By CHRISTOPHER KEOUGH
Staff Reporter of the Los Angeles Business Journal, 1/14/02
After years of decline, the strip of Wilshire Boulevard between downtown L.A. and Miracle Mile is showing signs of having turned the corner.
The most recent indication: the Los Angeles Unified School District finally succeeding in its 10-year effort to purchase the Ambassador Hotel and turning the 23.5 acre site into a school. Also helping has been interest in developing mixed-use projects at the Wilshire/Vermont and Wilshire/Western subway stops.
"We need more destination places so we can have more of an urban village feel," said Gary Russell, executive director of the Wilshire Center Business Improvement Corp., who has been instrumental in prodding the emergence of the urban village.
The BID, bounded on the east and west by Hoover Street and Wilton Place, respectively, and Third Street and Olympic Boulevard to the north and south, has spent more than $6 million on streetscape improvements, beefed up security and sanitation teams and business recruiting since its formation in 1995.
"There's a better impression that it's safer and cleaner," Russell said. "We've come around and we're very confident we're on our way."
That the neighborhood is safer is more than just an impression. According to Los Angeles Police Department statistics, violent crime (rape, homicide, aggravated assault and robbery) in the area fell by more than half between 1995 and 2000 - from 4,590 incidents to 2,272 - though it climbed a bit last year. Police attribute the jump to 3,862 incidents in 2001 to a citywide increase in violent crimes.
The change in fortunes has come gradually, said Chris Runyen, vice president at Grubb & Ellis Co., who pinpoints the turnaround to 1997, when the office vacancy rate bottomed out at a whopping 35 percent. The success of neighboring markets made Wilshire Center's affordability - office rents average $1.30 per foot - increasingly attractive.
Other plusses include fiber optic cables under Wilshire Boulevard, ample parking and large amounts of contiguous space. Runyen said the two large parcels still remaining are 50,000 square feet at 3701 Wilshire Blvd. and 150,000 at 3250 Wilshire Blvd., vacated when Daniel, Mann, Johnson & Mendenhall relocated to Arco Towers downtown last year.
Alternately identified as Mid?Wilshire and Wilshire Center, the strip is unlikely to return to the glory days when major tenants included the likes of Travelers Insurance and IBM Corp. Instead, buildings are filling up with an array of businesses, nonprofits and governmental organizations.
At the end of last year's third quarter, the most recent statistics available from Grubb & Ellis, rent rates along the Wilshire Corridor remained the lowest in the county - 31 cents lower than the LAX corridor. But the Wilshire Center's office vacancy level was down to 14.8 percent - a 3 percent decrease from the like quarter in the previous year.
"A year ago, two years ago, we were discounting parking and giving a month or two of free rent. We stopped doing that," said Linda Hedden, property and leasing manager for the leading landlord in the area, Jamison Properties. "A year ago we signed deals for $1.15 and we're signing leases for $1.25 now. We expect to increase 10 cents each year."
Ed Fischer, senior investment associate at Delson Norris Investment Properties, said the residential market in Wilshire Center is heating up as well. He called the area a seller's market as buyers line up to snag multifamily apartment buildings that have been covered under rent control laws and which will now transition to market rates.
"It's close to Downtown; it's close to Hollywood; it's close to Hancock Park," Fischer said. "It's close to everything."
Russell said the opening of the Red Line subway stations at Wilshire/Western and Wilshire/Vermont in 1996 have been a validating event for the area.
Now, according to Ashok Kumar, director of technical services and transportation analysis at the MTA, more than 4,600 people get off the train at Western Avenue and nearly 10,000 get off at Vermont every weekday.
It's that kind of captive audience that has people paying more attention to the location, said Russell. "Five years ago you couldn't get any developer interested in those sites."