Successful redevelopment of urban areas requires the perfect blend of timing, financing, political support and community consensus. It's nearly impossible, experts told the CREJ, but it's coming
Any commercial real estate developer would rather start with a blank canvas of undeveloped land.
Finding such a property anywhere near an urban center is just wishful thinking, however.
In all of the state's major cities, developers must look increasingly inward for development opportunities, opportunities that resemble puzzles as builders must assemble parcels, devise new construction formats, untangle complex city codes, seek out community support and then find tenants willing to squeeze into unlikely spaces to tap large, often underserved populations.
Those who take on the urban renewal challenge may find themselves strapped with entitlement headaches, funding challenges, narrow margins and the label of pariah in the communities they try to serve.
Or, entrepreneurial urban developers may be able to erase their predecessors' mistakes and find themselves at the front of the curve of opportunity created by necessity. There's simply no where else to go.
To explore the real-world challenges facing urban developers, CREJ Editor Diane Winocur moderated a panel of eight experts representing a full range of players in the drama that will redefine commercial real estate and our cities in the years to come.
The CREJ wishes to thank all of its urban roundtable participants for their time and insights, with special appreciation to Charles Dunn & Co. for hosting the roundtable at its downtown Los Angeles offices.
First, let's define our terms. What is the "urban" in urban redevelopment?
GERTLER: I think there's a lot of different views. It's not just the matter of what used to be called "inner city."
BANNER: I work on infill, but I only work on projects that are in census tracts characterized as distressed. The example is the Chesterfield Square [shopping center] project. [Katell Properties] bought that property from a manufacturer whom I helped move there.
KATELLcolor>: The dairy? It was closed.
BANNER: No, it was a food processor. And I hate to tell you what they paid for [the site].
KATELL: But it was just sitting there. That was a closed area.
BANNER: We did a bond deal. They tried to renovate, and they decided that it was just going to be too heavy for them to do it. They ended up selling the property.
KATELL: [mock grumbling] I hate it when somebody knows more about my projects than I do.
BANNER: But it shows you how, when you're talking about infill, you have these competing interests.
But is the inner city the only area we're talking about?
KATELL: I've done a lot of work in the San Fernando Valley, and I don't know whether to consider that urban or not. I've always called it suburban.
GERTLER: Take a community like Reseda, which has a demographic with significant populations of Persians, Latinos, Vietnamese and a mix of other Asian-Pacific cultures. To me, that is as urban as any other part of the L.A. area, and we have to think of it that way. You have to deal with all of those interests as you are attempting to do anything in those areas.
KATELL: And people have said Los Angeles is a bunch of suburbs looking for a city.
DALE-JOHNSONcolor>: There's an urban character to suburbs. I think anywhere within the periphery is urban. It's just that, as you come closer to the urban core, there are more opportunities for redevelopment.
GIVEN: I would say that the definition that encompasses it all is the difference between pure land development, which might begin with a green field, and urban redevelopment, which begins with a prior urbanized land use that is now being redeveloped.
Why is it important to redevelop the urban core? What are some of the positives?
BANNER: I'm born and raised here in [Central] Los Angeles, and most of my professional life has been spent working there. And I look at the core of the city, if you think of it dying, it's going to eventually kill the extremities. So, I think, that's why it's very important to make sure that that core stays healthy. Otherwise, you put the rest of it at risk.
And the other thing is that, because of this notion that, as Will Rogers said, "They're not making any more land."
KEVLES: Also, it's the industry changing with the times. An example is big box retail, which didn't exist a couple [of] decades ago, and, obviously, now it's a big deal. That's why you have a lot of run-down commercial boulevards where retail may be underutilized or may have substandard uses or even people turning them into industrial uses.
Land use changes because of how the market and business models change. We have to keep ahead of the game as best we can rather than wait for things to get really bad.
KATELL: In the general planning context, we're talking about smart growth. [It starts with] urban redevelopment, to take advantage of infrastructure that's already in place, to reduce traffic, so commuters don't have to move all the way from the suburbs to the inner city.
