Southern California Commerical Real Estate Lawyer & Attorney : Aronson Light Law Firm : Los Angeles, San Fernando Valley, California

Thanks to the vigilance of local presevation group Hollywood Heritage, the historic Hollywood Palladium theater has been saved from demolition.  The Los Angeles City Planning Department seems to have forgotten that a 1986 ordinance protects hundreds of historic structures within the Hollywood neighborhood; but in their defense it is only recently that developers have been willing to take a chance on new construction in the dilapidated area and so planners may be unfamiliar with the ordinance. The t nightclub and ballroom has been leased to Live Nation, operator of numerous other historic venues as well as the House of Blues chain.  Live Nation will renovate the venue to its former glory, and it will be the centerpiece of a large lifestyle center being built around it.. 

The Palladium opened in 1940 with a Frank Sinatra concert and in 1960 its stage and dance floor became home to the Lawrence Welk Show.  It has played host to the Academy Awards as well as the Emmy Awards and Grammy Awards, and has been used in numerous films (including The Blues Brothers) and television shows (most recently American Idol).  The Palladium was a major concert venue before arenas and stadiums took over, and still is in demand for private parties and other events.  When it opened, the Palladium was believed to be the world's largest nightclub.  Morrissey will perform ten shows between October 1 and October 13 and then the venue will be closed for renovation; Morrisey's former band, The Smiths, debuted at The Palladium in 1985.

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All across Southern California, the battle over the size, location and scale of development continues.

Santa Monica

In 2004, Santa Monica residents blocked Macerich's plans for redeveloping the three-story, 570,000 square-foot Santa Monica Place Shopping Center and replacing it with three 21-story condominiums, retail, restaurants and offices. Macerich has recently scaled back plans for the center, providing for the same footprint as the original building, but with an open air center, a third floor dining deck overlooking the ocean and a more open, village-like feel to connect to the Third Street Promenade. In March, Macerich submitted this plan to the City of Santa Monica and has received relatively positive initial reaction from the community. The approval process is expected to continue through this summer. 

Sherman Oaks

In the Sherman Oaks area of Los Angeles, Westfield has recently proposed expanding the 867,000 square foot Westfield Fashion Square by 280,000 square feet, adding 80 new stores, expanding and remodeling the food court, adding a 5-story parking garage and updating the exterior. Although many area residents dissatisfied with the out –of-date center are thrilled with idea, a significant opposition has formed, concerned with increases in traffic to the center, particularly on the weekends and holidays. The next step is an Environment Impact Report assessing the expansion and a public hearing where the local community may voice their concerns and/or support for the expansion.

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Despite some local opposition, large developments in Ventura County are moving ahead to add homes, businesses and local attractions to the area. On May 8, 2007, Santa Paula voters approved plans to amend the city's general plan to include the neighboring Adams Canyon area. This measure paves the way for the development of up to 495 large homes, an 18-hole golf course and a 200-room hotel and spa. Santa Paula is located 65 miles northwest of Los Angeles and 14 miles east of Ventura. In Oxnard, redevelopment and expansion of the Channel Islands Harbor is pushing ahead, notwithstanding some local resistance (including a lawsuit currently on appeal). Ventura County, which owns the harbor, has been working with developers to add new homes, renovate and expand marinas and redevelop the wharf with new restaurants, stores and hotels. Two new housing developments alone will collectively include over 1,000 new homes (including town houses and condominiums). Greystar Real Estate Partners is planning to demolish existing businesses (Casa Sirena hotel and Lobster Trap restaurant) and replace them with new restaurants, retail stores and hotels. Although not all area residents are happy with the change, many residents are hopeful that the aging, neglected harbor will be revitalized by the development and raise the value of their area homes.

Gregory W. Griggs, Los Angeles Times, Santa Paula OKs Twice-Defeated Luxury Housing, May 10, 2007; Gary Polakovic, Los Angeles Tmes, Harbor Makeover Sails Ahead, May 7, 2007

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At the beginning of lease negotiations, landlord and tenant are typically enthusiastic about the project and are eager to move forward. Following the conclusion of a successful negotiation however, if construction of either the entire center or tenant's premises is involved, this enthusiasm can quickly turn into animosity. It is often said that construction typically takes twice as long and costs twice as much as planned, yet many parties fail to address that issue in their lease. 

If the landlord is performing construction work before delivering the premises to the tenant, then the lease should clearly set forth benchmark dates by which landlord must secure permits and approvals, commence construction, and complete construction. If any of those deadlines are not met, then tenant should have the right to terminate the lease and to recover liquidated damages on account of the significant time and money spent in due diligence, permitting, tenant improvements and attorneys fees. Deadlines should be subject to extension for events beyond the control of Landlord and for delays caused by tenant or tenant's agents or contractors.

The landlord should also have a termination right if it is unable to obtain all required permits and approvals, or if the conditions attached to governmental approval render the project too expensive, or if the construction project gets bogged down in litigation with opponents of the project. The landlord should protect itself when constructing or remodeling the premises for a specific tenant to be as clear and precise as possible in the lease as to what improvements and finishes are to be used and exactly where they are to be located.

The lease should also provide tenant with the right to terminate if tenant does not receive all permits required to conduct its business within a reasonable time. This right should also include at least a 30 day extension option if tenant is close, but has not received its permits.

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The Los Angeles Planning Commission hopes to bring smarter growth to the City of Los Angeles by providing a clear set of rules for developers to follow and requiring community contribution by developments, including walkability and residential components. The Commission encourages developments which are village-like, include housing, and face outward instead of focusing on a parking lot.

