TWA departure a new blow for Central City West.

The neighborhood once had designs of becoming a skyscraper-lined extension of downtown. But that seems like a long time ago, and the decision by Trans World Airlines to leave L.A.'s Central City West area is just another sign of the area's ongoing struggles.

"They were not only a big notable tenant, they also occupied a significant amount of space for that area," said broker John Alle, president of John Alle Co.

Specifically, TWA leased 40,000 square feet of space and employed 400 people at its Shatto Street offices, making it one of the area's major office tenants. The announcement last week that it will close up its only West Coast reservation center in June left Realtors and nearby business owners shaking their heads.

"Nothing's been going on. There has been virtually no interest for tenants in the past 10 years. It's an out-migration district," said Brad Cox, senior managing director of Cushman & Wakefield in downtown L.A. "You have B-class buildings, a lack of amenities and restaurants. Not a lot of progress had been made in the area."

That's quite a contrast to what city planners had in mind more than a decade ago when the district (bordered by the Hollywood (101) and Harbor (110) freeways, and Olympic and Glendale boulevards) was designated as likely to cash in during the real estate boom.

City officials conceived a plan that included breaks for new retail and residential projects to service the needs of a burgeoning community of office workers. The plan envisioned millions of square feet of new construction.

"The Central City West plan was the absolute darling of the real estate market and people thought it would catch the next wave. However, the wave didn't materialize and the shoreline receded," said real estate consultant Allan Kotin, a principal with West Los Angeles-based PCR Kotin.

The plan was stalled by resident protests over the impact of development in the area. Then, bank consolidation led to a mass exodus of employees and flooded the market with available downtown office space. After that came the recession and the riots, and pretty soon, the Central City West landscape lost its luster. A number of developers went bankrupt or downsized projects.

"In 1992, the vacancy rate peaked at 30 percent for office space and now it's down to 22 percent, which is still not strong enough to warrant office development on the west side of the freeway," said Andrew Ratner, executive vice president of Cushman Realty in downtown.

The departure of TWA will push that vacancy rate even higher. Built in the 1960s, the glass and concrete building at 1543 Shatto is too old to be considered for the kind of renovation and updating underway at other reservation centers in Chicago, St. Louis and Norfolk, Va., TWA officials said.

Prospects are not good for finding another major tenant. The average office tenant in the district occupies from 2,500 to 5,000 square feet - a far cry from TWA's 40,000 square-feet.

Now, it is hoped that the rejuvenation of downtown L.A. with projects like Staples Center and Disney Concert Hall will spill over to Central City West.

But Realtors caution that it could be a slow process. Rents in Central City West have bottomed out at roughly $16 to $18 per square foot, compared with the $24 the buildings commanded a decade ago.

Still, the district could be turning the corner. Watt City Center was purchased last November by Brentwood-based G.H. Palmer Associates to convert into a 658-apartment tower with 40,000 square feet of retail. Downtown developer Smith Hricik & Munselle is building L.A. Center Studios, creating six sound stages. Development of the $200 million Belmont High School also is underway, albeit there is concern over land contamination.

"We're optimistic about the new developments and spillover effects they'll have in the area," said Ed Reyes, chief of staff for Councilman Mike Hernandez.

Mike Green, manager of the 78-year-old Pacific Dining Car, was circumspect about the news.

"The loss of TWA concerns me. We were sorry to see them go," Green said. "But our business comes from the entire downtown area. We expect to do well from Staples. Our regular customers will have another reason to come to downtown and stay longer."