the shocking and abrupt closing of the AMF Midtown Lanes, beloved Maria’s Café and World on Wheels. The approaching closing of Orchard Supply and Hardware (OSH) and the Broadway Federal Bank, along with the coincidental purchase of adjoining land has got the rumor mill working overtime.
TNN decided to get the story straight and approached the developers, father, James R. Young, and son, Courtland Young, of Midtown Shopping Center Associates, for an interview. They were eager to communicate to the community, clear up concerns and share their vision of the Midtown Shopping Center moving forward.
TNN:Can you tell us a little of the history of your family’s relationship to the Midtown Shopping Center.
Court: When my dad got here in 1978, he bought the ground lease which was to continue until 2031. My personal history started in 2007. I began working with my father in redeveloping, retenanting and upgrading everything around the Shopping Center, and in the past few months we were finally successful in something James Young had been trying to do since the late '70s, which is purchase the underlying land from the owner, Catellus.
TNN:I remember James mentioning being committed to staying here after the riots even though the place was devastated. He saw the value of what the Center could become since it was central to an area of the city that was only going to grow. Can you talk a little bit about that?
COURT: The area was decimated in general post the ’92 riots, and there was a push for rebuild L.A..
JAMES: Actually, there was a redevelopment district that stopped on the eastside of San Vicente and went down Pico, and it was right after the riot. It was created to sort of restore and improve the area, but it stopped on the eastside of San Vicente.
TNN:So you took it upon yourselves, without government aid, to help the Center get back on its feet?
JAMES: Yes. The only building that wasn’t completely destroyed was the Swap Meet, which was the current Orchard building, and there were 64 families, Korean mostly, whose family businesses were destroyed and taken away from them because of the riots. We tried to use that as a starting place. So it took us about three, four years to get the Swap Meet back open in a limited way. But it never got enough energy because by that time, all the people who used to shop at the Swap Meet were now going to what are called power centers to buy cheap goods or discount kind of things. And their shopping habits had changed, so we never got the energy back that we once had. And we finally had to close it because it never got critical mass as a business, and that’s when I started working with Orchard Supply.
COURT: Which was in about ’97 because they moved in, in ’98.
TNN:So you rebuilt all these buildings?
JAMES: We tore down all the buildings except Broadway Federal and the Bank of America because the configuration of of the Shopping Center, or what’s called a site plan, was 1960s, So we started a whole new site plan to basically attract better tenants, and better circulation, and better safety, as a matter of fact, so all those things came into creating the new site plan.
TNN:Some people in the community didn’t know you had been around this long. They thought you had just arrived with the purchase of the land.
JAMES: Well now you know.
TNN: Tell us about your vision for the Center.
JAMES: I’m influenced by Culver City. I’ve met with the mayor several times; he was a parishioner in my church. They have done as good of a job as anybody in creating a street-safe, fun, electric kind of atmosphere, and so I’m using them as a case study. But it has to be done in baby steps, in little, tiny steps. They did it block by block, store by store but I use the Helm’s Bakery Project as an example of what you can do with simple things, like just blocking off the street that used to go through, which was dangerous for our kids at church. They blocked it off and then they put in water features and other kinds of things that allowed several of the restaurants like the Office to come in. This is one of the first times the Office had come into areas like this. The opportunity of having an ambiance outside where you hear water, you have a safe environment, and there are no cars involved.
TNN:You’re thinking of water installations?
JAMES: Oh, all kinds of things.
TNN:One of the things that happened at the bowling center was that a lot of the seniors love to play dominos and they love to play chess.
JAMES: Cort and I have talked about chess.
COURT: A good example was one day I was going to LAX; I drove by Magic Johnson's, Ladera Heights Center, and outside of the Starbucks there, there’s a nice gathering daily of older folks drinking coffee, playing chess. That’s one of our inspirations.
JAMES: We can take concrete tables so that you can have space for dominos … or chess and all that kind of things. That’s what I mean by the concept I call restive areas.
It’s little, tiny steps. Unless we can get the kind of tenant that we’re currently talking to and maybe have a shot at, that will allow a new platform for us to go to the next step.