The Planning Commission recently released a list of 14 principles (titled Do Real Planning!) to combat poor quality development in Los Angeles (see www.aialosangeles.org). By releasing these principles, the Planning Commission issues a challenge to developers and Commission employees to:

1. Demand a walkable city;
2. Offer basic design standards (eliminate stucco boxes, blank walls and street-front parking lots);
3. Require density around transit;
4. Eliminate department bottlenecks;
5. Advance homes for every income (every upzoning should include the obligation to provide lower and middle-income housing either on-site or through monetary contribution);
6. Locate jobs near housing;
7. Produce green buildings (provide benefits to any developer who will commit to building a LEED certified project);
8. Landscape in abundance (create an "urban forest");
9. Arrest visual blight (including overhead power lines, careless signage);
10. Neutralize masionization;
11. Nurture planning leadership;
12. Identify smart parking requirements;
13. Narrow road widenings (which undermines walkability goals); and
14. Give project input early (goal is to provide preliminary guidance or rejection within 60 days after an application is filed).

Developers should consider this new approach when seeking approvals in Los Angeles, and should allow for longer review periods, especially since modifications are more likely to be required. The Planning Commission notes "[W]hile we hope the stated goal in item 14 can be realized, we do not expect that it will occur overnight."

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Southern California's Inland Empire, as Riverside and San Bernardino Counties are commonly known, has experienced rapid population growth over the past decade. As homes became less and less affordable in the more temperate coastal regions of neighboring San Diego, Orange and Los Angeles Counties, developers began constructing tract housing in the Inland Empire, where low land prices allowed for more affordable homes. Most buyers faced long commutes, as there were few jobs available within the IE. Now, thanks to various circumstances, the Inland Empire is attracting jobs and allowing residents the opportunity to work closer to home. Wells Fargo's home mortgage division has just signed a lease for 285,000 square feet of newly-constructed office space in the City of San Bernardino to house 1,600 employees of its regional headquarters. Although this was a consolidation of existing IE offices, the reported $80 million commitment by the bank reflects their continuing confidence in the region. The Los Angeles Times reports that office vacancy rates in the area have fallen from 12.7% to 8% over the past 12 months, while during the same period 1,000,0000 square feet of new office space was been added in the market. Opus West, developer of the Wells Fargo building, is planning to construct other office buildings in the area. According to local brokers, the IE is attracting Fortune 500 companies due to low rental rates and a large population of well-educated white-collar workers.

The City of Riverside is actively working to make itself more attractive to business. The Times reported that AT&T will construct two free, wireless internet networks covering the entire City, one for residents and one for businesses and City services. The City hopes to make itself more attractive to high-tech companies by creating a "computer-savvy population." (Los Angeles Times 7/11/07, 7/19/07)

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In a long-expected move, Westfield has announced that it will redevelop the huge parcel of land that separates its Promenade and Topanga Plaza shopping centers in the Woodland Hills area of Los Angeles.  The proposed 3.8 million square foot development will reportedly include a hotel, condominiums and apartments, offices, shops and restaurants.  The project cost is reported to be $750 million.  The property has been underutilized for many years and is home to a vacant two-screen movie theater, a number of older restaurants, and various other small commercial buildings.  The entitlement process is expected to  take two years or more, and some objection is likely to arise over the perceived increase in traffic that the project may generate.  Westfield is nearing the end of a complete renovation of Topanga Plaza, with a new Target and a relocated Nordstrom now open and Neiman Marcus under construction.  Once the work on Topanga Plaza is complete, it is expected that Westfield will renovate the Promenade, but no official announcement has yet been made.

Woodland Hills is located within the San Fernando Valley, the northern half of the incorporated City of Los Angeles.  1.3 million of the City's nearly 4 million residents live in the Valley.  L.A.'s Valley residents have tried unsuccessfully on several occasions to secede from the City . Were secession to be successful, the new municipality would be the 7th largest city in the United States. The Valley is home to five other incorporated cities: Calabasas; San Fernando, Burbank; Glendale; and the gated residential community of Hidden Hills.  (Hidden Hills may be the only incorporated municipality in the United States whose City Hall is located outside the city; residents purchased and moved City Hall to a residence in the City of Los Angeles just outside the gated entrance to Hidden Hills after a court ruling granted passage through the gates to anyone wishing to view public records maintained by the City.)

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The Century City area of Los Angeles (just west of Beverly Hills) is in the midst of dramatic change. Westfield recently completed a major expansion of its Century City Shopping Center, building a new AMC theater complex and adding a second level to accommodate Borders, The Container Store, and a new dining terrace, and providing a more upscale appearance for the 43 year-old shopping center. The old food court and theaters have been replaced with fine-dining restaurants and upscale retailers. Westfield has also acquired two aging office buildings that abut the shopping center, 1801 Avenue of the Stars (slated to be demolished to make way for a mixed use project with retail and offices located beneath a condominium tower), and 1930 Century Park West (retail and additional parking). Nearby on the site formerly occupied by the Shubert Theater, the striking 720,000 square foot, 12-story 2000 Avenue of the Stars office building was recently completed. This new building, occupied primarily by entertainment industry businesses and located on the same block as the 44-story Century Plaza Towers, will be accompanied by several quick service and sit-down restaurants, a cultural center featuring art exhibitions and a central, grassy park. Next on the agenda are condominium projects. Approximately 1,000 condominiums are in various stages of development, including one 40-story building to be located on the former St. Regis Hotel site, two 48-story towers to be located on Constellation Avenue on the former Century Club location, and the mixed-use project proposed by Westfield at 1801 Avenue of the Stars. Although many local residents fought these projects over traffic, environmental and other concerns, eventually the developments were given the green light. Supporters argue that traffic in the area may actually be alleviated, as many of the new condo residents will likely work in the Century City area.

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