The collapse of the real estate and credit markets is apparent in Los Angeles from stalled developments to homes that won’t sell to offices vacant for months.
You just wouldn’t know it cruising L.A.’s Miracle Mile.
Cement trucks rumble down the historic Wilshire Boulevard commercial district amid a construction boom that belies any economic slowdown.
No fewer than three residential projects on consecutive blocks are moving forward. A BMW dealership is moving in, replacing an old Cadillac dealership and a Bob’s Big Boy that have been demolished. And that’s in addition to what’s recently been completed.
After seeing little development during the real estate boom, the milelong stretch of Wilshire Boulevard from La Brea and Fairfax avenues as well as the adjacent blocks east to Highland Avenue is surprisingly seeing the pace pick up.
“There is a real story in the Miracle Mile area,” said Kevin Batchelor, a partner with Houston-based Hanover Co., a national developer of luxury apartments that last month opened the Viridian apartments on Eighth Street, just off of Wilshire.
The question, of course, is whether the revival will last. Most of the projects recently opened or under construction were approved and financed before the credit markets were decimated in 2007.
“When you start a project you assess the market at the time, and you are really lucky (if) your project comes to the market under the same conditions,” said Wayne Ratkovich, president of Ratkovich Co., a Los Angeles developer that last year completed a $28 million dollar renovation of its 30-story high-rise at 5900 Wilshire Blvd. “I’m sure a number wish they had an earlier start.”
Storied history
The Miracle Mile was developed in the 1920s by A.W. Ross as the first auto-oriented district in the city, with a wide boulevard that was once home to department stores like Desmond’s, which serviced the well-heeled residents of Hancock Park.
Those stores closed decades ago, leaving a motley collection of aging low-rise office buildings, modest shops and middle-of-the road restaurants such as IHOP. But it’s not as if there hasn’t been any development over the decades.
Developer Jerry Snyder built the massive Wilshire Courtyard office complex in 1987. There’s a modern Ralphs supermarket and more recently a new Rite Aid pharmacy and a slick Office Depot store. But those developments did little to improve the staid street life.
But in recent years a host of small food outlets such as a Starbuck’s, boutiques like the chic women’s store Des Kohan on Cloverdale Avenue and eateries like the artsy Caf & #233; Back Door on Dunsmuir Avenue began to change the character of the neighborhood. Nightspots such as the club-like Busby’s and Little Bar, a typical neighborhood spot, also enlivened a once moribund nighttime scene.
Development opportunities
There’s still a lack of the nice sit-down restaurants and boutiques that have made other commercial districts attractive to younger Angelenos. But many of the old Art Deco buildings remain untapped development opportunities, including the former home of Desmond’s, which houses a FedEx Kinko’s on the ground floor.
“The Miracle Mile district has so much character,” said Scott Walter, vice president of development and acquisitions in Southern California for developer Legacy Partners Inc., which has two area projects. “It is a tight-knit, close community and it was clearly an area that we wanted to be a part of.”
The latest developments, in addition to Viridian, include two residential projects in varying stages of completion. Foster City-based Legacy is building a residential property at 5550 Wilshire Blvd. and one block over San Francisco-based BRE Properties Inc. is putting the finishing touches on a rental property at 5600 Wilshire Blvd.
Commercial and residential developer Legacy is one company that has changed plans to cope with the down real estate market. The developer and project partner BlackRock Inc. broke ground at 5550 Wilshire Blvd. in October 2007 for a six-story building with 163 residential units and 15,000 square feet of retail space. Initially a condo project, it now will probably be leased when completed in two years, Walter said.
In October 2005, Legacy also purchased the site next door. That parcel includes the former Desmond’s store, a historic building, and a large surface parking lot. Legacy has plans for a 175-unit residential project there.
Meanwhile, BRE, a publicly-traded apartment developer, is finishing up a 284-unit, five-story apartment building at 5600 Wilshire Blvd. The $134 million development will open next month with studio units starting at $2,000 per month and the corner two-bedroom units at $3,950. Pre-leasing began in August and so far 15 units have been leased.
“Our target is generations X and Y demographics and this neighborhood has people of that age bracket,” said Marco Vakili, vice president of development in Southern California for BRE, a real estate investment trust.
While the projects under construction will likely open, how fast the units are occupied is another question. Since July, only about 10 percent of the apartments at the 60-unit Viridian project have been leased, according to Ryan Hamilton, a Hanover development partner.
The project at 5659 W. Eighth St. caters to wealthy and corporate renters, with units starting at about $3,600 per month and topping out at $9,100. The development has amenities such as a 24-hour concierge and bell captain service. Hamilton said projects like the Viridian are helping to “create that critical mass that is necessary to revitalize the area.”
Indeed, retailers are starting to take notice.
Charlotte-based Sonic Automotive Inc., a car dealership owner, is moving its Beverly Hills BMW dealership to the Miracle Mile area, two blocks east of La Brea.
Raymond Valentine, vice president of manufacturer relations for Sonic, said that the BMW dealership has outgrown its old location and Miracle Mile was an attractive destination. “There is a lot going on right there, it seems like the place might be rolling pretty soon if it’s not already,” he said.
