Real Estate Predictions 2011: A View from Los Angeles - Panic, Capitulation Plus a Whiff of Despondency?

Best wishes for 2011.

We are certain this is going to me another incredibly exciting year in real estate in which the war-torn, battered and weary sellers are embattled with enterprising, arriviste, opportunistic buyers, creating price and terms clashes of epic proportions.

2011 will be the 2012 of property transfer, in which short sales, foreclosures, receiverships, bankruptcies and various and sundry other forms of financial and legal "work-out" are the norm rather than the exception.

2011 may even be the year of Capitulation (see the Sentiment Cycle above).  Long-term bearish sentiment has left not one optimist in the room -- time to "throw in the towel."

2011 may even possibly be the year of Despondency ("how could I have been so wrong?"), the inflection point setting the stage for the next cycle of price increases.

But maybe not.  2011 may have a whiff of Fear, Desperation, Panic ... and dare we say, Hope?

In whichever direction the market heads, Adner Realty Group will be ringside, ready to chronicle the Los Angeles real estate scene.

And how did our 2010 predictions hold up?  (See our December 31, 2009 post "8 Real Estate Predictions for 2010 - Kissing the Bottom Goodbye - From Panic to Hope and Beyond") We'd give ourselves about a 6.5 out of 8.  To recap:

1. Interest rates will rise.  WRONG.  Our biggest mis-prediction.  Interest rates fell to an astonishing 4.375% for 30-year fixed loans, a low since records were first kept 40 years ago.
2. The bottom of the market for first-time buyers will soon be past us. RIGHT! Prices in 2010 were higher than the ultra-low prices of 2009 when buyers fled the market en masse.
3. Prices will continue to decline on the high end ($1.5 million +). RIGHT! Jumbo loan financing was scarce, and the abundance of short sales and foreclosures drove the market down.
4. Foreclosures and short sales will become pervasive in all segments of the market. RIGHT!  Just because a house costs $2 million doesn't mean it's immune from foreclosure.
5. Over-priced new construction will become less so as developers are forced to chop their prices. RIGHT!  The only way sellers could move the inventory was through red ink.
6. Getting a loan will be tougher than ever. RIGHT! Underwriting standards tightened  considerably leading to delays in most closings.
7. Investors will benefit as properties trade hands at generational lows.  HALF RIGHT.  Multifamily prices are off their lows; industrial prices are flat; but hotel and office sectors have not attained market bottoms.
8. Real estate will begin reverting to its role as a safe, predictable asset class. RIGHT!  Heard any "get-rich" schemes in real estate recently?

We live in remarkable times, in which lows attain new lows, dire gets direr, conflicting indicators jam the airwaves and defy easy interpretation.  Although these times seem extreme, Southern California real estate has a century-long history of careening booms leading to colossal busts.  This remarkable time happens to be "the Big One".  

Beverly Hills Development Watch: Beverly Hilton Up for Sale, 1953 Hotel Preserved, But Make Way For Luxury Hotel and Residential, and "Last Straw" for Trader Vic's

When a neighbor is able to command a pretty penny for their real estate, an owner thinks it may be the right time to tiptoe into the market.

This is precisely what's happening with the Beverly Hilton, the 1953 hotel sited at the corner of Wilshire Boulevard and Santa Monica Boulevard in Beverly Hills.

Last month we reported that 9900 Wilshire, the adjacent parcel and home to the former Robinson May department store, sold for $148 million.  Prompted by unsolicited offers for his property, Beny Alagem, the current owner of the Beverly Hilton, has retained Cushman & Wakefield to market this prime wedge of real estate.

The idea is that either a new owner or the current owner will go ahead with a plan that was approved by Beverly Hills voters in 2008 to renovate the original 352 room hotel, and build 110 residential units and a 170 room luxury hotel.

How much will the site command?  The current owner paid $130 million in 2003 and then completed $80 million in renovations in 2006.  Is it possible that the hotel site will pierce the $200 million mark?  There are many hungry players with vaults of cash seeking the best global assets, and the Beverly Hilton is that sort of sweet plum, ripe for the picking.  Our hunch is that interest in this unique opportunity will be as strong as a Trader Vic's double Long Island Ice Tea.

The Beverly Hilton is a Los Angeles institution, not so much for its accommodations (its rooms are 4-star), but because of its size (an 8.9 acre parcel in the middle of Beverly Hills!), its prominent frontage at one of the most prominent intersections in the city, and because of its showbiz legacy.  Merv Griffin was the previous owner (interesting to note that he paid $100 million for the property in 1987), and the hotel's International Ballroom has been home to the Golden Globes since 1961 and is the site of the Academy Award's Governor's Ball.

Beverly Hilton hotel may get new owner [Los Angeles Times]

Hilton on the Market [Los Angeles Business Journal]

Beverly Hills Development Watch: 9900 Wilshire, Coveted Robinsons-May Site in Beverly Hills Sells for $148 Million - 65% off Previous Sale Price

Many developments follow a simple course, going from raw land to finished final entity with nary a speedbump along the way.  That's not quite the case for 9900 Wilshire Boulevard, one of the most valuable real estate sites in the nation, which just sold for $148.3 million, after a rocky couple of years.

