The developers of the Grand Avenue project, The Related Companies, which had sought another 8-month delay for the $3 billion project in downtown Los Angeles, were recently rejected by the city-county government board overseeing the project and given a much shorter reprieve to August 15th. Expected to redefine the area surrounding downtown's Music Center and Disney Hall, apparently the board wants to explore its other options, including re-bidding the project out to another developer and scaling down the plans even though it hand-picked Related four years ago, in part due to its great success with the Time Warner headquarters near New York's Columbus Circle. So could this be a case of government not understanding economics and hoping for a magic wand solution? Possibly. Wouldn't it be better to delay the entire project and build it as planned rather than jump-start something boring? From an L.A. Times story:
The government board overseeing the $3-billion Grand Avenue project on Monday unexpectedly rejected the developer's request for an eight-month delay to begin construction on the development across from the Walt Disney Concert Hall. While both sides said they remain optimistic that the sprawling downtown Los Angeles development is on track, the vote is the strongest sign yet that government officials are growing concerned over repeated delays and hope to keep a tight rein on the developer they handpicked for the project almost four years ago.
Instead of approving developer Related Cos.' requested delay until February, the joint powers authority approved a motion by Los Angeles County Chief Executive William T. Fujioka giving the developer until Aug. 15. That's a much shorter period than expected, though one that could be extended when the authority -- made up of city and county officials -- meets in July...
...one county supervisor, Michael Antonovich, suggested that the Frank Gehry-designed project be scaled back because of real estate market conditions. "Given the stark economic climate," said Paul Novak, a planning deputy for Antonovich, "our best approach may be less of a 'grand' vision than the plan previously approved by the county and the city."
Novak suggested that the joint powers authority should revisit various components of the project, including the high-end retail stores and the five-star hotel. Grand Avenue is the linchpin in the effort to revitalize downtown L.A. and to bring in more affluent residents and retailers.
The development would rise around some of the city's landmark cultural institutions, including Disney Hall, the Museum of Contemporary Art and the Music Center. Related California President Bill Witte said after the meeting that his company would "just continue to work with the committee." The Grand Avenue project's first phase -- which includes a shopping center, hotel and two residential towers -- was once slated to be completed in 2009. But that date was shifted to 2011.
Now, Related wants to push the opening to 2012. Witte has said the delay in beginning construction would allow Related to finalize thousands of pages of construction documents before work begins. Because nearly 70% of building costs for the project would be for concrete and steel, completion of those documents may allow the developer to avoid overruns later.
Related has struggled to find the funding to get the project off the ground. The California Public Employees' Retirement System pulled out of Grand Avenue last year, saying it had too much investment in downtown. But a fund controlled by Dubai's royal family has invested $100 million in Grand Avenue, and Related is seeking an additional equity partner for the project. Grand Avenue is one of several major developments around the nation that have been delayed because of the credit crunch.
In Seattle, developers recently shelved plans for a $7-billion development, citing the poor economy. Huge projects in Las Vegas, Phoenix and New York City have also been scaled back or delayed, including part of the Gehry-designed Atlantic Yards in Brooklyn and a $14-billion development of the area around Penn Station on Manhattan.
Tuesday, June 10, 2008
Gov't Board rejects Grand Avenue project delay
Tuesday, March 18, 2008
The Dubai-enabled Grand Avenue Project in L.A.
After months of concern about how the the first phase of the $3 billion Grand Avenue project in downtown Los Angeles will get funded, a Dubai-based sovereign wealth fund has ponied up $100 to get things started. From the L.A. Times:
Armed with $100 million from Dubai and a refined design plan, officials Monday said construction will finally begin next month on the Frank Gehry-designed residential and shopping plaza along Grand Avenue that is considered a linchpin to downtown L.A.'s revitalization...
The fund stepped in with $100 million after one of Grand Avenue's big early investors, California Public Employees' Retirement System, exited the project, saying the organization was already too heavily invested in the downtown real estate market.
The investment from Dubai gives the developer, Related Cos., the money needed to secure construction loans -- allowing it to finally tear down a parking structure across from the Walt Disney Concert Hall, where the first phase of the development will be built. The $2-billion plan calls for shops, condo towers and a boutique hotel -- as well as a civic park -- on city and county land on Bunker Hill.
There remain skeptics who wonder whether downtown L.A. is being overdeveloped with condo projects. In addition to Grand Avenue, there are a slew of residential towers rising around Staples Center, a 76-story tower proposed next to Pershing Square and other older office buildings being renovated for apartments.
In the last year, about a third of all proposed housing developments downtown have been put on hold or canceled. They include the 50-story Zen tower on 3rd and Hill streets, the Mill Street Lofts in the industrial district, the multitower Metropolis off the 110 Freeway and the conversion of the former Herald Examiner building...
The three-phase Grand Avenue project ultimately could include eight condo and office towers, retail stores, a boutique hotel and public park. The first phase includes two towers at opposite ends of the block east of Disney Concert Hall -- set that way to preserve sightlines to the venue from many parts of downtown. The taller tower -- 48 stories -- would include rooftop pools, 264 high-end condo units, a 289-room Mandarin Oriental and an Equinox health club.
The second, 19-story tower would include nearly 100 rental units -- designated as affordable housing -- and 126 condominiums. Phase one also includes the civic park northeast of the concert hall.
The second phase is to be built on the block south of Disney Hall, with preliminary plans calling for two 30- to 35-story residential towers, one five- to six-story residential building and more retail stores and parking. The third phase would go two blocks east of the concert hall. Preliminary plans call for a 35- to 40-story residential building that would include some retail shops and possibly a 15- to 20-story building with office space or condos.
