Big-box builder plans mixed-use at downtown site.

Is Wal-Mart coming downtown?

Los Angeles Orthopaedic Hospital is negotiating to sell a large surplus property to a developer known for building shopping centers that are anchored by Wal-Marts, according to sources close to the deal.

Rothbart Development Corp. has emerged as the potential buyer of a 9-acre parcel that the hospital is selling at the corner of Flower Street and Adams Boulevard.

A Rothbart executive confirmed that the company has teamed up with Santa Monica-based housing developer Martin Group Inc. to buy the property. The two firms are planning a mixed-use development that incorporates big box retail and high-density multifamily housing.

"We do not have a particular anchor lined up for the project, but we are talking to several big box retailers," said Lindsey Kozberg, vice president of development for Rothbart. "There has been a lot of interest."

The land could fetch between $55 million and $65 million, sources close to the transaction said. While these sources warned that the deal could still fall apart, Stanley Rothbart, the company's principal, has had experience developing several Wal-Mart shopping centers across Southern California.

Rothbart had proposed building the controversial 200,000-square-foot Wal-Mart Super center in Inglewood, where voters shot down the project in a referendum last year. The election became a flashpoint between Wal-Mart Stores Inc. and national labor leaders wanting to protect unionized supermarket workers from the growing dominance that the Supercenters have achieved in selling groceries.

If Bentonville, Ark.-based Wal-Mart is chosen as the anchor tenant at the Orthopaedic Hospital site, the location would not sell groceries, according to Richard Plummer, a senior director at Cushman & Wakefield Inc., which has been hired to market the hospital property. But even with a standard big box store, staunchly antiunion Wal-Mart would likely face stiff opposition from influential local labor and community groups.

Councilwoman Jan Perry, whose 9th District includes the site, said she hadn't formed an opinion on the project and has set up a meeting with the developers to learn more about the proposal.

Perry said that at least 20 percent of housing on the site will have to be subsidized rental apartments for low-income families. "It would be an excellent outcome if people could afford to live there on wages they make from working at the big box storedevelopment," she said.

Hospital moves

Los Angeles Orthopaedic Hospital is selling the property because next year the surgical and inpatient care units are moving to a new facility in Santa Monica that it will share with UCLA.

Orthopaedic Hospital's outpatient clinic will remain at the downtown campus, which also contains the Orthopaedic Hospital Medical Magnet High School, a public school that trains students for healthcare careers.

Besides getting top dollar for its land, hospital representatives say they want a buyer who will be a good neighbor to the clinic and the surrounding community. "We're looking for a good fit," said architect Christopher C. Martin, a hospital board member who is on the real estate committee.

The blocks surrounding the site are mostly poor neighborhoods and empty warehouses that were formerly used by garment manufacturers. Commercial corridors in the area have a hodge-podge of uses. Retail is intermixed with auto repair shops, light industrial manufacturers and storage facilities. Just to the north of the development site, near Washington Boulevard, is a hub of six car dealerships--not including a proposed Chevrolet dealer.

A decade ago, the city council voted to create a nearly 3,000-acre area--including the Orthopaedic Hospital site--where subsidies could be used by the Community Redevelopment Agency of Los Angeles to attract new investment. But developers have only recently begun to take notice of areas south of the Santa Monica (10) Freeway.

At Adams Boulevard and La Brea Avenue, in a different CRA/LA redevelopment zone, developer J.H. Snyder Co. has proposed a similar project to what Rothbart and Martin Group are planning. Snyder has submitted plans for a Costco-anchored, mixed-use residential development with the majority of housing units set aside for low-income families.

"That's the type of development we'd like to see more of," said Jenny Scanlin, the CRA project manager for the downtown region. "We have been trying to help create more retail opportunities and residential opportunities in that area."

Changing demographics

The Orthopaedic Hospital land has drawn lots of attention from developers because of its size and location. Most of the poor neighborhoods south of the Santa Monica (10) Freeway haven't seen the robust residential redevelopment activity taking hold several blocks north, around the Staples Center arena.

Even so, the site is only about a mile from where those thousands of new condominiums and apartments are being built--and close to a proposed Exposition Line train station with access to the Harbor (110) Freeway. It's also only two miles from the University of Southern California, which is slated to have its own Exposition stop.

Access and visibility are important because a big box ny store would needs have to be a regional draw that could attract shoppers from a five-mile radius, according to a CB Richard Ellis Group Inc. market study.

CBRE was hired by the CRA/LA in April to study the area surrounding the hospital site, which is in one of the city's largest redevelopment areas. The study found that the redevelopment area, where the median income is $24,000, or nearly half the county average, could support $400 million in annual merchandise, grocery and restaurant sales. Those sales levels are enough to support 1.5 million square feet of new retail development without impacting sales at existing stores.

Other developers interested in the Orthopaedic Hospital site include retailers Target Corp., Costco Stores Inc. and Home Depot Inc., said Plummer of Cushman & Wakefield.

That doesn't surprise Scanlin who said big box retailers are showing interest in downtown. "They believe it's an area that's underserved," Scanlinshe said. said.