To recap, this site, home to the former Robinsons-May Department store, sold in 2004 for $33.5 million.  In 2007, jet-setting British developers Candy & Candy purchased the site for $500 million,  with ambitious plans to create a 235-unit condo/townhouse complex designed by Richard Meier, fabled architect of the Getty Center.

Needless to say, a global recession later, Candy & Candy were out, and Carlos Slim, Mexican billionaire and co-financier of the purchase, foreclosed on the $365 million loan.  The land was auctioned privately, and just closed this week.

The buyer is Joint Treasure International, a Hong-Kong-based private equity firm, with plenty of experience in this property type.  Since 1995, the group has owned the Beverly Wilshire Hotel, just down the road.  Joint Treasure intends to develop luxury condos and has had preliminary meetings with Richard Meier, but it's unclear, ultimately, what will emerge on the site.

We think now is an excellent time for the group to hit the drawing board with the intention of creating some of the best luxury housing ever to emerge in Los Angeles.  Perhaps five years from now, when the units open for sale, the global doldrums will have receded, and a cadre of world-class buyers will be lining up to get in on the excitement.

Beverly Hills Development Watch: Developers of 9900 Wilshire Surrender 8-Acre, $500 Million Site to Bank

Los Angeles Times: Coveted Beverly Hills property sold for $148.3 million

Century City Watch: Century Plaza Hotel Gets Stay and Two 46-Floor Mega Towers as Backdrop

Conservationists have successfully prevented developer Michael Rosenfeld from razing Century City's historic Century Plaza Hotel, the 1966 mid-century masterpiece designed by Minoru Yamasaki. Now the public can debate the new plan for the site, which encompasses construction of two 46-floor towers, and will be one of the Westside's largest developments in decades.

The site profile by the numbers: 100,000 sq ft of offices, 94,000 sq ft of retail, 290 condos in the towers, and 394 hotel rooms and 63 condos in the Century Plaza Hotel.  The project is anticipated to come online in 2014.

Our reaction to the plan: wow, that's a helluva lot of office space.  And retail space.  And condos.  Is there a demonstrated need for such a mega-project?

During the economic downturn, the average square footage allocated to an attorney has gone from approx. 900 sq ft to 600 sq ft -- and there's still plenty of vacant office space across Westside LA.  What firms are going to occupy these new offices?  And how much retail do we need?  The average worker has become woefully impoverished and is hitting the discount chains, which are unlikely to come to this Century City locale.  Furthermore by 2014, so much retail will have moved to cyberspace, obviating the need for bricks and mortar stores.  Finally, the proposed condos are certain to be in the luxury vein, and the market is currently having difficulty absorbing what has already come on line.

The project will certainly bring much needed construction jobs to the area, but the developers' optimistic view that this project will be supported by an upswing in the economy seems to be another instance of overspeculation -- that got us into this economic quagmire in the first place.

New plan for Century Plaza Hotel adds two 46-floor towers [Los Angeles Times]

West Hollywood's Movietown Plaza Brings 294 Condos, 76 Apartments and Retail to Eastside

Within a few years, Movietown Plaza, a dumpy, old strip mall at 7300-7328 Santa Monica Boulevard will be transformed into a dense, mixed-use complex housing 294 condominium, 76 affordable housing units, and retail fronting Santa Monica Boulevard.

This week the West Hollywood city council dissented with the city planning's recommendation to reject the project and approved Casden Properties plan that includes a nine- and ten-story tower. Concerns included the impact on traffic, congestion and parking in an area which is seeing a burst in development.

Don't expect to zip from Beverly Hills to Hollywood on Santa Monica Boulevard -- the cumulative effect of these developments will cause major increases in traffic. But the eastside of West Hollywood is in need of revitalization, and this kind of major project will anchor residential and commercial activity in this central, Hollywood-adjacent area.

Major changes are afoot in WeHo, and it is rapidly being transformed from a horizontal city with lots of sky to a vertical, dense city -- like every other major metropolitan area in the world.

Beverly Hills Development Watch: Developers of 9900 Wilshire Surrender 8-Acre, $500 Million Site to Bank

We hear so much about foreclosures, short sales and "cash for keys" that it almost seems common course that banks repo real estate for which owners are in default. But we forget that sometimes these distressed properties have some very big price tags.

Like $500 million, for example.

Today, the posh British development team Candy & Candy and Iceland’s Kaupthing Bank will hand back ownership of 9900 Wilshire Blvd in Beverly Hills to a bank controlled by Mexican billionaire Carlos Slim. The developers had defaulted on their $365.5 million loan, which had been one of the largest transactions in Los Angeles County.

This 8-acre site, formerly home to the Robinsons-May Department store, was to be home to 235 super-luxury condominums designed by Richard Meier. Candy & Candy had successfully promoted similar developments, such as One Hyde Park in Central London.

But times change, and the project never got past the drawing board. We believe even more money could have been lost if the project saw the light of day and its multi-million dollar condos were languishing on the market. And whoever the new owner is will have a lower cost-basis and the ability to set prices at realistic levels.