HASKELL: You also have buildings wear out from simple use, and now the consideration becomes, "OK, now what do we do? Do we simply redo what we have or, because of the economics, change the type of use?"
GIVEN: Southern California has gone through many changes [over the years]. In the '20s, Broadway and Spring in downtown Los Angeles went from a level of development that you might see around Olvera Street to being the Wall Street of the West, a phenomenal change, in a matter of 10 years. It's almost hard to imagine, even today. And we've got 6 million more people coming in the next 20 years [according to the Urban Land Institute].
I think that in many aspects, redevelopment is not a choice. It's a necessity. The investment in and constant change of use of urban real estate is a reality and necessity of the economy.
Considering that there's a sort of irrevocable pact about not altering neighborhoods, you can only look to very few areas for redevelopment. These are either large industrial areas that are moving out, that can change, or areas like downtown Los Angeles, and like the commercial strips, where we can begin to accommodate this growth.
In the end, it's going to make for a more interesting little city.
Are there negative impacts as well?
DALE-JOHNSON: I think it's difficult for a lot of people to see it in downtown L.A. because there are so many complex factors going on, but urban growth means higher land values in the urban core.
A good example is if you look at the area around John Wayne Airport in Orange County and how that's evolved over 30 years. You had an area of low-rise, suburban office that, within 15 years from its original construction, was torn down and replaced by high-rise office. That's just a function of the growth in the urban area and the additional density and higher land values that go with that.
GIVEN: A pet peeve of mine is traffic [being called a redevelopment "impact"]. I'd like to see that concept go away and be totally decoupled from urban development and all kinds of development.
It's like the weather. It's something they can talk about, and it's always "not good." Somehow we've trained ourselves to consider traffic as a measure of success or failure [of a project]. I find that it is totally unrelated.
In fact, traffic may be the best indicator of the transformation and success of an evolving area. It means businesses are going to work harder to get closer to their customers. It means people are going to choose different modes of transportation. Maybe they'll walk. It means neighborhoods will be getting better. And I think it's a hiccup that occurs in people's lives. I would love to see people start to deal with traffic as an opportunity.
How does the public perceive urban redevelopment, and what can be done to pre-empt public resistance?
GERTLER: I think, just as with urban, we have to define public. I think a lot of people in the development business define public as those people who oppose them at every turn. Actually, there are a lot of publics, and it's our job to find them and engage them in the process.
The Ambassador College site [in Pasadena] is one example. It's a block from the new Gold Line Station. It abuts Old Town Pasadena. There's a grocery store, a Ralphs right there, and on the west side are the homes of people like [former California State Attorney General] John Van de Camp.
So here's a classic smart growth project that is mostly housing, in a city that has not complied with the state's housing element requirement.
So just how do you present that to the public? I think you have to look at the breadth of interest and engage other people, and you can build support.
How we present that to the public is a function of being proactive. If you wait until there is a big reaction, it's too late. We're not effective as firefighters, and probably you can't be either. But if we get out there early and try to position and define projects and solve problems, there's more of a chance that you're going to get approval.
COLONNA: So much of the dynamic of a site like Ambassador becomes a function of an overoptimistic development plan. That creates the gadfly who believes this is a bad deal. If you're close to the numerics of that particular transaction, the deal had economic viability.
If you really take a step back, we see so many deals on the cusp of success that are infill, that frankly are spoiled by greed. And, you know, to attract capital and to have the clairvoyance of taking the risk of inner city or infill urban development, there's got to be a point at which you say, "Hey, look. This is my pro forma. It says this many units. But I really just want this many units." And then the dynamic becomes the seller, and deals don't happen.
I'm trying to balance responsibility and the public's vision of that versus the vision of really what happens, which is, there's money to be made at reasonable levels of density and trade-offs on traffic. But I agree with your traffic statement.
Where does successful urban development start? With the visionary developer or the city willing to look at the big picture?
KATELL: Redevelopment suffers ultimately from having nowhere near the resources necessary to do the job. We can do catalytic projects. We can do focused projects. But we're only successful when there is opportunity for people with all different levels of capitalization, and all different levels of organizational depth, who have an entrepreneurial idea about what to do with the land, whether it's for their own business or for development purposes, and are able to be transactive, and do what they want to do with a property.
