DOWNTOWN LOS ANGELES - Downtown Los Angeles has seen a tidal wave of investment and redevelopment in the past 10 years. All across the community there are glossy new high-rises, glistening mega-projects and even seven-figure restaurants.
Yet the flash has not always been applied evenly, and the community carries the landmarks of a neighborhood in transition. In certain places the glitzy projects stand near vacant or dilapidated buildings that have not seen activity for years.
Several of Downtown’s fallow properties have been sidelined by the recession, and every stalled plot or building has its own particular backstory. However, three large, long-vacant edifices are owned by the same New York City-based firm. The lack of progress on the structures is sparking criticism from multiple Downtown stakeholders.
The Chetrit Group, a family-run batch of investor-developers led by Joseph Chetrit, is as well funded as it is low profile. It owns the Hotel Clark in the Historic Core, the Embassy Auditorium and Hotel in South Park and Giannini Place in the Financial District. In each instance the buildings are notable for the length of time they have remained empty, their key locations and the activity happening around them (Chetrit also owns a fourth Downtown property, an office building at 611 W. Sixth St. formerly known as the AT&T Center).
Some Downtown property owners say that attempts to reach out to the Chetrits about the condition of their buildings have been ignored.
“We just ran up against a brick wall,” said Karen Hathaway, president of the http://www.ladowntownnews.com/articles/2010/01/15/news/doc4b5103b7e3937042098882.txt" target="_blank">Los Angeles Athletic Club, which stands across from Giannini Place at Seventh and Olive streets. “It appears to be truly an absentee owner, and that’s not good for the community.”
Joseph Chetrit did not return multiple phone calls to his New York office. Attempts to reach two other Manhattan-based company officials by phone and email were also not returned.
Michel Attias, a Chetrit Group representative based at 611 W. Sixth St., said last week when reached by phone, “What other landlords think about my buildings, I don’t give a damn. I don’t care about their buildings. I conduct my business the way I want.”
The Chetrit Group, according to published reports and real estate professionals who have worked with them, operates as a closely held, well capitalized company.
The firm does not have a working website, and past media reports depict its principals as press-shy operators who routinely shun interviews.
The group’s core consists of five French-Moroccan brothers, led by Joseph Chetrit. The family has a background in textile manufacturing and importing, according to published articles and sources.
A 2007 http://therealdeal.com/newyork/articles/busy-chetrit-stays-discreet" target="_blank">article in The Real Deal magazine reported that the Chetrits have bought and sold billions of dollars worth of commercial and residential properties in New York, Florida, Illinois, California and New Jersey, some outright and some through partnerships.
Richard Baxter, a New York-based executive vice president of real estate firm Cushman & Wakefield who brokered the Chetrits’ first big New York deal in 1994, describes the Chetrits as savvy, opportunistic investors whose business hinges on market timing.
“Between 1994, when they first entered the market, and the height of the market here, which was 2007, they made billions in buying and selling real estate, not necessarily developing it,” he said. “All of it was based on buying low and selling high.”
Many of the Chetrits’ New York acquisitions, like their properties in Los Angeles, have been empty, older buildings in prime locations, said Baxter. They often select structures with flexible zoning, he said, and analyze the cost and timing of every potential use for each building. Sometimes, the answer is to do nothing.
“They often feel it’s better to leave the property vacant, so when a particular market comes back it’s positioned for sale for that particular use,” said Baxter. He cited a property on Fifth Avenue in Manhattan that the Chetrits purchased a few years ago for $400 a square foot.
“They sold it 18 months later for $750 a square foot and did nothing to the property,” Baxter said. “They’ve had a great history of doing that type of transaction.”
Yet the Chetrits have also extensively improved and renovated many of their holdings, said another real estate professional who has worked with the group but did not want to be named because of an ongoing business relationship.
The figure said they have the financial wherewithal to acquire properties without accruing significant debt, which allows them to wait out unfavorable financial cycles and not have to satisfy lenders. Still, the figure added, it is unusual for the group to hold properties as long as the ones in Downtown.
The Chetrit Group has owned the Embassy and Clark since at least 2001 and Giannini Place since at least 1998, according to documents filed in the county recorder’s office. The firm purchased the AT&T Center in 1999.
The Embassy and Giannini Place are both city-designated Historic-Cultural Monuments, according to the preservation organization the Los Angeles Conservancy.
The eight-story, 1913 Embassy, originally known as the Trinity Auditorium, stands just north of the Fashion Institute of Design and Merchandising. Though it is close to the school’s core of students and less than half a mile from L.A. Live, the Beaux Arts structure once owned by the University of Southern California has been vacant for more than 10 years. Some local stakeholders have eagerly awaited the property’s redevelopment for years.