There were signs that the $500 million price tag was perhaps a tad inflated: the property sold for $33.5 million only three years earlier.

[Beverly Hills Gets Waldorf Astoria, Luxury Condos, and Bump in Traffic]

Downtown Los Angeles 2010: Banks, Mezzanine Lenders and Developers Tussle at the Negotiating Table

Since the Great Depression, bankruptcy -- both personal and corporate -- has cast a long shadow over the American psyche. Whether it was the titans of 20th century commerce canonized in Monopoly -- or the wizards of Wall Street canonized in the last decade -- the greatest financial parties of all time terminate in one brief acronym - BK, or its adoring sibling, foreclosure.

Now, as some mega-projects go under, foreclosure of real estate projects is reaching a new apotheosis. This week, the owners of Stuyvesant Town and Peter Cooper Village -- a haven for the middle class on the East Side of Manhattan -- handed back the keys to its creditors. Four years ago, Tishman Speyer Properties purchased the 11,227 apartment complex for $5.4 billion dollars -- the largest real estate deal in US history. Their projections of a 13.5% return on capital never came to pass.

Because real estate relies on a large measure debt for its financing, when values drop the equity portion of a deal can very quickly evaporate. CALPERS (California Public Employees' Retirement System) wrote off its entire $500 million investment in the project (a 26.5% stake). Even the Church of England got punished, losing its $64 million investment in the project. Gross miscalculations based on bubble-era projections turned good money into naught.

The Flat, Downtown Los Angeles

Downtown Los Angeles has its fair share of projects in bankruptcy, and they are shaping the city. The dual-headed Hydra of BK and foreclosure is impacting at least five projects Downtown, according to reports from the Los Angeles Downtown News.

1. LA Central (South Park, 11th and Figueroa) Wells Fargo is in the process of foreclosing on NY developer the Moinian Group for failure to make payment on its $45.6 million note. The developer is in negotiations with the lender and hopes to keep the land, set to become a $1 billion mega-project near Staples Center.
   
2. The Flat (Downtown West, 750 Garland Avenue) China Trust Bank foreclosed on owner 750 Garland LLC after they defaulted on a $23 million construction loan, and later sold the project to private equity fund SA Properties for $20 million. The rental building's cash flows were likely attracted the new investors.
3. EVO South (South Park, 11th and Grand) The mezzanine lender, Westport Capital Partners, took over the project after Portland-based South Group stepped away from its loan on this 311-unit condo project. The building continues to sell units, uninterrupted by this transfer in ownership.
4. Santee Village (Fashion District, 716 S Los Angeles Street) Bank of America now owns the four condominium building project after investor Patriot Group and developer MJW investments defaulted on its $47 million loan. One of the buildings never opened and probably will not any time soon.
5. Brockman Building (Jewelry District, 7th and Grand) Developer West Millenium Group defaulted on its $35 million loan for this 12-story condominium projects, but has not yet been foreclosed upon by lender Bank of America.

In the best of times, developers and investors project mighty cash flows and dramatic increases in the value of their assets. When times don't prove so flush, they run for cover -- and in the process may lose a building or two.

Who will benefit from this financial churn? Buyers and renters. There is a lot of discounting going on, and others' losses will prove to be their gains.

Los Angeles Downtown News Picks 21 Most Significant Projects of the Past Decade

Los Angeles Downtown News is releasing its list of the 21 most significant projects in Downtown Los Angeles in the past decade. Here's a recap of their picks:

• 5. Safer Cities Initiative
  
• 6. Cathedral of our Ladies of our Angels
  
• 7. Gold Line
  
• 8. High School for the Visual and Performing Arts
  
• 9. Medici
  
• 10. Caltrans Headquarters
  
• 11. Standard Downtown
• 12. Elleven/Luma/EVO
• 13. Los Angeles State Historic Park
• 14. Art Walk
• 15. SCI-Arc
• 16. Rainbow apartments
• 17. Orpheum Theater Renovation
• 18. Edward R. Roybal Learning Center/Vista Hermosa Natural Park
• 19. Toy Factory/Biscuit Company Lofts
• 20. Pegasus
• 21. LAPD Headquarters

Any predictions for Picks #1 - 4?

Drumroll please ... they are:

• 1. Old Bank District
• 2. Disney Concert Hall
• 3. LA Live
• 4. Ralphs -- who knew a supermarket could cause so much excitement! But it is the first one Downtown in 50 years.
  

8 Bankrupt Projects Shaping Downtown Los Angeles

There's plenty of good news to celebrate in Downtown Los Angeles residential real estate. A few major, recent, high-profile projects are more than 2/3 sold (Ritz Carlton at LA Live, EVO South, Rowan Lofts, Barker Block). Prices are off 20% or (significantly) more from their 2005 - 2006 highs. Downtown LA, ironically, is among the most affordable and most dynamic residential neighborhoods in the city.

However, what was conceived, purchased, and designed in the exuberant mid-2000s is now coming to market in maundering 2009. Developer equity has evaporated, bank loans are underwater, and some of these projects and their owners are facing Chapter 7 and Chapter 11 bankruptcy.