In our company's experience, the cities that have been successful are the cities that worked hard to develop consensus. In doing so, they have moved proactively to set the table, to the extent that they can. But, even more so, they're ready and transactive when the vision has to adapt to the reality of what's happening in the marketplace.
It's the situation where the developer coming in is operating on real time today, not what was perceived as a problem 10 years ago. And it's the capacity of a city and of the leadership in the community to be able to equally adapt, which is at the core of where the successful projects are happening.
DALE-JOHNSON: I agree. But once that vision is expressed in public and understood, you create a land-assembly problem, a price problem, for a developer. So the developer's got to have the vision. A successful guy has got to have the vision to understand that the political will is there, and get into the game.
GIVEN: Years ago, there was a big battle along Detroit Street in Los Angeles about the redevelopment of the wonderful old homes and multifamily complexes into higher-density multifamily.
That neighborhood [of architecturally rich, matching brick apartment buildings] was built by a number of small builders who, under the rules available in the city, were able to go out and take what was on the land and put up something else. It didn't take the five or 10 largest developers that you can count on your fingers to be able to build the city.
I think that land assembly for certain uses, that's where the teaming and partnering is very important. And I think Jonathan has been very involved in some of the new ordinances and development reform. It's getting to the point where just doing a project doesn't mean having to assemble land, doesn't mean having to buy a block so that you could put in the parking that you need to do, and where more people can be involved.
And it isn't all about large-scale redevelopment. I think if the city was rebuilt only on large-scale redevelopment, we'd never get anywhere.
KATELL: There is a place for that process to work in the way you suggested. I think that in both cases, where the private developers will take the risk and go through that kind of a process, I think they can get there, and I think that they can come up with a compromise.
But there probably are cases where the city or agency might see developers aren't willing to do what they need to do. What I haven't seen is any political will to do what you are describing. Maybe it could happen in the future, but I certainly haven't seen that.
For example, Chesterfield Square, we had an adjoining property. This should be a classic case. It was a recycling center. Everybody hates this property. But there was no political will to use eminent domain to take it down, and the guy didn't want to sell. So we couldn't do it on a private basis.
Probably because they would have to relocate him, and they knew nobody else is going to want him either.
BANNER: He's been there for 40 years.
So how can developers be respectful of the community, and bring change, too?
BANNER: I actually like this notion of change, and I really think that as a city or neighborhood, you have to get people to value change. Otherwise, the status quo is fine with them. So you have to be smart enough to appeal to whatever that interest is, to say, "This level of change or this kind of change is actually good for you."
Maybe it solves some of the problems. It's an opportunity for us to do something different, and it's a value proposition.
GERTLER: It is all about the fear of change and something different, no matter how bad it is - the fear of the devil you know versus the devil you don't know. You need to understand the values of the community in which you're working, and then to shape your project, even the minor ones, in ways that are important to them. Engage them so that they feel they are a part of it. That ups your odds by 60 percent right there.
COLONNA: Absolutely.
Getting back to political will ...
KEVLES: The mayor definitely wants to provide the political will to the people who can help us with our housing problem. Second to public safety, I would say the housing problem is the top priority for the city. The administration did a lot to contribute to this resolve.
KATELL: That I'm anxious to see.
GERTLER: Yeah.
KEVLES: In any event, the political will is there. Yet we also want to respect neighborhoods. I think what the development community needs to do, and obviously I'll speak just for L.A., in partnering with our office and the City Council, is to engage directly with neighborhood councils that have commercial strips with potential for mixed-use redevelopment, and not use the word "density," because there's no context.
BANNER: Jonathan, let me ask you something. Given whom you work for, who would you say should be the ultimate salesperson for delivering this vision? I think you really have to sell at the end of the day.
KEVLES: Well, I think it's two-fold. It's at the neighborhood level where it is people, members of neighborhood councils, encouraging people to get involved so they can help to spread the word that there is such thing as density that can improve the quality of life.
