DEVELOPMENT STRATEGIES FOR THE UNITED STATES POSTAL SERVICE TERMINAL ANNEX AND THE LOS ANGELES UNION PASSENGER TERMINAL By Suzanne L. Finch B.S., University of California at Berkeley (1983) SUBMITTED TO THE DEPARTMENT OF URBAN STUDIES AND PLANNING IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF THE DEGREEE MASTER OF SCIENCE IN REAL ESTATE DEVELOPMENT AT THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY SEPTEMBER 1986 (Suzanne L. Finch 1986 The author hereby grants to M.I.T. permission to reproduce and to distribute publicly copies of this thesis document in whole or in part. Signature of the author Suzanne Finch Department of Urban Studies and Planning July 31, 1986 Certified by Mr. James McKellar Professor of Architecture and Planning Thesis Adisor Accepted by Mr. -ames McKellar Chairman Interdepartmental Degree Program in Real Estate Development SEP O5 1986 I~f R I RotetF DEVELOPMENT STRATEGIES FOR THE UNITED STATES POSTAL SERVICE TERMINAL ANNEX AND THE LOS ANGELES UNION PASSENGER TERMINAL By Suzanne L. Finch B.S., University of California at Berkeley (1983) Submitted to the Department of Urban Studies and Planning in partial fulfillment of the requirements of the degree Master of Science in Real Estate Development ABSTRACT This thesis analyzes development strategies for 70 acres of land in Los Angeles, California. The two sites, separately owned, provide an excellent opportunity for development. The site was selected for study because of it's unique position in downtown Los Angeles, the historical status of the two main structures, and the potential to rejuvenate an area that has badly deteriorated. Development is constrained by plans for a subway which will run through the LAUPT site, forcing phased development to begin on the southernmost and northernmost portions of the site. Furthermore development must await the City Planning Commission's designation, resolving a discrepancy between existing zoning and the Community Plan. An additional constraint is the adjacent area, currently characterized by 40 permanent residents who sleep in the park regularly. Income levels in the immiediate vicinity are below $10,000 but reach $14,000 in a 2.5 mile radius from the site. Having reviewed potential mixed-use combinations, the preferred development program on the LAUPT site includes, 260,000 square feet of Specialty/Tourist retail, 750 Tourist and Business Hotel rooms, 80,000 square feet to include the transportation infrastructure, a museum, night clubs, and entertainment oriented retail, and finally, 3,200,000 square feet of mid and high rise offices. This 4 phase development program will take 28 years to build out and will total nearly 4 million square feet. The preferred development program for the USPS site includes a 400 room hotel with 50,000 square feet of conferencing, a 300,000 square foot Trade Center, 1,200,000 square feet of mid and high rise office buildings, and 300,000 square feet of secondary office space. This will take 20 years to build out in 4 phases and will total approximately 2 million square feet. It is the interaction between the mix of uses on both sites which will assure the ultimate success of the two development programs. The design of the two projects will encourage interaction by allowing movement on three levels. Further enhancing the activity level at the new development will be the transportation component with Metro-rail, Amtrak, Trailways, DASH and the El Monte Bus line. The proposed development and the combined mix of uses will enable the LAUPT/USPS site to become a focal point and downtown destination for all of Los Angeles County. TABLE OF CONTENTS INTRODUCTION 1 OPPORTUNITIES AND CONSTRAINTS Physical Overview 2 Locational Attributes 6 Development Objectives and Expectations 7 Community Issues and Groups 10 Linkages to Adjacent Neighborhoods 13 Regulatory Issues 19 MARKET BASE ANALYSIS Trends Influencing Development 24 Summary and Update of Market Analysis 29 Development Patterns in Los Angeles 33 Conceptual Development Framework 63 EVALUATION OF MARKET ABSORPTION AND MIXED-USE POTENTIAL Office 65 Retail 75 Hotel 84 Specialized Uses 92 Market Summary and Conclusions 103 PROPOSED DEVELOPMENT PROGRAM United States Postal Service Site 106 Los Angeles Union Passenger Terminal Site 109 FOOTNOTES 111 BIBLIOGRAPHY 112 SUPPORTING DOCUMENTS General Site Desription 23a Building Conditions 23b Building Heights 23c Land Ownership 23d Historic Resources 23e Los Angeles County Office Space 65a Los Angeles County Absorption 65b Secondary Office - Mid-Wilshire 68a Secondary Office - Miracle Mile 68b Secondary Office - Park Mile 68c Secondary Office - Glendale 69a Existing Primary Office Downtown 70a-70b Primary Office Under Construction Downtown 70c Primary Office Proposed Downtown 70d-70e Secondary Office - Downtown 70f-70p Office Demand Analysis 74a Competitive Sub-Markets 72a Retail Methodology Summary 83a-83b Downtown Retail in Mixed-Use 83c-83d Regional Shopping Centers 83e-83f Growth in Hotel Room Supply Downtown 86a Hotel Demand Growth Downtown 86b