Mid-Wilshire (Wilshire Center): Internet Firms Pump Life Into District

by Nola L. Sarkisian, L. A. Business Journal Staff Reporter

Mid-Wilshire is emerging as one of L.A.'s hottest new-media addresses. Drawn by affordable rents and a fiber-optic trunk running underneath Wilshire Boulevard, dozens of new-media companies have moved into the area, which now goes by the name Wilshire Center.

In the past two months alone, four new-media companies have signed leases at the Albion Pacific Building at 3350 Wilshire Blvd. Last year, some seven new-media companies inked leases at the Wilshire West building at 3250 Wilshire.  A telecommunications company is in final negotiations to lease 20,000 square feet in the area, according to brokers.

"The economics in this area is great for these companies," said John Anthony, director of leasing for Charles Dunn Co. "The community has easy transportation access, with three Red Line stations. There's abundant space for companies to grow and parking is convenient."

Not to mention those fat fiber-optic lines that can handle high-speed Internet access. Ten years ago, Pacific Bell began laying the lines, which are configured in a three-mile loop extending from Norton Avenue on the west to Coronado Street on the east.

"We have quite a bit of fiber in the area and we just did a reinforcement job there last year," said Warner Bass, loop electronic coordinator for Pacific Bell. "We've probably equipped about 30 buildings in the area with fiber as well. It's based on our studies that this will be a potentially used fiber area by companies."

Fiber-optic lines run under a few main thoroughfares and other pockets of L.A. County, but the Mid-Wilshire loop had been virtually untapped following the departure of insurance companies and back-office operations from the area. But now those lines, in addition to affordable office rents, are drawing a new breed, like software developer Rotor Communications Corp., which moved into the Art Deco Wiltern Theatre building about 18 months ago.

"There's an abundance of supply, which makes connections cheaper and easier here," said Alan Sandler, principal of the company. "Additionally, we're more centrally located than we thought. We're close to Hollywood and to our corporate clients in downtown." Pierre Wuu, co-founder of Click2Asia.com, an Asian global portal that launches Oct. 4, looked everywhere for ample space and fast Internet speeds. But prices ran him out of Pasadena, Monterey Park, Santa Monica and Orange County. Three weeks ago, Wuu moved his company into 6,400 square feet at 3600 Wilshire Blvd., where his workforce operates 40 computers, Sun Microsystems servers and a T1 line.  "This building has the bandwidth we need to service our customers," Wuu said.

Along with the influx of new-media tenants, Mid-Wilshire is attracting some major projects. The Aroma Sporex complex, a 380,000 square-foot facility, is being constructed by Hanil Development Inc, Located at Wilshire and Serrano Avenue, the five-story sports/retail project will feature a driving range, clubhouse, fitness center, jogging track, sauna, restaurants and retail stores.

Meanwhile, talks are progressing on a proposal to develop a one million-square-foot cineplex-anchored retail complex on the site of the old Ambassador Hotel. In addition, area brokers say no fewer than seven national retail chains are negotiating for space in the area - from grocery stores to apparel shops.  The influence of the newcomers, coupled with economic recovery in Asia, is already being felt by existing retailers in the area.

"We're starting to see our business pickup," said Michael Choe, owner of the Golf Emporium along the boulevard. "Being that this is (Wilshire Center) Koreatown, we're affected by what happens to the community here and overseas, and things are starting to turn the corner."

It's a striking contrast for a community that witnessed a severe downturn earlier this decade when executives began moving their firms to newer buildings downtown or to Century City to be closer to their Westside homes. The exodus from Mid-Wilshire swelled following escalating crime and the 1992 riots, the 1994 Northridge earthquake and damage caused by Metro Rail construction in the early to mid-'90s.

About 80 business and property owners eventually banded together and started a business improvement district four years ago. Through property assessments, the improvement district spent nearly $6 million to plant 2,000 crape myrtle trees, install a series of meridians and set up 330 concrete planters filled with begonias along the sidewalks. A nine-person bike patrol was hired to provide security, and brochures were printed touting the area's attributes. Now the district has 350 members.

"It's L.A.'s greatest-kept secret, and we're slowly getting the word out for businesses to create a future here," said Gary Russell, executive director of the business improvement district.  

Gradually, the grassroots efforts, along with stepped-up enforcement by the Los Angeles Police Department, have sharply reduced crime in the area.  "We've seen crime drop by about 30 percent in the area in the past three years." said Jason Lee, a public affairs officer for the LAPD. "It’s a trend that's mirroring the rest of the city."

The improvement has been sufficient to draw new investors, the most active of whom is Dr. David Lee. Since 1994, Lee has purchased 15 buildings in the Mid-Wilshire area, including Equitable Plaza, John Hancock Tower and Wilshire Park Place. His 4 million square feet of holdings (about 45 percent of the market's total) are worth about $200 million, local brokers estimate.

Meanwhile, office vacancy in the Mid-Wilshire area has dipped from a high of 35 percent in 1994 to about 23 percent today - still high, brokers concede, but a big improvement.  Lease rates have edged up as well. After bottoming out at less than $1 per square foot in 1994, monthly rents are now $1.35 in prime buildings. That's still a bargain compared to the Westside, Hollywood and Burbank, where the range is from $1.80 to $3 a foot. Such savings can mean the difference between life and death for an Internet startup.

Not everyone is experiencing the resurgence. "Our business is down 50 percent since the early '90s," said John Tamayo, general manager and co-owner of the Atlas Supper Club, which will celebrate its 10th anniversary this year. "We welcome these new-media companies to the area and we hope their presence will bring in bigger players."

Other, more-modest watering holes are already noticing the change, however. "We're pleased with the younger people who are coming here," said Rogelio Osguera, bartender at the HMS Bounty, in the ground level of the Gaylord Apartments at 3355 Wilshire. 'They bring better business at night time.  We get the older crowd from 4 to 10:00 p.m., and the younger crowd from 7:30 p.m. to 2:00 a.m. It keeps things busy."