Retail construction up in San Gabriel Valley, L.A.

Much of increase is due to post-riot rebuilding efforts

A study of the recent uptick in retail construction permits in Los Angeles County revealed that the slight increase was largely due to post-riot rebuilding, coupled with increased permitting activity in the San Gabriel Valley.

According to the Construction Industry Research Board, L.A. County retail building permits issued during the first quarter of 1993 reflected an estimated combined construction cost of $51.3 million, compared with $40.5 million in first quarter 1992. That represented a 26.7 percent increase.

Most of the retail permits were for projects slated for cities in the San Gabriel Valley -- Azusa, Covina, El Monte, South El Monte, Industry, Rosemead and Pomona -- and in both the city of L.A. and unincorporated L.A. County.

Pomona's considerable increase in retail permitting was largely due to a project, which has now broken ground, to convert a former Gemco site into a Vons grocery store and a Pic N' Save, according to Dennis Makey, a Pomona city planner. A Smith's Food King and a Toys R Us store, which were also permitted during the first quarter, have broken ground as well, said Makey.

Several other city planners, as well as real estate brokers and developers, however, were hard pressed to pinpoint any major retail construction activity on the horizon.

Instead, most of the real estate sources interviewed cited only minor retail projects, such as car dealerships and mall expansions.

Brad Talt, first vice president in the San Gabriel Valley office of CB Commercial Real Estate Group Inc., said the huge influx of Asian investors who came to the San Gabriel Valley and bought land, but held off building because of the recession, might now slowly be building, resulting in the uptick in retail construction.

But, as he observed, the numbers aren't up that much. He surmised that much of the construction being done is remodeling.

Other than the mega-retailers, such as Wal-Mart Stores Inc., most of the retail activity will likely remain in remodeling for awhile, he said.

Added Rick Caruso, president of Caruso Affiliated Holdings, a Brentwood-based retail developer: "If the numbers are the start of something, we would see architects get more business and pre-construction plans getting fired up, but that's not happening."

Of the retail activity that is occurring, about 80 percent is likely due to the rebuilding that took place since the riots, said Mark Esses, managing director of Delson/Norris Retail Properties, a Santa Monica retail brokerage firm.

A team of developers, in fact, plans to build as many as 30 retail-anchored, mixed-use centers in L.A.'s blighted neighborhoods.

The team's inaugural project is the 337,000-square-foot Compton Artesia Town Center, which is designed to include a big warehouse or discount department store, a supermarket, specialty shops, a 16-screen cinema and a community center. The community center would likely include a meeting room, day-care service and job training facilities.

Members of the development team include Beverly Hills-based Pacific Development, which has previously developed several other retail centers in struggling local neighborhoods, Brentwood-based developer Riley/Pearlman/Mitchell Co. and West L.A.-based Urban Venture Partners.

Members of the team said their pursuit for financing appears to be making progress, but many developers who survive the lengthy permitting process are hitting a dead end in their search for funds, said industry observers.

Developers typically begin construction within a month of receiving their permits, said Ben Bartolotto, research director for the Construction Industry Research Board.

However, many of the developers who received permits in the first quarter of 1993 might actually be holding onto their permits and not building because they cannot get financing, sources said.

The latest L.A. County permit figures, while slightly improved from the year-ago level, are still off 33 percent from first quarter 1990, when the estimated construction cost of local retail projects for which permits were issued was $76.3 million.

The Construction Industry Research Board compiles its statistics by estimating the construction costs of approved retail projects for which permits have been issued. The costs are estimated by studying project plans and assuming certain construction costs per square foot.

L.A. County retail construction permits jump
City                       1st qtr 1993          1st qtr 1992
Azusa                         $407,800                    $0
Bell                           250,000                     0
Covina                       3,736,800                     0
El Monte                     1,902,300               333,700
Industry                     1,961,900                     0
Los Angeles                 32,909,500            15,976,000
Unincorporated
L.A. County                  3,922,900               455,300
Pasadena                       696,000                     0
Pomona                       3,410,600               313,900
Rosemead                       317,000                87,000
San Fernando                   769,000                     0
South El Monte               1,177,700                     0
All other local
cities                       2,404,600            23,334,600
L.A. County:               $53,866,200           $40,500,500
Source: Construction Industry Research Board Figures represent
the estimated construction cost of retail projects for which
permits were issued.