Developers redesign Hawthorne apparel complex: Fashion City would be similar to Universal CityWalk.

More than a year after it announced plans to become the Southland's new garment district by wooing tenants from the crime-ridden environment of downtown Los Angeles' California Mart, developers of the so-called Fashion City still need financing and solid commitments.

"It's going to have to be or not in 90 to 120 days," said the project's co-developer, Alan M. Schwartz, managing partner of Sam Levy Investments in Torrance. "Every market week in the last three to four years, the number of people (who come to the California Mart) drops off significantly."

But now Schwartz and Manhattan Beach real estate developers Comstock, Crosser & Hickey have a new idea.

Instead of their original proposal to build two 750,000-square-foot apparel marts on a 25-acre vacant lot in Hawthorne, the developers figure to build only one apparel mart and fill the rest of the area with specialty shops, theaters, restaurants and museums. Called Fashion Walk, the area would be similar to MCA Inc.'s successful Universal CityWalk pedestrian retail street in Universal City, but with a fashion theme.

The proposed area, on Rosecrans Avenue just west of the San Diego (405) Freeway in Hawthorne and two miles south of Los Angeles International Airport, can easily be seen from the freeway.

"The location is terrific in terms of visibility," Schwartz said. "The building itself is going to be a major statement."

The $160 million project would rescue the wholesale garment industry in Southern California, the developers asserted. The local garment industry has had difficulty attracting store buyers to the area, especially in the wake of the L.A. riots.

Fashion City's apparel mart, which would be called the World Apparel Center, would be open to the wholesale trades only, not the general public. California Mart is occasionally open to the general public.

"It used to be you needed to show a pass or business card to go anywhere in the mart," said Schwartz. "It was more professional. We want to re-establish the industry."

The proposed World Apparel Center would include a seven-story showroom and exhibition complex, a state-of-the-art video production studio, conference rooms and offices "geared toward the 21st century," he said.

About 400 of the estimated 1,400 tenants who lease space at California Mart, commonly known as CalMart, have expressed interest in relocating to a new apparel mart. But tenants at the 1.4-million-square-foot center at 9th and Main streets in downtown Los Angeles are split between the Fashion City project and another proposed project in Santa Monica.

The Santa Monica project, proposed by real estate developer J.H. Snyder Co., would be a $150 million, 600,000-square-foot addition to the Santa Monica Water Garden development, a partially completed office complex with a central lake and fountains.

Although developer Jerry Snyder said he has letters of intent from about 400 CalMart tenants, he still has not secured financing. Letters of intent are non-binding documents stating a tenant's intention to lease space in a particular building. Such documents are of dubious value because they do not constitute a leasing commitment. Hence, commercial lenders typically will not finance a project until those letters of intent have been transformed into actual signed leases.

"Financing for office space is very difficult right now," Snyder said. "We'll continue to explore avenues of financing."

Fashion City has no financing either, although Bank of America has expressed interest, Schwartz said.

About 85 tenants, mostly manufacturer representatives, have committed to Fashion City in letters of intent, Schwartz said.

The project also has the support of the South Bay Association of Chambers of Commerce, a group of 18 city and county chambers; a group of general managers of hotels surrounding the airport; and the City of Hawthorne, Schwartz said.

He admitted the process is slow and frustrating.

"There's fear of downtown (L.A.) retribution," Schwartz said. "The thing a lot of the tenants are waiting for is to see some of the drivers of the industry on board. We don't have them yet. But we have the ear of some very important manufacturers."

Schwartz said those include ABS and Tahari, both high-end women's clothing manufacturers; Calvin Klein, a designer clothing manufacturer; and Nicole Miller, a high-end clothing and accessory firm.

Snyder said he doesn't feel threatened by the Fashion City project -- he has support too. In December, the 110 E. 9th Street Tenants Association, which represents CalMart tenants, voted in favor of the Water Garden over Fashion City.

Snyder and Schwartz agreed on one point -- the only way either project will work is if all the CalMart tenants commit to one place.

"When buyers come in for shows, they want to be able to come to one area," said Snyder. "I don't think it's going to split. I think they're going to find a place to relocate all of them, or they're going to stay where they are." Staying where they are may not be possible.

The Morse family, which owns CalMart, has fallen behind on its mortgage payments to the property's lender, Equitable Life Assurance Society of the United States. Equitable, in turn, has filed four notices of default in connection with about $245 million worth of debt on CalMart. The notices, which are often a precursor to foreclosure, indicate that three Morse family partnerships haven't paid monthly mortgage payments since April.

Linda Rodts, a spokeswoman for Equitable, said the matter is working its way through the courts.

The wholesale garment industry in L.A., which attracts buyers from around the world to major apparel shows about five times a year, was a $12 billion industry in its heyday, Schwartz estimated. He said that has dropped to about $7 billion today, with buyers taking their money to other industry markets, such as New York, Atlanta, Chicago, Dallas, San Francisco and Seattle.

Last year, CalMart dropped its rental rates and, with the help of city officials, cleaned up the streets and beefed up security in the area, but it is still deteriorating, Schwartz said.

"It's the Rodney Dangerfield of the apparel industry -- it gets no respect," he quipped. "Milan looks down at Paris. Paris looks down at New York and everybody looks down at L.A."