BANNER: Absolutely.
KEVLES: It's also from the mayor's office to try to encourage the departments and members of the City Council to understand that there are places in the city where we can improve the quality of life and make use of good density.
GERTLER: I'm glad that you raised the issue of leadership and political leadership. While there may be some people around who are willing to stick their necks out a fraction of an inch, I think it's critical that we have a political leadership that's committed to a vision, and we don't have that in Southern California.
To be fair to [politicians], their bottom line is 50 percent plus 1. They need to have the votes to get re-elected. So we all have to help them.
[What they need is] help finding other people, besides the usual suspects, to engage in the process.
I respect that there are a lot of really responsible people who care about their community, who want to make sure that things happen in a way that preserves the quality of life. But to a lot of them, that means no change. Those are the voices you hear the most. And those are the voices that, unfortunately, the political leadership is listening to because the others aren't engaged enough. But we've got to pull them in.
And I would say to Jonathan, and I know being a deputy [mayor] it's a tough road, but the political leadership has to provide the vision so that people see that the solutions are actually going to benefit the quality of their lives.
What should politicians be doing?
DALE-JOHNSON: It's a moving target. If you look at the demographics, the aging of the baby-boomer generation and the influx of Latinos, our communities are changing. So what makes sense in a neighborhood today may not make sense five years from now. So you really have to be thinking creatively.
GERTLER: Even with the change in political leadership or political power, there's still some disconnect between what some of the elected think and what's been going on in the communities they represent.
GIVEN: But, I think you said that there aren't leaders with vision. I can certainly say that across the state in cities where we're working there are individuals and organizations that do have a strong grasp of the vision, and they have a very transactive approach to how they're willing to implement that vision. I think that there should be some recognition of that because those situations become the role models for others who are searching for how to get traction.
GERTLER: John, I didn't say that they had no vision. I said they're not willing to stick their neck out on behalf of the vision.
GIVEN: Well, I think there are some who are doing that. I think it's been remarkable to see where that happens. Yeah, where that vision runs up against the wall, you ...
GERTLER: We have to support them.
Perhaps we're talking about scope. Individual agencies can be supportive while regional support for redevelopment may be lacking. Nick, I know you have a resistance to investing in projects that cross city lines.
COLONNA: Look at it as capital. Any project with more than one agency in an entitlement program is going to see the relative cost of capital go way up.
When we're dealing with some of these model communities that know what they want, that have battled it out with people, and you're just negotiating development agreements straight up, we're there.
When you bring in any coalitions, the third party who really doesn't have anything to gain, we'll walk away. And that's a bad trend for California in general.
BANNER: You really have this perception of, "Well, I don't want to go in this political jurisdiction because I perceive there's just this instability, that I could get in there and never know what the end game is. So I'll go to the other side of the street to this market, which I perceive to have a little bit more stability."
That is a perception that is probably shared by a lot of people that pick where they decide to do business.
COLONNA: But isn't so much of it that the communities that are getting the capital redeployed into them are the ones that have decided to compromise?
KATELL: Where are those?
COLONNA: Well ...
KATELL: Have you found some?
KEVLES: Downtown.
BANNER: I think some of those are where people would value change. If you go to places where people have nothing, they'll say, "Well, something is always better than nothing." They may be more interested in some form of change.
KEVLES: It's a vicious cycle though.
KATELL: My best example of what we're up against is - I was walking down the street, San Vicente Boulevard where my office is in Brentwood, following three men, and we walked past a project under construction with retail on the ground floor and a couple levels of apartments. It is a perfect urban infill project. People could live there. There are restaurants, there are cleaners, there are drugstores, everything that they can walk to and not have to get into a car.
And one of them said to the other two, "I live in the Valley. Our homeowners' association would make sure that a project like this would never happen."
I had to resist the temptation to throw them in front of traffic.
[Laughter]
So will redevelopment happen only in places where it's been made easy?
GERTLER: You can win even in the tough jurisdictions. We had a win recently in Thousand Oaks, where the council is a no-growth council. And we had a win because we equaled out the number of people who supported it to the people who opposed it.
