To most investors, Compton would hardly seem an ideal locale in which to invest money. Memorialized in the NWA rap album, "Straight Outta Compton," the city has a national reputation as a center for the worst of the urban gang and drug culture.
Yet, to Jose de Jesus Legaspi, Compton and much of South-Central Los Angeles, the epicenter of the 1992 riots, is "the new frontier" in part because years of neglect have created a huge unmet demand for retail and other services.
"These areas have been underserved for years," the Mexican-born Legaspi says while checking out a decrepit strip mall along a stretch of Long Beach Boulevard. "When there's a shopping center like this one that's very old, and it can still be successful, imagine what you can do if you fix it up?"
Legaspi is doing more than simply imagining, however. During the next few months, he plans, along with a supermarket owner, to modernize a series of strip malls in the heart of South Los Angeles. And Legaspi's investment interest in the area is not eccentric. Other companies, from national fast-food chains to local Latino-owned companies such as La Pizza Loca, are expanding operations to South Los Angeles.
The reason for this dynamic shift is not a renewed corporate social consciousness. Rather, it is simple demographics. Once predominantly African American, Compton is now at least half Latino, and as much as two-thirds of the population of neighboring Watts is Latino.
Although this demographic trend is most marked in Los Angeles, similar transitions are evident in Houston, Miami, Phoenix and San Diego, where Latinos already outnumber African Americans. The newcomers are participating in urban economies that, despite widespread poverty and high crime rates, possess far more economic potential than many investors, pundits or politicians imagine. The now predominantly Latino "neglected areas" of Los Angeles County, for example, are home to a manufacturing economy with a total net worth of more than $54 billion that employs some 350,000 people, more than the industrial economies of 30 states combined.
A 1994 survey issued by Cognetics in Cambridge, Mass., ranked Compton and South Gate, a predominantly Latino community near Downtown, in the top 20 of nearly 800 urban communities for dynamic entrepreneurial growth. "People think that because these neighborhoods are low income, there's nothing there," says Linda Griego, president and CEO of RLA, the non-profit agency dedicated to rebuilding the area after the '92 riots. "There's enormous strengths and opportunities for those who bother looking."
This is especially true, Griego says, in many Latino immigrant neighborhoods, where Legaspi and other developers are concentrating their efforts. Although Latinos account for nearly four times as many poor in the county as African Americans, more than 80% of Latino males in South Central are in the work force, compared with 57% for blacks.
Contrary to popular perceptions, most Latinos who live in South Central have been in the country for at least 10 years, with strong family and economic ties to the region, according to demographer David Hayes Bautista. These characteristics are attractive to retailers who cater to the needs of growing families and small businesses. "The Latino consumer is a very family-oriented, extended-family-based consumer," says Legaspi. "Because a lot of businesses feel comfortable with the Latino community, they will feel comfortable investing in South Central."
As an example of successful Latinization, Legaspi points to Pacific Boulevard in Huntington Park. Fifteen years ago, the street was mostly deserted; vacancy rates approached 40% to 50%. Today, Pacific is one of Southern California's liveliest shopping streets, with weekly sales volumes rivaling those of Rodeo Drive or Downtown's Broadway.
For inner-city Los Angeles, Latinization may represent one last hope to avoid becoming a permanently discarded urban wasteland. During the past two decades, such primarily African American inner cities as Detroit, Cleveland, Newark and Richmond, Va., have suffered significant population declines and remained essentially moribund even when the surrounding regions are booming. As has Los Angeles, these cities have experienced a huge outflow of both middle-class whites and blacks to surrounding suburban and exurban areas. But in Los Angeles, the steady influx of Latino and Asian immigrants have prevented the emptying-out phenomenon that plagues older cities.
In South Los Angeles, this population growth has helped maintain the kind of broad-based industrial economy that has all but dissipated in other cities. Latino workers constitute nearly two-thirds of all the production workers in such manufacturing industries as textiles, metal working and medical instruments.