Downtown Hotels 91a-91b Hotel Room Rates - Downtown 91c Trade Centers 94a Hotel Meeting Space - Downtown 95a Conference Facilities Downtown 95b-95e Museums, Galleries - In or Near Downtown 97a-97b Museums - Los Angeles Vicinity 97c-97d Galleries In Vicinity 97e Downtown Attractions 97f-979 Downtown Performing Arts 97h-97i Athletic Facilities Downtown 99a-99g Vocational Schools 10la-101d Wholesale Facilities 102a-102d Alternative Development Program-USPS Site 108a-108c Alternative Development Program-LAUPT Site 110a-110c INTRODUCTION EVALUATION OF DEVELOPMENT OPPORTUNITIES AND CONSTRAINTS This thesis will first analyze the specific opportunities and constraints existing on the Los Angeles Union Passenger Terminal and United States Postal Services sites in order to establish an appropriate framework for the further analysis and development of the properties. The properties are described physically with special attention given to those uses currently in effect and those which will be required in the future. Locational attributes are considered followed by an examination of the objectives and expectations of those directly involved with the LAUPT/USPS site. A discussion of Community concerns and issues will attempt to assess each group's individual relationship with the LAUPT/USPS site. Finally, we will review the regulatory issues, including the zoning and Community Plan Designations and the implications of the property's historic status. Current market conditions are analyzed, including overviews of the adjacent areas and major trends which will influence development of the area. Demographics, employment figures, and income levels are examined to determine existing and forecasted market support and development trends and opportunities. With this analysis complete, land uses with the best potential for inclusion in a mixed-use project on the LAUPT/USPS site are studied. Throughout the analysis of the individual land uses, the potential interaction between these uses is interpreted and evaluated from a broader mixed-use perspective. Finally alternative development programs specify, a mix of land uses, phasing, locational and physical requirements, as well as the targeted market position of the development. 1 PHYSICAL OVERVIEW Property Description - Union Station Site The railroad companies own approximately 50 acres on the parcel of which Union Station depot and facilities occupies 13.3 acres. The Union Station passenger terminal is a long, one and two story building. Most of the construction in the terminal building is reinforced concrete, although there are steel beams, disguised as wood, in both the ticket and waiting areas. The building consists of a series of tile roofed rooms and arcades in varying proportions. The larger and taller of these are near the center. The other rooms taper down towards the two ends. There is a basement area which is used for car parking (120 spaces) and mechanical space. Some of the space which was originally used for storage is not being used. The first floor consists of large ticket and waiting rooms, restrooms, and a large art deco restaurant. The ticket and waiting rooms and the restaurant are the most public part of the building and give the building its image from Alameda Street. There are two courtyards, one on the north side and one on the south side of the waiting room. Beyond these courtyards there are service areas on both the north and south ends of the property. Within these areas are truck ramps which give access to the second level driveway. Behind the station at grade are a baggage handling area and a mechanical equipment room. At grade is a truck-height concrete platform, built on fill, 60 feet wide and 800 feet long, with a steel shed-type roof. The platform is open to the tracks on the east side and is flanked by a row of industrial type overhead doors along the west side. At each end of the platform is a two-story flatroofed office building of concrete construction. East of this main platform are pedestrian islands which separate the railroad tracks and are accessible through an underground tunnel. At this same level is a steel structure built in 1952 with no garage doors remaining. The first bay on the southern side of this building will be removed for Caltrans construction. 2 On the easternmost side of the property is a small building used for train testing. Further to the north is an interlocking tower where the railroad operator changes switches. This tower will be outdated when the railroads change from electro-pneumatic to fully electric switching. The Union Terminal site is served by utilities located under Alameda Street. Water, gas and fuel oil lines enter the building from Alameda Street. There is a pipe tunnel which runs parallel to the passenger tunnel and delivers utilities from the terminal building to the track area to the east. The terminal area drains toward Alameda and Macy Streets. Current Uses, Future Requirements - Union Station Currently, Amtrak has a lease with LAUPT for about 50% of the terminal building and track area.