Let Loose in Long Beach

35

For Jim Michaelian, chief executive of the Grand Prix Association of Long Beach, the early days of the race were as much an exercise in staging as race logistics.

“There was an X-rated Pussycat Theatre on Ocean Boulevard and we hid it when the cameras from CBS covered the Grand Prix as one of their feature sports events,” he said. “We certainly didn’t want to have people see that.”

But having downtown Long Beach as a backdrop to the 40-year-old race is less a problem these days, as a flood of development has poured into the city, much of it in response to an updated, more developer-friendly zoning plan adopted last January.

Where once stood liquor stores, vacant offices and X-rated movie theaters now stand craft breweries, hotels and creative office space. Downtown development and investment in the waterfront city of 465,000, the second largest in Los Angeles County, is on an upswing. Projects planned or under construction are expected to add up to 1,750 new residences, 533,000 square feet of office space, 400 hotel rooms and 53,200 square feet of retail space as well as a half-million square feet of civic space, according to the Downtown Long Beach Associates, which represents the area’s property and business improvement district.

“It has been a true metamorphosis,” Michaelian said. “In 1975, downtown Long Beach was a Navy town. We had flophouses and X-rated movie theaters. … We have gone from trying to restrict the coverage to a full expansion on showcasing the assets of the city.”

He is not alone in his enthusiasm.

“What’s happened in the last 10 years is remarkable,” said Kraig Kojian, president of the Downtown Long Beach Associates. “In 2000, we didn’t have a shovel in the dirt for any new development.”

Rebound revived

For most of last century, Long Beach had been a gritty maritime town, dominated by its port operations and the Long Beach Naval Shipyard with a few tourist attractions, such as the Queen Mary, the Grand Prix and an amusement park near the waterfront.

Like many other large urban areas across the country, Long Beach slipped into decline in the 1970s, a descent that was capped by the 1997 closing of the shipyard. Things started looking up a year later, when the Aquarium of the Pacific was built. The city’s downtown was fully on the upswing when the housing boom hit in 2002. More than 2,000 apartment and condo units were added to the skyline in the early 2000s, bringing the area total to more than 13,000 apartments and condos, and 30,000 residents today.

Retailers soon followed. Shops such as Z Gallerie and Express began to fill up Pine Avenue, a main thoroughfare, and the area seemed to begin to thrive.

But the momentum stopped in the wake of the Great Recession of 2008. Retailers closed and development plans were put on hold. Then in 2011, Gov. Jerry Brown signed Assembly Bill 1X 26, which aimed to put a dent in the state’s budget shortfall by disbanding community redevelopment agencies, including the one in Long Beach that had been crucial to revitalizing downtown.

Streamlined approvals

In spite of the economic pressures, downtown still held a lot of appeal to developers, especially when it came to taking advantage of its stock of early 20th century architecture.

During the boom, developers approached the city with plans for the adaptive reuse of several of its historic buildings and for approvals to build taller than allowed by code, among other proposals, said Derek Burnham, planning administrator for the city.

“We thought (such projects) would go downtown in our longer-term vision but (they were) outside of our regulation at the time,” he said. “So we found ourselves in a reactive mode and every development needed some amendment to the plan.”

Discussions about adapting the city’s code to reflect these ongoing requests started back in 2007, but didn’t gain momentum until 2009.

What resulted was a 2012 change in regulations that moved the city to a hybrid form of approvals based on “form-based” applications, Burnham said, “meaning that the look of the building and the size and context of the building was more important than what’s inside.”

The change encouraged development by updating design guidelines and easing restrictions as part of a new downtown plan. It also eased the path for developers interested in the adaptive reuse of historic buildings.

As with all changes designed to encourage development, not everyone got behind the plan when it was proposed.

Some residents and stakeholders first met the proposal to change downtown’s zoning codes, which also allowed more density and less parking, with trepidation, according to Councilwoman Suja Lowenthal, who represents a large portion of downtown and spearheaded the zoning revisions for the council.

