In The News : 2002

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New project seen as linchpin in boosting area's seedy image

December 16, 2002
This article also appears on another site: Los Angeles Business Journal

The enormous hole on the southwest corner of Santa Monica Boulevard and La Brea Avenue is just a few blocks from the heart of the so-called Hollywood Renaissance. But it might as well be miles away.

While hundreds of millions of dollars have poured into remaking Hollywood and Sunset boulevards, commercial life along the Santa Monica Boulevard production corridor, stretching from the West Hollywood border to Vine Street, has remained static.

But the hole, future home of Target and Best Buy stores, as well as other national retailers, is an indication of change to the commercial district, where the daytime bustle of post-production technicians and set designers makes way at night for the creeping presence of drug dealers and prostitutes.

Developer J.H. Snyder Co. is spending $80 million to build the 250,000-square-foot West Hollywood Gateway project, which sits just outside the Los Angeles border. It is scheduled to open in January 2004.

By adding a stronger retail and restaurant component to an area dominated by creative offices, studios, light industrial space and storage facilities, many in the area hope to see a pedestrian presence on Santa Monica.

"It won't happen right away but I think in the next 10 years you're really going to see a change along Santa Monica. The (Gateway) development will lead to growth," said Jeff Luster, president of Major Properties and a 20-year veteran of the Hollywood commercial real estate market. "The property owners there are a cohesive group and they are trying to improve the area."

Clean up effort

Leading the charge for those improvements is the Hollywood Media District business improvement district, which was formed in early 2000 and now has 220 stakeholders.

The area's seediness led to a flight of production-related companies to Culver City, Burbank and Glendale, especially after the 1992 riots. Some of that space has been absorbed, but the rough image is hard to shake.

Armed with $1.5 million in grants from the Community Redevelopment Agency, the BID has been undertaking streetscape improvements around Santa Monica Boulevard and Highland Avenue. The group wants to expand on those efforts and possibly even have utilities placed underground along Santa Monica to free up sidewalks and improve the area's aesthetics.

"The only way we can have successful economic redevelopment is if we make it clean and safe and solve our parking problem," said Mary Lou Dudas, executive director of the Hollywood Media District, pointing out that the closest parking garage is blocks away. "We call Santa Monica Boulevard our spine, and we want to really transform it into a pedestrian corridor rather than a harsh urban corridor, which is what it is now."

Security patrols hired by the BD have managed to lower crime rates and discourage prostitution, but because the group's borders don't extend all the way to West Hollywood, many of the problems have simply moved west.

"We hear it's being squeezed in the area between us and West Hollywood," said Duda, adding that the BID will try to expand its territory to the West Hollywood border sometime next year.

Virtually everyone agrees that the Snyder project will be an improvement over the car wash and mini-mall that occupied the site previously and that served as a gathering spot for some of the neighborhood's more undesirable characters.

Even with its image problems, Santa Monica Boulevard remains a popular locale for production houses and a variety of other entertainment companies. Eastman Kodak, for one, has a large facility there.

"It's as desirable as anywhere in Hollywood if you're in the business," said Steven Tronson, a senior associate at Ramsey-Shilling Co.

Rents for creative office space on Santa Monica run from $1.25 to $2 per square foot, Tronson said. That's down 10 percent to 20 percent from the dot-com boom, but vacancy rates are a respectable 10-15 percent, lower than the Hollywood office market as a whole.

"Its true that most of the physical changes in Hollywood have taken place to the north," Tronson said. "Santa Monica Boulevard is the guts of Hollywood. It's definitely gotten better, but there is a ways to go."