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Hopes Grow With World Trade Towers : For Long Beach, Doubts, Snags Called Transitory

January 04, 1987|DARYL KELLEY | Times Staff Writer

LONG BEACH — If, as Guy Tozzoli says, there are six stages in the development of a world trade center, Long Beach should savor the enthusiasm of the first.

"There will be all kinds of problems," predicts Tozzoli, who opened New York City's World Trade Center in 1970 and is president of the fast-growing, 53-nation World Trade Centers Assn.

Tozzoli had plenty of problems even in Manhattan, the nation's center of international trade and finance. Construction was late, tenants backed out of leases and profits were non-existent for five years, two beyond the projection, he said.

"There are six stages in all great projects. First there is enthusiasm, then doubt, then panic. Phase four is the search for the guilty. Phase five is punishment of the innocent. And phase six is giving credit to those who didn't have anything to do with it," the gravel-voiced Tozzoli said with a laugh. Tozzoli survived to see profits from his $1.1-billion Manhattan twin towers reach $137 million last year.

'Great Place' for Center

"Nearly all of these trade centers are financially successful. And Long Beach is a great place for a trade center. But nobody builds a half-million-square-foot project without problems," he said.

Tozzoli was referring to the 27-story first tower of the massive, four-phase, $550-million Greater Los Angeles World Trade Center in Long Beach, for which ground was broken last month.

His comments are notable because such perspective has not been stated publicly before--not during the enthusiastic first stage of the trade center project.

The trade center, a joint venture by home-grown IDM Corp. and Japanese construction giant Kajima Corp., has been hailed by local leaders as the most important commercial building in the city's history.

It will house 15,000 workers, dominate the downtown skyline and anchor Long Beach's emergence as an international city, IDM owner Michael J. Choppin said.

To hear him tell it, the success of the 2.2-million-square-foot center, which would be the world's second largest trade center behind New York's, is almost inevitable.

Market-Driven Development

It is the right project in the right place at the right time--a market-driven, office-and-hotel development near the West Coast's two dominant ports that can ride the rising tide of Pacific Rim trade to completion, perhaps by 1996, Choppin said.

And, as an IDM-Kajima joint venture, it combines local knowledge with the assets and contacts of one of Japan's largest construction firms, said Choppin, Long Beach's largest real estate developer.

At the trade center's ground-breaking last summer, attended by 5,000 guests, U. S. Sen. Alan Cranston (D-Calif.) called it "one of the most important commercial centers in our nation . . . a focal point for our future."

But since then--even as those who know office buildings, ports and international trade were saying the center will be an immediate success--a few doubts have set in.

In late November, officials at the Port of Long Beach, which spent $30 million to buy and clear 12.7 prime acres for a trade center, grew anxious. One top officer hinted at action to prod IDM-Kajima if construction had not begun by the new year.

Meanwhile, managing partner IDM grappled with easement and building permit problems that kept bulldozers off the site until December, and its attempts to firm up months-old pre-lease tenant commitments languished until construction began three weeks ago.

Lofty Expectations

And, in interviews, leasing agents who have worked for years to try to fill other new Long Beach office buildings--none as large as the trade center's first tower--said the center might have trouble living up to lofty expectations.

Trade center rental rates, topping at $2.90 a square foot per month, are 20% above the high for Long Beach and about that of prime buildings in downtown Los Angeles and Newport Beach, agents noted. The downtown Long Beach vacancy rate has inched downward from 21% last year, but agents say they still must cut extraordinary deals to lure large tenants.

Also, one of the region's top land-use scholars has questioned the basic premise for construction of a trade center: that the strong growth of the ports of Long Beach and Los Angeles has fueled a demand for a major business complex nearby.

Ports that handle mostly imports are basically shipping stations without the support activities of a port of origin, and there is no need in this electronic age for most trade-related companies to be nearby, said George Lefcoe, a professor at USC and an organizer of international conferences on urban planning.

"In order to build a world trade center of any size someone here needs to answer the question, 'How can Southern California dramatically increase regional exports?' " Lefcoe said.

Shipping lines and freight forwarders are drawn to ports but don't often look for pricy quarters in buildings like the ultra-modern, granite-and-glass trade center, he said.

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