To address community concerns, with the help of Long Beach urban planning and architecture firm Perkowitz + Ruth Architects’ division Studio One Eleven, the city created a planning committee comprising residents, business owners and stakeholders to build consensus and define the final plan. The city held debates and hearings for nearly five years before the committee, city staff and council members came to a consensus about what could be built downtown.

“We tried to balance this committee so that it in some way represented every aspect of downtown living,” Lowenthal said. “There was a representative from the Convention and Visitors Bureau, an expert in historic preservation, a business owner, a resident. So the community at large saw that process play out and felt represented and could make their input known. I think because the process was so community driven and involved, those initial fears folks had were worked through.”

Development spur

Last January, the city enacted its “Downtown Plan.”

The revised plan allowed for increased height of new developments on Pine and other major thoroughfares. It also reduced parking requirements for retail, restaurants and residences, which the city intended to encourage use of the Metro Blue Line light rail, its free downtown bus services, bicycles (through increased bike lanes and storage facilities), shared parking structures and pedestrian traffic.

At the same time, it streamlined the number of departments a business or developer must approach for approvals and conducted a blanket environmental impact review assessing the impact of up to 1.98 million square feet of office, retail and restaurant space as well as 5,000 residential units and 800 hotel rooms, effectively reducing the environmental study that a new developer would need to do to get a project approved.

In all, the plan reduced the time it takes for a project to get approval from an average of 18 months to about four, Burnham said.

Residents rising

The changes coincided with a pent-up demand for housing in downtown Long Beach, and as a result, the residential market has taken off.

“A lot of residents are moving into our downtown and that has shaped the evolution of downtown,” said Kojian. “They are moving from established neighborhoods throughout Orange County and are looking to utilize and take advantage of the conveniences, attributes and amenities of the urban center.”

The increased population and improvements in downtown have pushed the median home price up by 87 percent over the last 12 years, to $173,833 last year from $92,866 in 2000.

David Cannon, a 49-year-old engineer who is president of downtown Long Beach’s Everest International Consultants Inc., made the move downtown four years ago and has watched the residential revival emerge.

He and his wife, Kaylin, moved in 2008 from the Long Beach suburbs, trading an 1,800-square-foot single-family home for a 1,700-square-foot condo on the Promenade.

“Downtown was a place we liked to visit for early evening hours for dinner but we didn’t want to hang out a lot,” he said. “Slowly we saw the city making changes, making new developments and we felt more safe. We moved downtown with some trepidation. The first weekend was really loud with the urban noise, but ever since then, we haven’t missed our house in the suburbs once.”

Cannon said he appreciates the community feel of the downtown area, something he didn’t experience in the suburbs.

He said the cost-differential was a wash as well. They sold their home for about $100,000 more than they paid for the condo, though monthly homeowners’ association fees increase their housing cost slightly. He did say that he thinks the couple is saving money by not driving as much. He once went 13 days without driving his car.

Jim Anderson, chief executive of West L.A. development company AndersonPacific LLC, is developing the $180 million Shoreline Gateway, a two-building high-rise apartment and condo project that will total 422 units and include ground-floor shops at the site of a former bank building on Alamitos Avenue near the waterfront.

The project, originally proposed in 2004, has been approved by the council and is awaiting final approval of its amended owner participation agreement, a type of development agreement, by the state’s Department of Finance.

Anderson is optimistic that the firm will break ground on the first of the two towers in the fall, with completion scheduled for 2015.

The first phase would include 222 apartments in an 18-story tower with a rooftop pool and community room. The second phase would be for a 35-story tower with 200 condos. Both would have retail on the ground floor and be connected by a garden plaza with outdoor dining. The second tower would break ground shortly after the first was completed.

Anderson said the price on the units, which will average about 870 square feet, will be market driven but he believes these high-end apartments will be able to rent for about $2.75 per square foot.

“We are looking for young professionals and empty-nesters,” he said. “One advantage is we are between downtown Los Angeles and Orange County, and there’s a lot of interest from couples that have jobs in both places.”

The upswing has not been lost on investors in existing properties.