COLONNA: You had to show up.
GERTLER: That's right.
And how easy is easy? Michael, do needy areas put up no opposition to projects?
BANNER: Well, I wouldn't say you won't get a "not in my backyard" problem. It just might be a different set of issues.
One of the things we've done a lot of is to support the development of independent grocers in places where you're not able to bring in a chain store. A market would come in to operate the same kind of grocery with the same products and services as a Ralphs, but they couldn't get the liquor license past the community. A neighborhood coalition would spring up saying they don't want too many liquor licenses in the area. It puts the grocer at a competitive disadvantage against the chains.
So, I mean, the problems tend to be somewhat similar. I would say sometimes other communities might not be as well organized.
How big a problem is the resistance of national chains to going into these areas?
HASKELL: I think the tenants do want to go into redevelopment areas. New tenants look at demographics as an opportunity for growth and expansion. If there's a million people and there's not a Kohl's store, Kohl's wants to go there.
And it doesn't seem to be price resistant. They'll pay higher prices to go into these dense areas. They're making concessions on multiple stories that they wouldn't do in other locations.
So the tenant, the occupant, is not a difficulty. I mean Jerry is having trouble maybe in South Central with some tenants, but a lot of tenants were interested. And I think that, if they'll go, they'll make concessions.
When Kmart announced their closures, they announced closures in their weak stores, and those were not urban stores that they closed. They were suburban, low-density stores.
So if you look at that as an indicator, then, if you're Wal-Mart, you might want to go to that market.
KEVLES: Don't you think that too many tenants have a very narrow perspective on what they believe is a suitable market for them, and suitable space they can go in, and their real estate guys are out there not deviating from that theme?
GIVEN: I think that CIM's success was, in part, in understanding how to provide a business model to bridge that problem, and help people get out of the mall and back into the traditional city.
Tenants developed a practice that, probably from the lasting legacy of the shift from Main Street to shopping centers 40 years ago, that there was a level of transactional organization that occurred in the retail business. You had one owner who you worked with, who was well financed. You had a standardized physical box that you could go into. There would be 100 other tenants, so there's a co-tenancy that's in place. And the lease transaction itself, which is not an easy transaction, was with professionals.
On Main Street or out in the city, out beyond the centers, you have separate owners, some of whom have trusts, some of whom have no capitalization, some of whom have an emotional tie to something they didn't do 20 years ago or their grandfather tried to do 20 years ago. And you have tenants who would like to get into that area but they don't have a partner to negotiate with.
I think that what we can learn to do is to create that partnership - by bringing capital to urban real estate, by bringing creative thinking to existing buildings, by being able to do it in multiple locations so that you're not the only one doing it on the block.
The tenant wants to know that you're working hard on three or four or five other properties and that you're going to bring in other tenants who will do business, who will do well in that same environment if they're all together. I think that in those environments, where there is that kind of partnering between real estate owners and landlords and developers and creative tenants with a story to tell and a message to get out to customers, tenants are anxious to get in.
DALE-JOHNSON: How easy is it to find those kinds of cases?
GIVEN: It's hard work, very hard work.
Can cities help in the tenant attraction process?
GIVEN: Believe it or not, [the city of] Santa Monica had an environment in which that happened. They made the investment in the land. They made the investment in the parking. They made the investment in the public improvements. And they did a land use plan that fit an evolving market. But it took the transactions to see the land use change and allow room for that to happen.
So it can happen in many, many environments. And it'll only happen in windows of time. It doesn't happen endlessly.
DALE-JOHNSON: That's project language for 10 years.
GIVEN: Right. Santa Monica did it. You know what they did? They said there will be no movie theaters anywhere but on the Third Street Promenade. They did that - whether they had the vision or not - just before the cycle of six-screen setup clusters were looking to go into places all over the Westside.
COLONNA: They knew what they wanted to create.
GIVEN: Yeah.
How about Los Angeles?
KEVLES: The chain stores, drug stores or grocery stores, they have their model, they have their box, they have a design that's already made, and they want to find a place where it's easy to stick it. And any deviation from that would be nerve racking for them.
