L.A. football stadium plan has firms scoping out the neighborhood

Take a short walk away from the bright lights of Staples Center and the giant video screens above L.A. Live, and it becomes clear that the acclaimed revitalization of downtown Los Angeles is still a work in progress.

Here, along South Olive Street near West 11th Street, you’ll find a smattering of merchants, including old printing shops and mannequin stores, but also a lot of abandoned storefronts guarded by locked metal gates.

This area is known as South Park, and apart from Staples Center and L.A. Live, it hasn’t seen the kind of office development and loft conversions that have given other parts of downtown thriving commerce and a burgeoning nightlife.

But with the announcement that AEG wants to build a $1.35-billion football stadium and convention facility, some retailers and developers have begun scouting the neighborhood and sounding out commercial real estate brokers for opportunities.

The stadium, downtown boosters say, would be very good for business.

“Retailers we would normally only find on the Westside, New York and Beverly Hills are looking downtown, and they named the likelihood of a stadium as what brought them,” said CB Richard Ellis broker Derrick Moore, who connects retailers and landlords. “Without the stadium, they would not be looking at downtown L.A.”

Chain stores prospecting for new downtown locations include CVS and Walgreens drugstores and various large clothing stores, said Moore, who doesn’t represent AEG. Sprouts Farmers Market and Fresh & Easy, two grocery chains, are also scanning the area.

At least four major hotel chains are contemplating a spot downtown, with their sights set on a spot near L.A. Live and the convention center, according to real estate brokers. AEG executives say they expect an announcement in April about a hotel to be built just north of L.A. Live.

The downtown stadium is far from a done deal. It must win approvals from local government and secure an NFL team. In addition, it is competing with a stadium plan by billionaire Ed Roski in the City of Industry.

If it does get the green light, no one is saying the stadium will help downtown become an urban mecca on par with Chicago’s Michigan Avenue or San Francisco’s Union Square. But some experts see it as a significant step.

“It would really be beneficial to the renaissance of downtown,” said Paul Habibi, who teaches real estate classes at UCLA, while adding that “other events besides football would help tremendously.”

Still, not everyone sees the stadium as beneficial to downtown’s progress.

When they are not in use, football stadiums “suck energy out of the surrounding area,” said Christopher Leinberger, an urban planning analyst at the Brookings Institution.

“They are just a bunch of blank walls staring at various streets. There is no reason to walk past them.”

Combining football with convention business would help, but in Leinberger’s estimation the country is oversupplied with convention centers. Downtowns grow best organically, he said.

“It’s better to have a lot of little things going than one silver bullet that absorbs all your resources,” Leinberger said.

AEG says it won’t neglect the streetscape. Between L.A. Live with its outdoor plaza and the new event center, the developers are “knitting together a nice series of different types of spaces,” AEG executive Ted Tanner said.

Urban planners point out that marginalized urban commercial districts seldom transform into hubs for retailers and restaurants overnight. Such revivals typically follow a pattern that starts with bars and nightclubs, followed by more upscale restaurants, drugstores and discount chain stores. Parts of downtown L.A. have reached that point, and mid-priced clothing stores are expected to follow as the next evolutionary step.

Downtown has long been a financial hub, with the biggest skyscrapers on the West Coast. More recently, civic leaders have shepherded construction of the Walt Disney Concert Hall and the Cathedral of Our Lady of the Angels. Widespread conversions of obsolete office space to apartments has given downtown another asset — a worker population that doesn’t abandon it for the suburbs at night.

Thanks to the Red Line subway and light-rail system, downtown also has a viable public transit system, which is a boon in attracting young adults to the area, planners say.

Moore, the real estate broker, says hip clothiers Urban Outfitters and H&M are scouting for locations, and that trend probably will continue with or without a stadium. Downtown’s mercantile heart is at West 7th and South Figueroa streets, which is close to office towers, apartments, L.A. Live and transportation hubs. Retailer Target will open a store at the intersection next year.

The Feb. 1 announcement that Farmers Insurance would spend $700 million to put its name on AEG’s downtown stadium represented a step forward for the proposal but hasn’t yet driven up retail rents downtown, which would have been a clear indicator of increased demand. Still, rents are stabilizing after falling as much as 30% in some buildings during the economic downturn, according to CB Richard Ellis.

Although overall retail vacancy is a substantial 17%, competition is stiff for locations in the financial district close to L.A. Live, and several parking lots near it are for sale, brokers say.

Property sales, which came to a virtual halt during the economic downturn, are back. A prime lot just east of the convention center was recently purchased by a parking lot operator from a condo developer for $275 a square foot. That’s far less than the prerecession peak of $400 to $450 but indicates the market for land is viable again.

Restaurateur Michael Ilic said he was considering the area near the proposed stadium for a second Gram & Papa’s cafe, which he operates in a small fashion district storefront.

“The basic formula for me is that foot traffic equals business,” he said, “and a football and convention center would bring foot traffic, that’s for sure.”

Whereas gentrification of some downtown neighborhoods such as Little Tokyo came about through many small changes, the emergence of South Park as a neighborhood was inspired almost entirely by the work of AEG, real estate industry observers say, starting with the opening of Staples Center in 1999.

Before that, the southern boundary of prosperous, white-collar downtown was 7th Street, Moore said. “There was really no reason to go beyond that.”

No reason, that is, unless one was going to the convention center, which was a self-contained island in a seedy, mostly commercial neighborhood. When the building now known as the West Hall opened in 1971, The Times’ architecture critic bemoaned its location and said it was set up in service of the automobile like a suburban shopping center.

Its isolation remained until the arrival of Staples Center, followed several years later by the $2.5-billion L.A. Live complex, which includes restaurants, theaters and hotels. They attracted investments on a few nearby blocks in South Park, bringing in condominiums, apartments, restaurants and bars.

The residential and retail renaissance downtown has caught the interest of established white-collar firms as well as young loft dwellers and bar patrons. Architecture firm Gensler, which was selected Friday to design the stadium, and law firm Haight Brown & Bonesteel recently announced plans to move downtown from the Westside.

“Not that long ago, if you worked downtown, as soon as you got off work, you couldn’t wait to get out,” said Chris Stouder, managing partner of Haight Brown.

“Now there is Staples Center, Nokia and the concert hall. The revitalization has made it a more attractive place to run your business.”

roger.vincent@latimes.com