The Los Angeles Downtown News summarized the projects:

1. Concerto – 900 S Figueroa Street – All eyes are on South Park’s mega-project, Concerto. On August 29, a much-promoted auction attracted broad buyer interest and all 77 lofts units “sold” at the event – which was intended to fund construction of the uncompleted 271-unit tower. A few weeks later, developer Astani filed Chapter 11 after its major funder Corus Bank was taken over by the FDIC. The FDIC wants to get out of the auction contracts believing the sale prices were too low. A court ruling today makes it seem that the units may indeed get released to buyers.
   
2. The Roosevelt – 727 W Seventh Street -- The 222-unit Roosevelt, which was designed as a condo building, is now being leased. The website still advertises.”Have It All. Luxury condominium loft residencies from the mid-$500,000s to over $1,000,000. Planned Move-ins First Quarter 2009.”
3. The Flat – 750 S Garland Avenue – a former Holiday Inn was transformed into a 206-unit apartment building that also houses trendy dining spot Blue Velvet. Although the project is 90% occupied, the developer defaulted on its $23 million loan and filed for Chapter 11 protection. Ultimately, a judge allowed the bank to repossess the property.
4. 705 W 9th Street – Developer Meruelo Maddux, Downtown’s largest landlord, declared Chapter 11 in March and is going through reorganization. Despite the project’s woes, they are currently proceeding with leasing.
5. Title Guarantee Building – 411 W Fifth Street. This building opened two years ago as a rental and went into Chapter 11 this February.
6. Brockman Building – 530 W Seventh Street. Many may know this building as the home to Downtown hotspot Bottega Louie. The cost of updating the 80-unit office building rose from $16 million to $35 million early on, portending ill for the project. The developer filed Chapter 7 after defaulting on a $35 million loan.
7. Santee Village – 716 S Los Angeles Street. At the edge of the Fashion District, Santee Village, a hugely ambitious 780,000 sq ft, seven building development failed to achieve its sales goals. In April, the developer declared bankruptcy, exited the project, and its assets were sold off. The project has about 300 condo units and 150 rental units. One of the seven buildings is not occupied, and two are only 30% occupied.
8. Blossom Plaza Project – Broadway & College Street. Blossom Plaza was planned at the site of Little Joe’s restaurant, which had operated for 101 years at this site in Old Chinatown (but closed in 1998 because the owner’s couldn’t afford to retrofit the building). This transit-oriented project which received more than $9 million in public investment, was to include 262 apartments. The developer filed Chapter 11 and the project is now in the hands of original equity partner Morgan Stanley.

Although the failure of these projects has brought great distress to equity partners, banks and developers, the public that will benefit from the BKs through lower condo prices and a softer, more affordable rental market.

In Downtown Los Angeles, Concerto's Future Hangs in the Balance

Concerto Hits Headwinds

Another tsunami of financial malaise welled through Downtown Los Angeles with the news that Sonny Astani has filed Chapter 11 and everything having to do with his mega-project Concerto is up in the air. (Read excellent coverage in Curbed LA.)

For a high-rise of this stature, the project is seriously underwater. This bold, three-tower complex was conceived at the top of the market and was delivered this spring in the worst real estate climate in decades.

Corus Bank, the lender for the Concerto project, was heavily exposed to condominium developments in some of the country’s worst-hit housing markets and was shut down by federal regulators two weeks ago. Not a single unit at Concerto has sold.

That Downtown LA’s marquee, residential development is in disarray is important because of the project’s size -- 77 loft units (sold at auction August 29), a semi-completed 271-unit glass Tower, and an as-yet-unbuilt third tower (currently a deep hole on the site).

Many questions remain unanswered, including the fate of the 77 Concerto Loft units, which, after a month-long marketing blitz, were “sold” to buyers at low prices at the August 29 sale event.

More Housing Units Come to Market

And the projects keep coming online. Here are more than 200 new units that will hit the Downtown market in the next six months:

• 655 Hope – To open mid-October. 80 units, from 600 – 1,268 sq ft, priced $349,000 - $920,000. 17 story adaptive reuse project.
• Barn Lofts – this adaptive-reuse project in the Arts District will be finished by the end of the year with 38 two-bedroom, two-bath townhouses.
• El Dorado – a 12-story building at 416 S Spring Street will open in the first quarter of 2010 with 65 units starting in the low $400,000s.
• Hewitt First – Final construction details are being completed on the 33 units at 130 Hewitt Street in the Arts District.

(Thanks to Los Angeles Downtown News for their oustanding reporting on this beat).

With Concerto’s 348 units, more than two hundred new units, and existing inventory at EVO South, Rowan Lofts, Barker Block and a handful of other projects, there are 800 - 1,000 units that need to be absorbed just to keep pace with current development.

And there is plenty of housing competition from the superabundance of rental buildings on the market.

Prospects for the Downtown Market

How will the current scenario impact the Downtown residential housing market? The failure of a project of Concerto’s size is stunning and bewildering. Like AIG, we thought Concerto was too big to face such an uncertain future.