In a project we worked with recently, we told a drugstore, "You'll get the political support if you put housing on top of this thing rather than just having the traditional box and a parking lot."
We couldn't get them to put the frontage on the street because you have to have everything set back. ... It will be a beautiful parking lot.
So we want to be able to engage with these chains that are coming in and their big boxes. They think that we should be so happy that a big box is coming to South L.A. I want to ask the developers to put some parking on the roof of the big boxes so that we can free up some land, maybe put some housing on that tract, or just a little more interesting development rather than kind of waste the land.
But that's going to be a challenge for us. Somebody will say, "Well, you know, a certain part of your community is so desperate. You shouldn't push away some development because you're trying to get more out of it."
Whereas I'll say, "Well in the long term, what are you going to get out of it? It's just another inefficient use of the only commodity we have to work with in the city government."
GERTLER: I think this is where all of us around the table really have to work together. Because I have turned down drugstore clients because they were totally inflexible.
Sound familiar, Jerry? I know you've had a struggle with inflexible tenants.
KATELL: I think we're probably talking about the same client. In doing Chesterfield Square, we started negotiating with Starbucks. There was no Starbucks in South Central, so we really wanted them there. I mean, we could have had a Coffee Bean and the others, but just having a Starbucks was a huge symbol to the community that shows they are just like the other parts of the city.
So Starbucks was insisting that they be in a freestanding location out on the street. And I didn't want them there. I wanted Starbucks in the center, where it would help create traffic. After two years, I finally got Starbucks to agree. They're happy.
Now, I finally got this drugstore chain who has this inflexible rule, "We can't have Starbucks next to us."
I don't have a choice. I mean, if I get this thing signed, I'm going to have to move Starbucks out on the street. But, talk about inflexibility, actually stupidity. Because there's Starbucks pulling in all these people all the time right next to them, and they've got signs 12 times bigger than Starbucks'.
DALE-JOHNSON: What's the figure?
KATELL: It's going to cost $600,000 to move Starbucks. Because Starbucks says, "Hey, we're happy here. If he wants us to move, maybe we'll do it, but you're going to have to pay for everything."
DALE-JOHNSON: Why don't they want the Starbucks next door?
KATELL: They have to be the end cap.
GIVEN: I will say that tenants and creative deal making in public and private partnerships do go together. We've had the success and benefits to date of a public-private partnership with the mayor's office, the City Council office and the Community Redevelopment Agency, which has resulted in a Ralphs supermarket that's going to go into downtown L.A.
The project will involve 250 housing units on top of that. It's a very expensive project to do it that way. Perhaps it would be a more profitable project if it were just a Ralphs with a parking lot. But I agree with Jonathan; that would be the wrong use of that particular land, and it wouldn't create the full development that's possible.
Mixed use is, to a great extent, brand new in Southern California. How much of a challenge does it represent? Will anyone lend on it?
DALE-JOHNSON: There are other cities around the world where it's commonly done. We all have to educate ourselves, and part of my job is to make our students better understand the challenge of mixed use and to have that way of thinking about urban development. We learn a lot by going to other cities, which have been successful for many years. I mean, we're pioneering here, and we shouldn't be.
COLONNA: Yeah. I think that most lenders are still operating in a Byzantine period of how they assess a mixed-use risk. I mean it's a laggard component, and it's a huge problem. As equity and as developers, we all see the value.
Unfortunately, we went through a significant era when major banks in L.A. were trying to make Community Redevelopment Agency quotas. I came through a bank and ran a workout area for quite some time, and the worst deals in terms of the sales were the CRA deals.
So the dynamic now is it's just coming to the point where there's a more responsible equity component being developed.
GIVEN: Well, and I think at the end of the day, the new product needs more equity behind it.
COLONNA: Yeah.
GIVEN: We've been successful by having an underlying philosophy of putting equity to work and not overleveraging it. And our current fund is CALPERS quality.
COLONNA: What's your maximum advance rate on a single project basis?