“There were times it looked like it was going to be revitalized and renovation was underway, and things would stop and start and stop and start,” said Mike Pfeiffer, head of the business improvement district that operates in South Park. “I would certainly love to see it turn into something. Its location is terrific…. I was always rather stumped that it didn’t move forward.”
The 12-story, 1922 Giannini Place, named for Amadeo Giannini (the founder of the Bank of Italy and later Bank of America), the building’s former anchor tenant, has been empty for at least as long, according to neighboring property owners. The Morgan, Walls & Morgan-designed property, closed off and recently scrawled with graffiti, features a three-story temple entrance, a marble and terra cotta façade and other architectural flourishes. It stands one block away from the recently completed http://www.ladowntownnews.com/articles/2009/05/15/news/doc4a0de74ee400c853415749.txt" target="_blank">Brockman Building, a still unoccupied loft project with the popular Bottega Louie restaurant on the ground floor. Although a slew of restaurants have cropped up along Seventh Street in the past two years, there have been no signs of activity at the structure.
“There doesn’t even seem to be a local caretaker who could provide them with some maintenance,” said Hathaway of the Athletic Club. “Ideally, the owners would try to understand what’s going on on the street. Most of us adjacent property owners have given up. If we can’t bring them to the table, there’s nothing we can do.”
Giannini Place “has the worst impact” of all the local Chetrit buildings, said Downtown real estate broker Ed Rosenthal of the firm Grubb & Ellis.
“It’s a critical building on Seventh Street, and Seventh Street is growing and developing and here is a prominent corner just left in disrepair,” said Rosenthal.
Then there’s the long-empty former Hotel Clark. The 11-story building stands on Hill Street just south of Fourth Street, near Pershing Square and adaptive reuse projects such as Metro 417 and the Title Guarantee lofts. It was previously owned by the People’s Republic of China, according to information provided by the University of Southern California’s Geography Department website.
“It’s not great to have that building there,” said Daniel Swartz, a developer who oversaw the $35 million transformation of the Title Guarantee building into housing three years ago. “Spring and Broadway continue to clean up and get nicer, and Main Street has gotten to be one of the chic addresses and it’s a shame to have that in the middle of everything.
“The neighborhood is really improving and that building is more than an eyesore.”
Despite the Chetrits’ under-the-radar position, the company has floated renovation plans for each of their properties in recent years.
The most dynamic were for the Embassy. In 2005, http://www.ladowntownnews.com/articles/2009/07/02/news/doc4a4d3fc7e0e84736729749.txt" target="_blank">plans surfaced for a $30 million transformation of the project into a swanky Gansevoort Hotel (there are Gansevoort hotels in Manhattan, Miami and the Caribbean). The deal later fell apart, although as recently as last summer the hotel concept seemed to be moving forward without Gansevoort, with the developers submitting plans to the city’s Cultural Heritage Commission.
Historic consultant Tara Jones Hamacher said earlier this month that a hotel plan is still in the works, though it is in the design phase and there is no timeline for completion.
Architect Ryan Miller of Raztsch Architects, who is working on the concept, expressed frustration with the project.
“We sent them three design schemes on the Embassy six weeks ago,” he said. “They have their own decision-making process, which is completely illogical and doesn’t follow any reasonable time frame. It takes them six months or a year to make a decision.”
Attias of the Chetrit Group http://www.ladowntownnews.com/articles/2009/09/18/development/doc4ab40b720cff1156350981.txt" target="_blank">told Downtown News in September 2008 that the Hotel Clark would reopen as a 350-room boutique hotel within eight months. Nothing has materialized.
Giannini Place was also http://www.ladowntownnews.com/articles/2008/02/25/development/estate02.txt" target="_blank">slated for a conversion into approximately 100 live-work condominiums with a retail component. Attias said earlier this month that the condo plans “are gone to trash” because of the economy.
“To be honest, we are working on some other things so that’s not really a priority,” he said. “The problem is the timing. The condo market is really bad, and finance is hard. Nobody is lending, even though we do not contract with lenders up to a certain amount.”
Chetrit does not plan to clean the structure in the meantime, he said. “No matter how many times you clean the façade, they come and tag it,” said Attias.
Plans to convert the 42-story Sixth Street office tower into more than 500 residential and commercial condominiums also appear to be on hold, and it could remain that way until financial markets improve.
As one real estate professional who has worked with the Chetrit Group said, if now is not the right time to build, the company will wait until the economy turns around.
Contact Anna Scott at firstname.lastname@example.org.
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