By Jaboner Jackson 8 am | As AEG wraps up legislation at the State level for protections regarding the Environmental Impact Report, the ripple effect on the properties surrounding the planned downtown Los Angeles stadium in South Park has already begun. Unlike the Westside and beach cities, downtown Los Angeles still maintains an ample supply of empty lots. Seven years ago, the entire South Park area of downtown Los Angeles was nothing more than a series of parking lots surrounding a shiny but lonely Staples Center. Real estate developer South Group kicked off the building boom in South Park in 2004 with the first new condominium project in downtown Los Angeles in twenty years. Others quickly followed suit. AEG upped the ante by breaking ground on its corporate offices and mega-entertainment complex on a series of parking lots surrounding the Staples Center in 2007 just as the construction pace of overpriced residential towers slowed. Almost every development company, including South Park, Astani, and Maguire, declared bankruptcy or restructured during the subprime mortgage fiasco from 2008 and 2009, but with Farmers Field set to be completed by June 2016 with the San Diego Chargers slotted as the anchor tenant, the once stagnant commercial property market for new development projects is once again picking up steam.
One of the development projects that never got off the ground in 2007 was the Glass Tower, located three blocks away from AEG’s LA Live complex. It sits on 0.54 acres across from South Group’s first project. Now the lot is for sale. The asking price? A cool $12.5 million. The lot has already been zoned R-5, meaning the City has approved the site for high rise residential and hotel use, amongst other possibilities. A selling point for the Glass Tower lot is that the site already has preliminary architecture plans. But rest assured that with the building of Farmers Field and Pico Hall, the new wing of the Convention Center, the new owner and developer will look to build a boutique hotel rather than another condominium complex.
Another vacant lot, which is directly situated across from the Convention Center and which was part of the City of Los Angeles’ eminent domain push with Staples Center in the late 1990s, can be had for $17 million. At 1.32 acres, it’s a bargain compared to the Glass Tower site so long as the new developer can get zoning in place for a hotel, which considering its relevance to the AEG mega-complex, won’t be hard to do. Remember those additional five hotels that Tim Leiweke has referenced numerous times? They need to start off as plots of asphalt.
If those lots are too big for your tastes, you can always go smaller. A 0.29 acre lot that is zoned R-5 and which is located a couple of blocks east of the Convention Center and Farmers Field is looking for an experienced hotel developer with which to partner to build a 16-22 story boutique hotel. In the words of the agent representing the current owner, “Thanks to AEG, South Park has become one of the hottest areas in the country.” The pricing? Let's just say it's a lot of alimony.
To be sure, AEG has formed South Park to its vision. But it’s also important to remember that AEG received big help from the City Council to procure the parking lots of South Park under eminent domain. AEG has flipped most of these lots to outside investors and developers over the last few years. Although AEG has the smartest guys around running the company, they have received a large amount of public assistance in the form of indirect subsidies for each one of their downtown Los Angeles successes. AEG's success hasn't been entirely homegrown.
Want to play Real Estate Developer? Check out zoning information on our Google docs account here. The FOOTBALLPHDS are sticking with the currency and debt markets rather than dipping into hotel development but we’re sure some of Wonderful Readers out there will want to jump aboard the AEG money train.
Just as we’ve been saying all along, AEG’s Farmers Field is sailing along. Yesterday, the California Assembly approved SB 292 by a vote of 59-13. While media outlets were excited about the news, our Wonderful Readers stifled a big yawn because they’ve expecting this result for months. Nonetheless, Dennis Romero of the LA Weekly hits a few of the fine points regarding passage here.
We expect the State Senate to approve SB 292 on Friday with some last minute changes thrown in, thereby paving the way for Governor Jerry Brown to sign the bill into law by late September or early October. The law will take effect on January 1, 2012, shortly after AEG submits its completed 10,000+ page Environmental Impact Report to the City of Los Angeles.
Speaking of LA Weekly, our comrades across town took a look at how Farmers Field will create a “Field of Billboards.” Read about the Bladerunner-ization of Los Angeles here.
Despite our harsh talk about Farmers Field over several months, we sold out last week and officially supported Farmers Field. Mr. Leiweke: how is the “We Support Farmers Field” discount on our three condos at the Ritz Residences at LA Live progressing? Rock Mayock returns this weekend from the Eurozone and we’re ready to make this happen. Hit a brother up with a discount, Mr. Leiweke. Drinks at WP24 on me, Tim.