GIVEN: At a fund level, we are 60 percent leverage.
COLONNA: We're 65 percent in our Smart Growth Fund.
GIVEN: Now, that makes the deal tough to pencil.
COLONNA: Right.
GIVEN: But it also makes you capable of being opportunistic. It makes you capable of being an underwriter at the table from the start of the project to the end. It puts you in a position to move a project forward and take it to other investors and lenders as you go, a deal that they would want to be in on.
COLONNA: Well, the momentum value inures you.
GIVEN: Yeah.
What about building and zoning issues for mixed use?
GIVEN: It varies in districts in each region. L.A.'s adaptive reuse ordinance is a leader in the state. San Diego is very good.
I think what's a bigger question is the notion that residential is treated differently than commercial in new construction, and the notion that land use needs to be segregated. So some old notions of open space need to be directly associated with residential in a high-density environment. I feel that's a pure suburban concept.
I think the bigger question is, does the development that everybody says they want to see, does that require more variances than the development that people don't want to see? And I would venture to say that, on the whole, the development that people don't want to see is easier to do than the development people want to see.
GERTLER: That's so true.
GIVEN: And that's completely upside down. And that's the scariest thing to a developer, to be doing something that has community consensus behind it, knowing that it will be subjected to potentially a years-long process in which the environment is changing around you while you're going through that variance process.
COLONNA: How many times have you had to modify something to be less aesthetic and lose value by virtue of that?
GIVEN: The classic one is one that we can now, I think, say rests in peace - the corner commercial ordinance that passed in Los Angeles in response to minimalls. Nobody wanted more minimalls, so we needed a corner commercial ordinance. The corner commercial ordinance didn't change the fundamental configuration. With the minimall, it simply said it had to be nicer. So it put limits on the height, it created more setbacks, it created landscaped areas, it created parking standards and signage standards.
When you come in doing a proper corner commercial development in an urbanized area that has higher density than a 45-foot height limit and mixed use, all the things that people want to see, you have to go through a variance process for every one of those standards.
What do we ultimately want? Will L.A. ever be Manhattan, with high-density housing and a rich, vibrant mixed-use street life?
DALE-JOHNSON: L.A. will be a collection of urban villages. Downtown will grow but it won't be dominant like Manhattan. It will be an important place in the regional fabric. It'll have character and culture and government offices and places to go and parks. But people also will want to go to Century City, Santa Monica, South Bay and Long Beach.
GERTLER: Hopefully, there'll be transportation alternatives to the car, which might make us a little more similar to Manhattan. Although with budgets as they are, that seems further and further away today than a year ago.
BANNER: It goes to notions of perception. I can remember being in Jersey City last year and on the phone was this developer who was doing some kind of conversion in Manhattan. And he said, "Oh, $700 a square foot."
I go, "Oh, I guess we can't live there."
So I mean, when you say, "Will it be Manhattan," you know you've got to start conjuring up all the things that go along with that and maybe that's not what we want for Los Angeles.
COLONNA: L.A. has had a housing shortage for 50 years, and it's just a function of price.
GERTLER: Manhattan is a 19th century city, and I don't think we want to revert to that life.
DALE-JOHNSON: Part of a lot of what we're talking about here is because L.A. has grown up largely in the 20th century, which offers the freeway network and a lot of opportunities that other cities don't have. And the challenge is to figure out how to capitalize on that.
And in the short term, are the obstacles too tenacious, is it wishful thinking or will California's cities be successfully redeveloped?
GIVEN: I think it's a reality. It's not a wish. It's a fact. It is happening, and it is happening very rapidly, and it will spread.
Participant Biographies
" Michael Banner, president and chief executive officer, Los Angeles LDC Inc.
Los Angeles LDC is a nonprofit community development financial institution. It seeds the economic improvement of low-income communities from within by helping existing employers expand and existing retail thrive.
Banner has arranged $50 million of LDC community development financing since 1988. He was the primary financial advisor to the Mayor's Office of Economic Development during the Riordan administration and serves on the boards of several commissions. He is coordinator for the Urban Land Institute's upcoming Urban Marketplace, and he is national institute director for the Urban League.
