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COMMERCIAL REAL ESTATE QUARTERLY REPORT

Gaining Traction

Trendy shops, eateries and offices transform downtown L.A.'s arts district

January 20, 2013|Roger Vincent

When Gideon Kotzer set out to open a discount electronics store in the mid-1990s, he deliberately chose an old warehouse in the cultural middle of nowhere -- the arts district of downtown Los Angeles, which charitably could be called sketchy.

Crazy Gideon's on Traction Avenue became an island of commerce in an area that saw little other retail activity beyond illegal drug sales. The store's remoteness in an otherwise unwelcoming warren of aging brick and concrete industrial buildings was central to Kotzer's business strategy.

"He bought that space with the mind-set that if people would drive to a desolate, faraway neighborhood, they wouldn't want to leave empty-handed," his son Daniel Kotzer said.

Crazy Gideon's has closed, and its formerly shabby space in the 1917 structure is expected to open to the public again this year as an expansive brew pub serving house-made beer with meals. The upgrade is emblematic of changes going on throughout the arts district.

For The Record
Los Angeles Times Tuesday, January 22, 2013 Home Edition Main News Part A Page 4 Local Desk 1 inches; 31 words Type of Material: Correction
Arts district: An article in the Jan. 20 Business section about the transformation of downtown Los Angeles' arts district misspelled the last name of real estate entrepreneur Tyler Stonebreaker as Stonebraker.
For The Record
Los Angeles Times Sunday, January 27, 2013 Home Edition Main News Part A Page 4 Local Desk 1 inches; 31 words Type of Material: Correction
Arts district: An article in the Jan. 20 Business section about the transformation of downtown Los Angeles' arts district misspelled the last name of real estate entrepreneur Tyler Stonebreaker as Stonebraker.

The neighborhood along the Los Angeles River east of downtown's Civic Center is drawing favorable comparisons to New York's meatpacking district, where trendy shops, restaurants, hotels and offices have taken over many industrial buildings that were strictly blue collar for decades.

The transformation has such momentum that some of the neighborhood's biggest supporters expect that it will be difficult to find artists in the arts district in another decade as gentrification drives up rents and pushes low-paid artists to cheaper locales.

An area in flux

But for now, the arts district is in a sweet spot of transition for many. Vegetable wholesalers and furniture makers share streets with top-flight restaurants and front-line technology and entertainment firms. Its walls sport elaborate murals -- and foreboding razor wire.

"There are very rough patches," said architect Scott Johnson, who lives in a condominium on Industrial Street. "It's muscular. It's complicated. It's interesting."

Part of the appeal for Johnson, who lived in the meatpacking district in the late 1970s, is the roughness most suburbanites would find off-putting. He calls it "authenticity" in a time when "we're getting bombarded with fake stuff."

The spine of the arts district is Mateo Street, a truck-laden thoroughfare named after early landowner Matthew "Don Mateo" Keller. The district evolved from agricultural uses including Mateo's winery in the mid-1800s to being the city's industrial heart in the early 20th century.

One of the most ambitious private developments of that era was Union Terminal Annex, which was connected by rail to the city's seaport and was the second-largest wholesale terminal in the world. Two of the four large remaining buildings are occupied by clothing manufacturer American Apparel Inc., and the owners are improving and divvying up long-vacant remaining space for other business tenants including the makers of Splendid and Ella Moss apparel.

The advanced age of the neighborhood's buildings worked against the district in recent decades as businesses moved to more modern, efficient industrial properties elsewhere in the region. Those that remained often barricaded themselves behind tall gates and barbed wire as the area gained a reputation for crime and homelessness.

"There were drug addicts and prostitutes on the corner when we started," said restaurateur Yassmin Sarmadi, who began working on French bistro Church & State seven years ago. "Now limousines pull up on a regular basis."

Sarmadi opened her bistro in the former West Coast headquarters of National Biscuit Co., a seven-story factory built in 1925 that was renovated and converted to condos in 2006. She was attracted to the historic nature of the building, she said, and the fact that it was remote from the elite restaurant enclaves of the Westside.

"It was far more exciting for me to be in a place that wasn't already 'there,' so to speak," Sarmadi said.

She lives in the arts district and enjoys the company of artists who are neighbors, but knows that the march of prosperity will make it hard for some of them to stay. It may take 10 more years to become as affluent as once-lowly Venice, Sarmadi said, but gentrification will come.

"I think it's inevitable," she said. "It brings a tear to my eye, but it's also progress."

Guiding change is Tyler Stonebraker, who helps young businesses such as film and television production company Skunk set up shop in old warehouses and factories.

Stonebraker's real estate firm Creative Space caters to creative companies that consider nontraditional offices essential to their identities and part of their appeal to desirable workers in the millennial generation.

"It's part of their brand now," Stonebraker's partner Michael Smith said of the creative firms. "They make up the bleeding edge of early adopters. And they like to be near each other."

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