Sale of Downtown units depends on pricing. The developers who acknowledge the current sorry state of affairs and price their units well will quickly shed inventory and at least cut their losses and move onto other projects.

Buyers are looking for value and quality – and the projects that offer the best combination of these two will be the winner in sales (EVO South succeeds in this area.)

Price point is also critical. Units that need to be financed with jumbo loans (over $729,500 in Los Angeles) face major hurdles. Units that can be financed with conforming loans ($417,000 or less) face the best prospects.

Pent-up buyer demand should keep the Downtown Los Angeles market slogging along with stable, low prices that were unthinkable just a few years ago.

First-time buyers are out in force, as evidenced by number of buyers who lined up for their shot at a discounted Concerto unit. This perennial wave of buyers seeking to put their rent days behind will provide the steam to keep Downtown Los Angeles afloat through these turbulent tides.

Developers Embrace New Downtown Los Angeles Design Standards

At a meeting last week, developers and designers overwhelmingly embraced the City of Los Angeles' "Design for a Livable Downtown" guidelines, according to the Los Angeles Downtown News.

This Guide is a coordinated, multi-departmental effort intended to promote "walkability, sustainability and transit options" and to reinforce the character of each of Downtown LA's many different neighborhoods.

Some of the points emphasized in the Guide are:

• creating wide sidewalks
• establishing wide setbacks
• building sustainably and "green"
  
• instituting abundant landscaping
• integrating parking into building structures
• promoting open space
• varying horizontal and vertical building details
• regulating signage
• incorporating public art

Historically, so much of Los Angeles was developed without a master plan and large swaths of the city suffer from sprawl and mini-mallization.

The City, wisely, in the 21st century has taken the early 20th century Downtown and imposed a strict vision which will transform the urban core into a distinctive, vibrant, sustainable, livable environment.

The snowballing momentum in Downtown building should be invigorated by this imaginative and useful plan to create one of the great metropolises of this new millenium.

Exclusive SoHo House Comes to West Hollywood

Attention global media elite, you now have a new watering hole. Trendsetting private club SoHo House, with outposts in London and New York, now gains a toe-hold in West Hollywood.

The Luckman Plaza Building at 9200 Sunset Boulevard at the border of West Hollywood and Beverly Hills will be the new home to SoHo House in Los Angeles. The Beverly Press reported that on July 29, the West Hollywood Planning Commission approved the club, which will operate on the penthouse of this newly rehabbed building and will also include a rooftop pool.

There will be a five-month construction phase before doors are opened. Plans also involve converting ground-level offices into a spa and retail space. The property owner is Mani Brothers Real Estate Group.

Agents, managers, producers and executives, hit your Rolodexes. You're going to want to be in on this game.

There couldn't be a better "Westside meets Eastside" location. Far from brash Hollywood, out of the spotlight, this exclusive, members-only club will indeed be the place to be. Order a drink, pull up a chaise lounge -- and let the show begin.

Updated August 20, 2009: On August 17, the West Hollywood City Council unanimously turned down an appeal that sought to prevent SoHo House from opening doors.

Per the Beverly Press, opponents are concerned about increased traffic, crime and paparazzi and feel the hours (rooftop open until midnight, top-floor restaurant open to 2 AM) are inappropriate for an office building. Supporters believe this is a classy establishment that will draw a sophisticated crowd.

The bottom line: the project is scheduled to open doors in time for the February awards season. Expect the bash of a lifetime at the 2010 Oscar party.

West Hollywood Developments Movietown Plaza and House of Blues Up for Review

Draft Environmental Impact Reports (DEIR) for two new developments in West Hollywood were released July 28, showing how the city is being transformed into a high-density live-work-play neighborhood.

At Movietown Plaza, 7300 – 7238 Santa Monica Boulevard (current home of Trader Joe’s and eighteen small businesses) a 9- and 10-story condo building (294 units) will arise, along with 32,300 sq ft of commercial space and a 76-unit affordable housing building for seniors with retail on the ground floor.

Nine and ten stories is tall for West Hollywood, and this project should change the city's grittier eastside into a bustling, upscale neighborhood like Manhattan’s Chelsea. But it will also irreversibly turn a quiet neighborhood with many single-story structures into a city. Casden Properties is the developer. The project is bounded by Santa Monica Boulevard, Poinsettia, Fuller and Romaine.

In West Hollywood's Sunset Strip neighborhood, the Sunset Time project will redevelop four contiguous parcels at the House of Blues site at 8430 Sunset Boulevard into three hotels (with 149 rooms), 40 residential condos, five affordable housing units, and 35,400 sq ft of commercial space with 246 parking.

Live Nation has a lease at House of Blues until 2025, but the city is seeking to relocate this iconic music institution to another venue. Sunset Time will enhance the area's reputation as central, dynamic, leisure-entertainment neighborhood. The project is bounded by Olive – Sunset – De Longpre and Fountain.

Read the Draft Environmental Impact Reports for both of these projects on the West Hollywood website

Is Hollywood Still in Hollywood? Yes, Movieland Jobs Are Here To Stay

On June 24, the ArcLight Cinemas on Sunset Boulevard hosted the Hollywood Economic Development Summit on “How Entertainment Continues to Drive Hollywood Development”.

