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The Foreign Dominance

April 06, 1986|DICK TURPIN | Times Real Estate Editor

Who owns downtown Los Angeles?

The Japanese, the British, the Canadians, the Chinese, the Germans, the Dutch . . .

If you "flagged" or identified all those familiar buildings in the central business district and heart of this metropolis, about two-thirds of the towers and office buildings would sport a foreign flag, indicating they are either owned or controlled by foreign investors.

In 1979, less than 25% were foreign-owned. Since then, the share of home-grown ownership downtown has diminished significantly.

Heavy investors from Asian and European nations, recognizing the Los Angeles area as the catalyst in the burgeoning development and progress of Pacific Rim nations, have placed their bets--their investments in the future--here, a place they firmly believe has a diverse and highly stable economy.

The most recent expression of that kind of confidence in this area by a foreign investor was in mid-March by Toronto-based Oxford Development Group. It announced the sale of almost every property it owned in the United States to another Canadian firm, BCE Development Corp. of Vancouver, for more than $1 billion.

What it did not sell was its considerable California holdings, one of which is its huge, new Citicorp Plaza project at 725 S. Figueroa St. The company intends to focus its future real estate activities in California, with strong emphasis hereabouts.

Currently, in the downtown market--bounded roughly by 1st Street to the north, Broadway to the east, Olympic Boulevard to the south and the Harbor Freeway to the west, the Japanese are the principal foreign landlords, known to own or control at least 14 buildings.

British interests own eight, and Canadians claim ownership of at least five. The Chinese have three, and two are German-owned. (See listing of owner nations with data from Julien J. Studley Inc. and Grubb & Ellis, commercial brokers.)

Outside the immediate downtown core are Chinatown and Little Tokyo, located to the north and northeast, respectively. Obviously, ownership there has a strong Asian flavor, while Broadway and Spring Street--once the parallel backbones of the "old downtown"--are still principally locally owned, according to John Curry, real estate economist of the Community Redevelopment Agency.

Thus, inclusion of those added properties, along with the Puerto Rican ownership of the Banco Popular--and headquarters, ironically, of the city's Community Redevelopment Agency at 354 S. Spring St., could mean, conservatively, that 70% of an extended downtown area is foreign-owned.

Research into ownership of many downtown structures shows the existence of many shell or "dummy" firm names, indicating usually that foreign ownership is involved and, for various reasons, a reluctance to identify themselves or their money sources.

The interest in the Los Angeles market is not waning either, according to real estate firms active in the downtown market.

"We believe that this is only the beginning of what will be a continual interest in purchasing real estate in downtown Los Angeles, certainly by the Japanese companies, but also by firms from other countries, including Canada, England and other European countries," said Howard D. Sadowsky, senior vice president here for Julien J. Studley Inc., national realty firm specializing in commercial properties and consulting.

Citing the ownership of at least 14 buildings by the Japanese, he said that Mitsui Fudosan, a major owner, is considering "building a major facility of about 900,000 square feet at Wilshire and Figueroa." Bank of Tokyo "recently purchased the 8th and Figueroa site and plans to build about 1 million square feet (there).

"Interestingly, once one or two of the Japanese companies expand their purchases of properties, it's only a matter of time until other companies will follow," Sadowsky said.

"Politically, the United States is the most stable in the world, and although you may not always get the best return, you know the money will be secure. While we in Southern California, especially in downtown Los Angeles, think the land and buildings are expensive, costs are cheap in comparison to world-class cities, such as London, Paris, Tokyo and New York.

"Investment in downtown Los Angeles is a good diversification of their money, and the overall returns of money in the United States on real estate deals over a long term still turn out to be an excellent investment.

"Since many foreign investors are publicity-shy, it is sometimes difficult to determine who the actual owners are on properties, since they may set up a dummy company. In fact, there may be additional properties that are foreign-owned but ownership is difficult to confirm."

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