I used to drive down Rimpau [Ave.] every day when I lived up in Hancock Park. I could see house by house, how somebody who hadn’t taken care of it, sold it to somebody who was going to invest money into it. Now over the twenty-some years, all the way from Wilshire Town to Pico, it’s basically the same houses only with a whole new look. Each one fixed up one by one.
TNN: That’s happened all over here.
JAMES: I understand the frustration with communities who want it [the development] to have happened yesterday, but those things don’t happen until you set the platform. We went with the momentum of the Lowe’s Center, knowing that was going to create momentum for us. Part of getting the signature Ralph's store in here was because they knew that the Lowe’s Center was going here, but you can’t force it. You have to just wait for the momentum to do something that allows you to take it to the next step.
TNN:So the development will be done in incremental steps.
JAMES: Yes. Everything in life is incremental, and especially a development like this. Once you get a tenant that brings a certain customer in, that will attract other tenants who wanted that kind of customer, too.
TNN:There’s been some confusion from bigger stores about this area. They think of this area as not worth coming into because they perceive it as a low-income area, which is completely untrue. This is a very mixed-income community with a lot of middle income and upper income neighborhoods.
I’ve lived in my neighborhood 18, 20 years. When I moved in, I would say 70% of these beautiful old houses were run down. Now I would say they’ve been all bought up and restored beautifully. This is what’s going on around here.
JAMES: The other thing that you don’t have that you’re missing and you just expressed it beautifully, and what retailers look for, is density. This is one of the highest density areas in the city of Los Angeles and the most underserved from retail zoning. It has always been high density but it’s just better now because people have invested in the homes, rehabbed the homes.
TNN: People have been murmuring….. Orchard is closing. The Federal Bank is closing. The bowling alley has closed and all coincidentally happened with your purchase of the land, giving rise to rumors and confusion. You’ve even received angry letters. Can you respond?
JAMES: We inherited, say the bowling alley lease, as a part of the acquisition but we were just a landlord, and they were just a tenant, and there was an agreement. We couldn’t do anything other than to allow the tenant to do whatever they needed to do in their own self-interest.
COURT: With AMF [the bowling alley and their tenants the roller rink and Maria’s], we inherited an old, expiring sub-ground lease that began in the ‘60s. We inherited a company that had filed back in November 2012 for Chapter 11 Bankruptcy, Protection and Reorganization. We gave the maximum amount of extension to the trustee in the bankruptcy court to allow AMF, who owns World on Wheels, as well to resolve their problems. It was the only under-one-roof bowling alley, roller skating rink owned and operated by AMF in the entire country. We gave them the maximum amount of time allowed to stay open for business, which included Maria’s Café, who was a subtenant of theirs, in hopes of them coming out of Chapter 11 Bankruptcy, maybe under new ownership and potentially trying to strike a deal thereafter. Their choice was to shut down the store. The lease initially was accepted, then it was rejected, which was all out of our control through the bankruptcy court. It’s just a term, accepting or rejecting leases, because this was a 50-plus-year sub-ground lease so it was always expiring in November of 2013. That’s what we inherited and that’s what happened and it was …
TNN:Why did they shut down before November?
COURT: We don’t know.
JAMES: We don’t know.
COURT: We never got a straight answer. They were paying 1960-type rents. Now Broadway Federal is a unique case, where they’ve shut down three of their branches in the past year. The regulators had placed them under Cease and Desist. They received a significant amount of TARP money, which as we heard, they only repaid a portion of, and their loans, commercially, were to churches, 100% of those were underwater.
JAMES: Or a high percentage of them were.
CORT: Yeah, a very high percentage of those were underwater so they’ve struggled to make it through this time. Subsequently, I know they’ve brought in new management. I believe the Hudson family has stepped aside. They closed down their main branch on Wilshire in order to raise some capital. And they shut down another branch and come October, as they also had a 50-plus-year sub-ground lease, they’ll be shutting down this location, as well.