With so much press about declining number of shooting days in Los Angeles and the downsizing of entertainment and media companies (recent news concerned layoffs at MySpace and MTV), the question is is Hollywood still in Hollywood or have the jobs moved elsewhere? Is Hollywood becoming a destination dining-retail-nightlife neighborhood that is devoid of its roots in the entertainment industry?

Looking at the numbers, the entertainment industry is very much alive in Hollywood. According to the Hollywood Chamber of Commerce, 12 of the top 20 employers in Hollywood are the entertainment industry, responsible for over 17,000 jobs.

1. Kaiser Permanente - Hospital - 5,000
2. Paramount Pictures - Motion Picture Studio - 5,000
3. Children's Hospital of Los Angeles - Hospital - 3,800
4. Sunset Gower /Sunset Bronson Studios - Motion Picture & TV Studio - 3,000
5. Universal Studios, Inc. - Motion Picture Studio - 2,500
6. CBS at TV City - Television & Radio - 2,300
7. Queen of Angels/Hollywood Presbyterian Hospital - 1,250
8. Los Angeles Community College - City College - 1,007
9. TV Guide - Television - 900
10. Nielsen Entertainment - Entertainment - 800
11. The Prospect Studios - Television Studios - 800
12. Raleigh Studios - Motion Picture/Post Prod. - 486
13. Time Warner Cable - Television-Digital Cable - 452
14. CSS Studios - Feature Film, TV, Post Prod. - 450
15. Capitol Records - Record Company - 435
16. Roosevelt Hotel - Hotel - 423
17. Renaissance Hollywood Hotel - Hotel - 400
18. The Original Farmers Market - Retail - 375
19. Home Depot - Retail - 310
20. Amoeba Music - Record, Tapes, Cds - 250

The remodeling of the Hollywood Palladium, the relocation of Live Nation’s headquarters to 6255 Sunset Boulevard, and the proposal to create a 115,000 sq ft campus for Emerson College at Gordon Street and Sunset Boulevard should also enhance the entertainment profile of Hollywood.

The scale of building is vast – there is currently $1 billion in construction going on in Hollywood. The fact that the entertainment and ancillary businesses will remain in this central neighborhood should give Hollywood its movie-legs for decades to come. [Park Labrea News/Beverly Press]

The "Burton Corridor" in Beverly Hills?

Two new residential developments are coming to Burton Way in Beverly Hills. One, an eight-story mixed use complex with apartments, is being greeted with open arms. The other, a 14-story condominium complex, is bringing dissent to the Hills of Beverly.

The mixed-use complex, to be constructed at the intersection of Burton Way and La Cienega / San Vicente Boulevards, is the brainchild of Rick Caruso, developer of the Grove and the Americana in Glendale.

Caruso's plans to build an eight-story mixed-use structure on his lot, with 88 apartments and a ground-floor Trader Joe's, have been widely praised by residents who welcome the project as a smart addition to the neighborhood.

The condo building, on the other hand, has been given a cool reception.

…A tiered, 14-story condominium project planned for just north of Burton Way, along 3rd Street between Wetherly and Almont drives, has met with opposition from neighbors, who criticize the building's height and say that it is out of character with its neighborhood.

The 95-unit Wetherly Drive condo project, as it is known, replaces 84 units in seven older apartment buildings.

Genton [developer] -- and others -- stressed that the height of the property was in keeping with other buildings in the area, including the nearby Four Seasons hotel.

What’s really being disputed is the future of Burton Way, a major artery of Beverly Hills. Should it be low-rise or high-rise? Beverly Hills isn’t Westwood or Century City. Is it really desirable to build up? But the city must grow denser, with residential living on major corridors of public transport. We can’t continue to fill the streets with more cars.

Look for more discussion when Councilman-elect Paul Koretz takes office. [Los Angeles Times]

Downtown Los Angeles: Residential Development in the Pipeline

There are big plans for Downtown LA. From the Hills of Bunker to the Industrial Heights of the Toy District to the Parking Lots-Turned-High Rises in South Park, developers are sculpting the future of the urban core block by mega-block.

Some projects are ambitious, like the $1 billion two-tower development replacing the Wilshire Grand Hotel, and Park Fifth, the highest residential tower west of Chicago to be built at Olive and Fifth.

But many projects have been delayed, deferred or derailed because of the recession, the lack of funding and the lack of perceived need. The building boom is being scaled back.

That’s not necessarily a bad thing. Let the businesses return to the office towers; let the residents buy up the lofts and occupy the rentals; let energy prices resume their climb so the people return to the city center. Downtown will retrench, catch its breath and absorb what’s been erected.

Dozens of residential projects are being entitled, built, completed and sold. Courtesy of the excellent reporting in the Los Angeles Downtown News, below is a summary of residential developments in Downtown Los Angeles. Grid numbers refer to a Downtown Los Angeles map, also courtesy of Los Angeles Downtown News.

