DOWNTOWN LOS ANGELES - Prominent developer The Ratkovich Company is poised to acquire and launch a major renovation of Macy’s Plaza, the faded Seventh Street mall, office and hotel complex.
The firm is in escrow to purchase the brick-clad, fortress-like property that houses a Macy’s department store from owner Jamison Services, Inc. The pending sale and proposed renovation could signal a major change in Downtown’s retail landscape. Despite the Macy’s and other name brand retailers such as Victoria’s Secret and Bath & Body Works, the mall has never flourished.
The deal was verified by several sources familiar with the negotiations but who are not authorized to comment. Wayne Ratkovich, president and CEO of the Downtown-based development company, declined to speak about the transaction. Jamison Chief Executive Officer David Lee did not respond to requests for comment.
According to sources familiar with the deal, Ratkovich Co. has financing in place to buy the complex for an undisclosed price and plans to do a series of upgrades aimed at making the property a centerpiece of Downtown retail. The shopping center is a short walk from FIGat7th, where Brookfield Properties recently completed a $40 million renovation anchored by a Target.
The Macy’s Plaza structure, which opened in 1973, takes up the entire block bounded by Seventh, Eighth, Hope and Flower streets. It is known for towering walls of mostly windowless brick that close off the complex from pedestrians, as well as a dizzying parking complex with a spiraling ramp.
Ratkovich Co.’s proposed renovation would aim to better integrate the property with street life, including the busy pedestrian corridor of Seventh Street. One design option under consideration involves removing the glass atrium that covers the retail portion, rendering that part of the mall an outdoor shopping area.
Jamison bought the complex, which is also home to the 487-room Sheraton Los Angeles Downtown hotel and a 24-story, 700,000-square-foot office tower, in 2005. Since then the firm, which was founded by Lee and has a history of spending minimally on improvements in its Downtown properties, has done little to upgrade the facility.
Some Downtown business advocates hope that the investment in the property will help it become a more vibrant commercial attraction that could add to the retail momentum generated by Target and FIGat7th.
“We are excited about the prospects of having Wayne Ratkovich reposition this important property,” said Carol Schatz, president and CEO of the Central City Association and the Downtown Center Business Improvement District. “He is a noted and well respected urban developer who will help to integrate this property with Seventh Street, Downtown’s major retail spine, and the rest of Downtown. We look forward to seeing Wayne’s vision for this mammoth project.”
Change Is Coming
There is precedent in the region for redesigning closed-in mall properties with an eye toward more pedestrian access and open space. Derrick Moore, a principal at real estate services firm Avison Young, said that a renovation of Macy’s Plaza could take a cue from The Macerich Company’s redevelopment in 2010 of Santa Monica Place.
Macerich oversaw a two-year, $265 million upgrade of the 30-year-old mall into an open-air shopping complex.
“Santa Monica Place also had your typical retail offerings that one would find in a mall, but what it changed was how the public interacts with that space,” Moore said.
This would mark another Downtown move for Ratkovich, who has a long history in the area. Ratkovich Co. has developed several Downtown properties including the Fashion Institute of Design and Merchandising campus and renovations of 800 Wilshire, the Fine Arts Building and the Oviatt Building.
In the early 1980s, Ratkovich bought and restored two Art Deco landmarks just west of Downtown, the Wiltern Theatre and the neighboring Pellisier Building. The firm also owns a massive mixed use complex in Alhambra called the Alhambra. According to Ratkovich Co.’s website, the complex’s office space was 30% occupied when the firm acquired it in 2005. New tenants include the USC Keck School of Medicine, Southwest Administrators, Tenet Healthcare and AT&T.
Lee, who has a reputation for not speaking to the media, is somewhat of a quiet tycoon in Los Angeles commercial real estate. Jamison Services owns or manages some 70 office buildings in the city, including four Downtown complexes. It is also in escrow to sell the Banco Popular Building at Fourth and Spring streets to developer Allen Gross, who is planning to convert it to apartments.
As for the nearly 700,000-square-foot office tower that rises on the northwest corner of Macy’s Plaza, Ratkovich Co.’s plan is to reposition it as a creative office property, sources said. Ratkovich would be following the lead of real estate companies such as Rising Realty Partners and Evoq Properties, which are increasingly targeting tenants from creative industries like technology, fashion and design.
The timeline for finalizing the Macy’s Plaza sale is uncertain, though sources familiar with the deal said Ratkovich hopes to close the transaction by May.
A representative of Macy’s, the anchor of the mall, declined to comment.
Contact Ryan Vaillancourt at firstname.lastname@example.org.