CORT: The last one is Orchard Supply Hardware. Within the past few weeks Orchard Supply Hardware filed through Chapter 11 Bankruptcy Protection, which everybody has read about in the LA Times. They are in the process of restructuring a relationship with Lowe’s upon approval from the courts. Lowe’s is looking at leaving the OSH brand as is, and being the parent company behind it, but only continuing to own and operate, I believe, say 75% of the stores and start shutting down the other ones. Unfortunately for us, as this OSH does perform well, they are in particular identifying this store, because it’s about 300 yards away from the newest Lowe’s 160,000 sq. foot mega store. I don’t think they want to cannibalize each other there, especially with the new OSH store that’s opening at the old Chrysler Dealership on La Brea. We were just notified of this very recently.
TNN: So the closing of Osh, the Federal Bank and AMF coinciding with your purchase of the land, is truly a bizarre set up of coincidences.
CORT: It is an unusually bizarre, never to be seen again set of circumstances.
TNN:It seems as if the stars were aligning. It is unusual but it’s exciting. Would there be any efforts to bridge with the Midtown Crossing mall?
JAMES: Like a physical bridge?
TNN: Like maybe a physical bridge? Or are you going to be on your side, they will be on their side and let the best plaza win?
JAMES: We want them to be as successful as anybody else, due to the fact that we have now created, as Jim Lowe says, this continuous shopping district. Between our 14 and a half acres and their 11 acres, we’re 25, 26 acres of commercial property. From Lowe’s, Smart and Final Extra, Ross, and Chipotle over there, to Yogurt Land and Subways and Wing Stops, and Ralph’s, and CVS over here, it’s nice, because there’s a nice mix between the two properties. There’s a nice balance. If you don’t find it over there, you’ll find it over here. I don’t know if a real bridge would ever exist over San Vicente.
TNN:So you’ve talked about a vision of the Plaza being a resource for people not just to come and shop, but to hang out, to meet with each other. You’ve talked about creating fountains and areas for people to sit and play chess and dominos and such. But what about the actual businesses that are coming in? Do you have a vision for the kind of businesses that you are going to focus on developing in here? Are they going to be family-owned, franchises, chains?
JAMES: It’s baby steps. Our goal here is to incrementally improve the quality of the tenant and the services that they provide to a higher and higher and higher standard. The majority of our community surveys indicated a need for more sit-down restaurants, health clubs, things like that, which aren’t in the area for whatever reason, and so we are currently negotiating with both of those. We’re dealing with top-quality national tenants because in this economy, you need credit tenants if possible because they facilitate the financing of the building, of new buildings. Ma and Pa businesses are not as interested in financing buildings because it has too much risk. We’re dealing with one unit that would be a sit-down family restaurant, and could be as big as 7,000 square feet. They’re very interested because everybody wants to get into this area now. But, we’re paying total attention to what the community wants and needs.
COURT: I just want to add that we still have about five or six Ma and Pa shops that have been here for over 20 years, who we know are fixtures of the community, and they will remain there.
TNN: Where did you do the survey?
JAMES: We did it at Ralph’s.
COURT: We created the survey ourselves. We passed them out at Ralph’s; we got approval from them. We passed them out at the coffee shop. We had some people take it out to Los Angeles High School. We collected several hundred.
JAMES: We just wanted to know what the community thought. We’re not survey people, but we just put together questions and ...
COURT: The through line was people wondering why they needed to go to the Grove if they could go to Midtown?
JAMES: That’s what we’re doing here, and each time we get to a new platform we’re going to make improvements, like we were talking this morning about something that would help attract better restaurants here.
COURT: And community activities…a few things that I know Jim did a long time ago, was a summer concert series.
JAMES: I held it on parking lots.
COURT: With some local musicians. We’re thinking about maybe trying to see if anybody would want to do a farmers' market here one day a week. Trying to add things to the shopping center that we’ve never seen before.
TNN:But the feeling I get is that you’re thinking very much about creating a community resource not just for shopping but also as a destination to come, have coffee, sit around, meet your friends.
JAMES: Absolutely, absolutely.
TNN:Councilman Wesson has spent a lot of energy getting development money, loans, and CRA support for developing the Crenshaw district. Are you getting any government funding?
JAMES: No. We have, over time, developed personal relationships with retailers all over the country and have the reputation of being a straight shooter and we have interest from many, many national tenants. And we just feel blessed that the community and the property are in a position to attract these key interests to come in and provide goods and services that the community doesn’t have and desperately wants.
photos by Dawn Kirkpatrick