655 HOPE

The 17-story adaptive reuse condominium project has pushed back its opening date from late April to July 1. Construction is mostly complete. The Financial District project will offer 11 levels of residential space, with 80 lofts from 600-1,268 square feet. Prices have been lowered to $349,000-$920,000. The structure also has three floors of indoor parking, a gym and a roof deck with a wet bar. At 655hope.com. B7

711 N. BROADWAY

Groundbreaking for the conversion of a four-story office building in Chinatown into condominiums has been pushed back to early 2010. The $22 million project would transform the BC Plaza building into a 53-unit complex. Condos are expected to sell for $300,000-$600,000. C3

808 S. OLIVE ST.

There has been no movement on a proposed mixed-use, residential/hotel project. The property currently holds a 900-space parking lot and will remain as such until the economy improves. C7

1133 S. HOPE ST.

There is not a solid timeline on the project. Plans call for a 29-story, 159-unit building to rise on a current South Park parking lot across from the South Group’s Elleven high rise. The development, which would take two years to build, would include 250 parking spaces, 6,700 square feet of retail and an outdoor pool. B9

ALAMEDA AND FOURTH CONDOS

Construction on the $30 million adaptive reuse project in the Arts District has been pushed back at least a month, to June or later, due to the economy. Plans call for the conversion of the five-story, 1923 structure that was once home to the Bekins storage company into 53 artist-in-residence lofts. Units would range from 650-2,400 square feet. E5

AMP LOFTS

An adaptive reuse project at 695 S. Santa Fe Ave. is still on hold. The developers have not disclosed any budget or timeline information for the Arts District project.

BARKER BLOCK

The third building in this $75 million Arts District complex opened this month at 530 S. Hewitt St., bringing 116 condominiums onto the market. Lofts range from 750-2,400 square feet and prices start in the high $200,000s. There is no timeline for two additional residential buildings at 549 Molino St., which will house 55 units. barkerblock.com. F6

BARN LOFTS

Conversion of the former Spreckels Brothers sugar beet warehouse at 940 E. Second St. into a 58,000-square-foot residential complex is expected to be completed in July. Prices have not yet been set for the 38 market-rate, three-story, loft-style townhouses, ranging from 1,300-2,600 square feet. All units contain two-and-a-half bathrooms, two bedrooms and roof decks. F5

CITY HOUSE AND THE OLYMPIC

Investors are still searching for financing for a proposed 800,000-square-foot residential and hotel project in South Park at Grand Avenue and Olympic. Plans call for a 60-story structure, the City House, and the 49-floor Olympic that would cost about $450 million. Once expected to break ground in early 2008, the project currently has no timeline. titanorganization.com. C8

CONCERTO

As construction continues, the developer has begun sales for the 348 condominiums in two buildings. The first phase of the project includes a mid-rise “loft” structure at Ninth and Flower streets with occupancy slated for June, and a 30-story tower at Figueroa and Ninth streets. Prices are from $295,000 to $3.5 million. There remains no timeline for the second phase, expected to bring another 281 market-rate condominiums in a second 30-story tower. At concertodowntown.com. B8

EIGHTH AND GRAND

Plans exist for a 14-story residential tower, a two-story commercial building and a 53-story residential tower at Eighth Street and Grand Avenue.. A pedestrian paseo would connect Grand Avenue and Olive Street. The project has no timeline. At astanienterprises.com. C7

EL DORADO

Renovation of a former hotel at 416 S. Spring St. will be completed in the fourth quarter. The 1913, 12-story building is being transformed into 65 units that will range from 850-1,700 square feet. Prices will start in the $400,000s. Residences include Italian kitchens and bathroom cabinets. Parking lot immediately south of the project to the city is slated to become a public park. At eldoradolofts.com. D6

HEWITT FIRST

Move-ins could begin by June for this 33-unit project at 120-130 Hewitt St. in the Arts District. The project will offer residences in two buildings, one erected in 1936, the other in 1948; a central entrance will feature a water fountain powered by solar energy. Units will range from 800-2,500 square feet and will have 18-26 foot cathedral ceilings and stainless steel kitchens. At hewittfirst.com. E5

L.A. LOFTS

A proposed 432,000-square-foot project at 1028 S. Hope St.remains on hold due to the economy. The South Park project is planned for a parcel near the company’s Packard Lofts. Designs call for a 25-story tower with 250 loft-style condominiums, two levels of underground parking with 390 spaces and 10,000 square feet of ground-floor retail. At veniceinvestments.com. B8

PARK FIFTH

There has been no progress on a proposed $1.3 billion project just north of Pershing Square. The fully entitled project would rise on a current parking lot at Olive and Fifth streets. The development would include a 76-story tower, which would be the tallest residential building west of Chicago, and a 44-story tower joined by a third, 15-story residential building. The project would create 790 condominiums and a 212-room hotel, plus retail and restaurant space. C6

SHY BARRY TOWER II

Developer Barry Shy plans to begin construction on a 39-story, 700-unit condominium tower at 601 S. Main St. in 2010, he said. In the meantime, he plans to build a five-story parking structure on the site, which will eventually sit beside the residential building. Groundbreaking on the garage is expected in six months, said Shy, and construction will take approximately one year. D7

