on the upswing because of greater public sector encouragement and more developers willing to take on the challenges inherent in building multiple uses in the same structure.
The public sector impetus is more immediate the need to address the local housing shortage. The city has taken steps to ease the entitlement process and, in some cases, played a direct role in financing.
The 1998 adaptive re-use ordinance, which speeded up the conversion of unused downtown commercial buildings to residential projects, along with a proposal this year for residential/accessory services zones that would ease the entitlement process for residential projects in commercial zones, reflect a city government responding to increased population projections by allowing higher density housing.
Within the next 20 years, the population of Los Angeles County is projected to increase by 1.5 million, to 11.6 million. Meanwhile, the average commute time (to and from work, combined) for L.A. County residents increased to 75 minutes in 1999 (the last year of data released) from 64 minutes in 1994, according to the Southern California Association of Governments.
The solution of the past to deal with growth by pushing low density development into the periphery has turned into a problem, said Stuart Gabriel, director at the USC Lusk Center for Real Estatecolor>. There's a demographic imperative to consider more compact growth and a tighter alignment of jobs and housing.
Or, as Dan Rosenfeld, principal at Urban Partners, said of the distinct lines between residential and commercial zones: The notion that you should live in one neighborhood, shop in another and work in a third is not only inefficient, it's boring.
City Efforts
Planning plays a role, but so too does government's willingness to participate.
The city is taking a financial role in enabling mixed-use projects in areas where projected rents may not be enough to ensure an adequate return on investment. Sunset & Vine will be the recipient of as much as $3.3 million in rebates on its real estate tax bill over the life of the project under a Community Redevelopment Agency program.
The CRA also contributed $7 million to the $51 million Hollywest Promenade, an East Hollywood project with 100 senior affordable housing units and 121,000 square feet of retail just completed by San Francisco-based MacFarlane Partners LLC.
I found the city to be progressive on this point, said Victor MacFarlane, its chief executive, referring to the tax break. The key is understanding that a half a loaf is better than no loaf.
With a housing shortage and a shrinking number of opportunities for retailers to get into prime locations, more developers are viewing mixed-use as a viable option, subsidies or not.
Mixed-use basically works best when it's located in areas where the retail component is considered an amenity to residential, said Robert Champion, president of L.A.-based Champion Development Co., which will complete work on the Pasadena Collection residential/office/retail project next year. People will pay a huge premium to rent an apartment to take an elevator down to Starbucks.
While mixed-use projects are perceived as good for the region on a planning level, their short history and mixed results make them risky for developers.
One of the first examples of a successful mixed-use project was Santa Monica's Von Tilburg-designed Janss Court.
The project, developed by Janss Corp. in 1989, had 30,000 square feet of retail, 50,000 square feet of offices and 32 condominiums. Its completion coincided with the resurgence of the Third Street Promenade, and it has remained nearly full for the past decade.
Hollywest opened its doors with its housing component fully leased and its retail component, including a 46,000-square-foot Ralphs supermarket, 93 percent leased. Casa Bella's retail spaces and apartments are full, prompting TriCal to put the development on the market for $13.5 million.
But not every venture has been a resounding success.
The Wilshire Borgata, on Wilshire Boulevard west of Bundy Drive, came on line in 1996, at the tail end of the last recession. The project's 60 condominiums sold fairly quickly, but the 10,000 square feet of retail has been plagued by a number of tenant defaults and vacancies. The project, now full, has been put on the market by its developers, Dkoby Enterprises Inc.
And G.H. Palmer Associates Medici project downtown has filled its 335-apartment first phase, completed in July 2000, but the 20,000 square feet of ground floor retail space remains empty.
Serving a Market
Some of the larger retail tenants and restaurants like to have traditional types of facilities like freestanding structures or shopping centers, said Lee Shapiro, director at Charles Dunn Co. and specializing in Westside retail leasing.
He noted that smaller, service-oriented operations like coffee shops or copy stores are more likely to consider ground floor mixed-use space. As long as there's more traditional competing product, the (mixed-use) developer will have the challenge of attracting big box tenants.
The greatest risk, said Richard Giss, partner at Deloitte & Touche, is in addressing the right market. You have a little difficulty in getting a retailer serving two different constituencies, he said of the Medici, whose higher-end apartment dwellers differ markedly from the more modest clientele in the surrounding area.
Downstairs from Casey at the Borgata, Fred Forooghi says that most of his customers come from outside the building.
Forooghi owns the Quizno's sandwich shop at the Borgata, as well as a Quizno's at another mixed-use project, the Plaza at the Arboretum in Santa Monica. He was attracted to the two locations because of the office buildings of Wilshire Boulevard and the Arboretum Courtyard nearby, not because of the residents above.
Ninety-nine percent of the business is from the outside, said Forooghi, who has owned the Wilshire Borgata shop for over two years. We get very few people from being in the building.
Meanwhile, developers must deal with the design and financing complexities of mixed-use.
There's no question it's more complicated, Rosenfeld said. You have to underwrite each use separately, you have construction and buildability issues, and it's a little more difficult to arrange financing than for a single-use project.
Still, Urban Partners, which is in the early planning stages of a 380-unit project at Wilshire Boulevard and Vermont Avenue, is among a growing number of developers taking on the task.
MacFarlane is exploring four potential mixed-use sites near downtown and CIM Group Inc. is developing a supermarket-anchored mixed-use site at 9th and Flower Streets.