Major real estate companies such as Beverly Hills’ Kennedy-Wilson Holdings Inc. have been on the prowl for multifamily property in Long Beach, paying among the highest prices in the market. Last year, Kennedy-Wilson purchased a 160-unit apartment building at 225 W. Third St. for $33.5 million, or $209,375 a unit.

Izek Shomof, a developer who has made a name for himself with adaptive reuse condo and office projects in downtown Los Angeles, has plans to turn two historic downtown Long Beach buildings into luxury condo projects.

“We’ve passed the pioneer stage,” said Kojian. “This is a residential marketplace to market to businesses.”

Developers respond

The streamlined approval process, coupled with the marked improvement in the residential market, has prompted an increase in commercial activity.

In the past two years, companies such as Samsung Electronics Co. Ltd. have opened offices while other companies have moved their headquarters. Ignify Inc., which provides e-commerce software among other technologies to businesses, moved its main operations from Cerritos to 200 Pine last year.

Activity such as that has helped office vacancy rates fall to 13 percent in the fourth quarter of 2012 from 15 percent in the year-earlier period, according to Jones Lang LaSalle Inc. And while vacancies are still high, the decrease could be seen as an encouraging sign.

Developers Jan van Dijs and Richard Lewis of JR van Dijs Inc., active in the market for some time, have seen the shift take hold. They’ve converted three older buildings into creative office and retail space in downtown and have another project under way.

“There are a lot of positive things happening, and that’s creating synergy,” said van Dijs. “We are big on downtown.”

The two are leading the $2 million renovation of the long-abandoned Psychic Temple, formerly the American Hotel, which is being transformed into creative office space for Asian-focused marketing group InterTrend Communications.

The company had already built up East Fourth Avenue into a destination by converting three buildings that were formerly a cat sanctuary and a furniture outlet into creative office space, where today tenants include design company DashDot.

Across Fourth, JR van Dijs renovated the former Lyons Art Supply building and brought record shop Fingerprints and a coffee shop to the area.

Fingerprints outgrew its space on Second Avenue and opened its new location in February 2011. Its customer base has remained strong and the location has become a destination, bringing with it customers for the other businesses that have sprung up on Fourth.

“Fingerprints was a coup for us,” Lewis said.

Not far away, Long Beach Judicial Partners LLC is developing a 545,000-square-foot courthouse building with 31 civil and criminal courtrooms, 63,000 square feet of office space to be taken by Los Angeles County, and 9,200 square feet of retail. The court facilities now housed on Ocean Boulevard will move into the space when it’s completed next year. The existing building will likely be demolished and developed into something “iconic” on the popular street, according to planning official Burnham.

On Sixth and Pine avenues, John Molina, chief financial officer of Molina Healthcare Inc., and his wife, Michelle, formed Millworks for a 193,000-square-foot adaptive reuse of an existing office building reportedly to house Molina Healthcare. The $55 million project is expected to be completed late next year and to bring as many as 1,000 new jobs to the area, another potential lure to draw in more retail.

Shooshani Developers LLC is planning a 21-apartment mixed-use project that will include 6,000 square feet of shops at 495 Promenade North in the CityPlace Shopping Center, which was formerly an enclosed mall that was opened up last decade to an open-air shopping district.

Looking forward

All the development is a good sign for Long Beach, but it still has a long way to go.

Stakeholders, including residents and the Downtown Long Beach Association’s Kojian, agree more development, residents and improvements are needed. The association is working on plans to improve streetscapes. But all acknowledge that retail, such as clothing boutiques, is lacking.

“We could use more places to shop,” said Cannon. “My wife would love a place like Bebe.”

All are hoping that the development further attracts retailers and business. The city is hopeful projects like Molina’s, which will bring in more workers into the area, inspires more shops catering to the masses to embrace downtown.

But developer Anderson said that if one wants to see the future of downtown Long Beach, just look to the renaissance that has occurred in another once neglected downtown.

“Long Beach is going through the same renaissance as downtown L.A.,” he said. “The residents have really inspired it to become a 24-hour location. It used to be a ghost town at night but now it’s not.”