SOUTH FIGUEROA

Groundbreaking on two 34-story condominium towers at 624 W.12th St. and 1200 S. Figueroa St. is expected to take place in early 2010. The development, by the team who built EVO, Elleven and Luma in South Park, will contain 324 condominiums with hardwood floors, decks and balconies. There are plans for a third tower at 1241 S. Flower St. At exploresouthgroup.com. B9

ZEN

Groundbreaking is pushed back from 2009 to 2011 for the 50-story Zen condominium tower slated for Third and Hill streets. If built, the skyscraper would be taller than any current residential building in Downtown. Designs call for a tower atop a 10-story parking podium with 302 lofts; 66 of them would be reserved for workforce housing. Construction would take four years. C5

What Happens When the Bohemians Leave Bohemia?

Over the past decade of "prosperity", up-and-coming enclaves such as Eagle Rock in Los Angeles and the Lower East Side in Manhattan gained residents -- and coffee shops, restaurants and design stores.

In Eagle Rock, the new bourgeouis bohemians ("bo-bo"s) arrived, flush with web start-up capital, screenwriting lucre and steady paychecks from architecture gigs. The median sale price of a home in Eagle Rock rose from $260,000 in 2000 to $620,000 in 2005

Derelict buildings gained eager new tenants with "big ideas" for retail. Old-school businesses such as car repair shops were replaced by hip new eateries and purveyors of design and antiques.

But, alas, the economy has soured and the wave of gentrification seems to have receded. The neighborhood has reverted to being its quiet, modest and often, charming, self. Maybe it reminds people why they moved there in the first place. [Source]

Jamie Adner

West Hollywood Gets More Mixed-Use Projects

Attention those who enjoyed the deli counter at Jons or a drive-thru burger at Carl's Jr -- these two venerable La Brea institutions may soon be gone, each replaced by a large mixed-use project.

A 6-story, 187-unit apartment building with 70,359 square feet of retail space will be built at the Jons site, at the southeast corner of Fountain and LaBrea (rendering above). The open sky of the big parking lot will be replaced by a large block of a building. A similar project by the same developer will rise on LaBrea close to Santa Monica at the Carl’s Jr site.

The developers are wisely constructing rental units since there are too many over-priced condos for sale and coming to market in the next few years. Renters will appreciate the central location and the retail, restaurants and nightspots close by (West Hollywood Gateway, Formosa Café, Jones…). The area is noisy and urban -- a great place to be renting, but not an ideal place to own.

These two new developments, along with the Movietown Plaza development at the Trader Joe's site at Poinsettia and Santa Monica, are bringing high-density living to the east side of West Hollywood. The city is gaining a Manhattan-type flavor: low-rise living, culture and entertainment at one's fingertips.

For those whose driving mantra was "take Fountain" to get across town -- you may find that Willoughby is your new (secret) corridor.

Updated 5/18/09: Curbed LA reports that the plans for the mixed use project at 7141 Santa Monica Boulevard are on hold, rescuing, for now, the Faith Plating Building, one of Frank Gehry's early projects.

Los Angeles Introduces Anti-McMansion Ordinance

The Los Angeles City Council this week approved a measure that will limit the size of remodeled homes in the city's flatlands to about 3,000 to 4,000 sq ft in most cases. The legislation was sorely needed to retain neighborhood character -- and to prevent egregious cases of over-building, where behemoths of 6,000 sq ft or more were towering over neighboring houses of less than one-third their size. The average home in Los Angeles is now 1,700 sq ft.

The new law restricts owners to building a new improvement no larger than half the size of the lot's square footage, plus a 400 sq ft garage. Many of the city's 304,000 flatland houses have lots in the 5,000 - 6,000 sq ft range. Councilman Tom LaBonge is pushing for similar legislation in the city's 100,000+ hillside homes.

Building groups and the Beverly Hills/Greater Los Angeles Association of Realtors immediately decried the legislation and warned that the ordinance would drive down property values in the city. Council members were not persuaded: the measured passed 12-0.

Jamie Adner
www.adnergroup.com

Beverly Hills gets Waldorf Astoria, Luxury Condos and Bump in Traffic

For those Beverly Hills residents who viewed the community as an austere bastion of refined taste and low-rise buildings, be prepared to take a deep breath and watch the construction cranes arrive. The Beverly Hills City Council has given the go-ahead to two major projects near the corner of Santa Monica and Wilshire Boulevards in the 90210.

At the former Robinsons-May site, fabled firms Richard Meier Architects and London's Candy & Candy have the greenlight to build 235 ultra-luxury condos and a small amount of retail and restaurant space. A short distance away, at the Beverly Hilton site, the city has approved the addition of condos and the West Coast's first Waldorf-Astoria Hotel. (See a map of ongoing development here.)

These projects have been in the pipeline for years -- now they have the authority to proceed. As the developments get underway, expect road rage from Bentley- and Maserati-driving BH'ers -- and ordinary commuters who use the Santa Monica and Wilshire axes to traverse from East to West and back.

www.adnergroup.com