" Nicholas Colonna, partner, Pacific Coast Capital Partners, LLC
Pacific Coast Capital Partners is a full-service real estate investment firm providing $1 billion in the past five years to commercial developers with whom it partners. It has two urban smart-growth funds, and its investors are national and regional banks. Among its biggest urban work has been to redevelop major industrial properties such as the Port of Los Angeles Distribution Center.
Colonna has more than 13 years experience in real estate lending working for Capital Markets Group, Wells Fargo Bank and Union Bank. He is vice-chairman of the Los Angeles Office Development Council of ULI.
" David Dale-Johnson, associate professor of finance & business economics at the University of Southern California's Marshall School of Business
As director of the Masters in Real Estate Development program, David teaches and works with students to analyze the real estate economics of specific urban-development scenarios. He also teaches on housing, land use and urban economics and founded the Summer Program in Real Estate to help minority developers. He has been a consultant to a number of local governments, to the U.S. Department of Housing and Urban Development and numerous private-sector entities.
" Julie Gertler, president, Consensus Planning Group
Consensus Planning Group is the largest firm in the country specializing in community relations, building grassroots community support for real estate development, transportation and public facilities projects. Gertler founded the firm 15 years ago.
She served as a deputy to the Los Angeles City Council and was appointed to a citizen's commission on rental housing by the mayor of Los Angeles. Gertler is active in ULI, International Council of Shopping Centers, Women's Transportation Seminar, Central City Association and is a board member of the Valley Industry and Commerce Association.
" John Given, senior vice president, CIM Group
CIM Group is the 800-lb. gorilla of urban redevelopment. Because it has its own urban-development fund, it is able to become the majority property owner in once-vital shopping districts, and turn them around. Since its founding in 1994, CIM has acquired, repositioned and operated Santa Monica's Third Street Promenade, Old Town Pasadena and San Diego's Gaslamp Quarter. The firm is moving ahead with plans to bring Downtown L.A. its first full-service supermarket, along with what will eventually be 1,200 lofts and 127,000 square feet of retail.
Given has 25 years experiencing in real estate development. He worked with the Los Angeles Community Redevelopment Agency and the Los Angeles Metropolitan Transit Authority. He's active in ULI, the International Council of Shopping Centers and the American Institute of Certified Planners.
" Jay Haskell, vice chairman, Charles Dunn Co.
One of the largest combination brokerage and third-party property management firms in the West, Charles Dunn has been around since 1921, and is best known for its representation of large swaths of Los Angeles' commercial corridors. In California, the 500-employee firm also has offices in Orange County, San Diego, San Francisco and Sacramento.
Haskell has 30 years worth of experience in the real estate industry, working as chairman president and chief executive officer of Seeley & Co. Prior to that he worked at Grubb & Ellis.
" Jerry Katell, president, Katell Properties
Los Angeles-based Katell Properties has developed more than 5 million square feet of commercial, industrial and residential real estate since 1976. It maintains a 1.2-million-square-foot portfolio, and is known for developing business parks, mixed-use, office, industrial, build-to-suit and multifamily projects. It became a pioneer of inner-city development when it opened Chesterfield Square, the first from-the-ground-up shopping center in South Central Los Angeles since the riots 10 years earlier.
Katell entered the real estate development business in 1964 and moved up the ranks with Oceanic Properties, Farwest Capital Co., Parking Structures International and W&K Co. He is a member of the executive committees of the Los Angeles District Council of the ULI and the Lusk Center for Real Estate at the University of Southern California.
" Jonathan Kevles, deputy mayor for economic development, City of Los Angeles
Represents Mayor James Hahn, who has put forward a three-pronged effort to bring new development, and especially housing, to Los Angeles. Kevles was appointed director of the Mayor's L.A. Business Team in 2001 and he served as a consultant for the Los Angeles Community Redevelopment Agency, the Los Angeles Department of Water and Power and the Los Angeles County Chief Administrative Office. Prior to his public service, Kevles was a project analyst for Kosmont and Associates.