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Richard Meruelo's Wild Ride
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| Richard Meruelo owns more than 100 acres and 50 properties Downtown, and is planning to break ground on his first new residential project, an ambitious 40-story condo tower. Photo by Gary Leonard. |
How the Downtown Real Estate Maverick Built His Empire, And Where He's Going Next
by Kathryn Maese
Many people think of Richard Meruelo as a controversial real estate tycoon who was also a major donor to Antonio Villaraigosa's mayoral campaign. In a way, that is fitting, as both politics and business are touchstones of his family.
It was, after all, his real estate savvy mother who started the empire her son would eventually expand from a tiny dress shop at 323 S. Broadway. Today, Meruelo controls more acreage than nearly any landowner Downtown - more than 5 million square feet and 50 properties.
It all began at Belinda's dress shop, one of dozens of similar outlets along the dense boulevard that sells wedding gowns and rents outfits to giggling 15-year-old girls for their quinceañera. It was the late 1960s and the corridor's shifting demographics were bringing more Latino customers and merchants.
Sensing the market's potential, the family began buying a property every year, mostly in areas, Meruelo said, where a large Latino population made land prices cheap and opportunity abundant.
"There was a perception that these heavily Latino areas like Downtown were going downhill but [my parents] thought, 'What do you mean, there are all these people?'" Meruelo said. "I grew up in that frame of mind of looking at areas that were going to change. We knew from experience what kind of merchants we could put in our buildings, what kind of people we could rent to. That gave us a foothold."
In the 30 years since, Meruelo's consortium of companies and interests - Merco Group and Meruelo Maddux Properties among them - has amassed a string of properties on both coasts (largely in Miami and Los Angeles). The firm's sizeable Downtown portfolio includes 100 acres, with a heavy concentration of industrial holdings such as the bustling Alameda Produce Market on Seventh Street and the multi-building complex housing American Apparel's 3,400 employees. Meruelo also owns dozens of vacant lots, cold storage facilities and warehouses.
Cuba Connection
Meruelo's parents fled Cuba in the early 1960s for New York City, but quickly relocated to East Los Angeles. Richard was born in 1964 and his early playground was the Broadway Theater District with its dozens of office buildings near Third and Broadway. As a youth he shined shoes on the weekend near the Bradbury, Douglas and Victor Clothing buildings.
He got an early lesson in wheeling and dealing when his mother's shop was red-tagged after the 1972 Simi Valley earthquake rendered the building's top two floors uninhabitable. Though many merchants fled Downtown Los Angeles, Belinda improvised. Facing eviction, and several time-sensitive wedding orders, she convinced the Building and Safety Department to allow her to rebuild - without the upper floors, which were demolished. The family still owns the property.
Meruelo attended high school at Don Bosco Technical Institute in Rosemead and graduated from USC with a business degree. At 23 he negotiated his first solo business deal, buying a three-story medical office building in Huntington Park.
Now, he is poised to step into a new arena: the Downtown housing market. And as is his style - big, bold and unapologetic - the 41-year-old is looking to make a statement.
In his industrial-looking headquarters atop a bustling produce mart, Meruelo laid out his ambitious plans during a recent interview with Los Angeles Downtown News. A scale model depicting a 40-story condominium project dominates his corner office. Dubbed 717 Flower, the 214-unit structure adjacent to the future Ralphs supermarket will break ground in March and rise in the next two years, he said.
If it proceeds as planned, it would be the tallest ground-up housing structure in Downtown. Meruelo Maddux's in-house architects designed the towering residence as an "aquatic metaphor" for the city. Plans call for a dramatic, watery glass curtain wall along the façade, along with a colorful "kelp garden" sculpture. Architectural elements include a coral bed and a bridge reminiscent of a diving board. Even the ground floor seafood eatery Mari will carry the theme.
"Downtown is one of those places that needs more density," Meruelo said. "We have not built housing in Southern California since the late 1980s. This building begins the first high-rise residential construction for us in Southern California."
The $120 million project's location, at the gateway to the red-hot South Park District and next to one of the most anticipated amenities in Downtown - a grocery store - is about to propel Meruelo's profile even higher.
The Antonio Connection
While Meruelo made his fortune through real estate, Downtown's political and business circles know him for two other things: big checks and big fights.
Meruelo found himself in the center of a media hubbub during last spring's mayoral race, when he gave $193,000 in independent expenditures to Villaraigosa's campaign, making him the largest individual donor. After that became public, reporters and incumbent Mayor Jim Hahn pounced on the size of the donations.
Meruelo said he and his family have always been politically active. He blames Hahn for the negative press. "What got the most attention has been my economic support to Latino candidates," Meruelo said. Then, referencing the infamous Carlos Vignali television ad that helped Hahn defeat Villaraigosa in 2001, he adds, "Hahn used anything he could find. He turned me into the next smoking crack commercial that ran four years prior."
Meruelo has also tangled with Downtown stakeholders, most prominently in a five-year development scuffle with the Southern California Institute of Architecture (SCI-Arc) and Arts District leaders. The school, which relocated to an old railroad depot in 1999, had plans to purchase an adjacent lot on Traction Avenue to expand the campus and create student housing and parking.
After lengthy negotiations, and a lack of funding on the school's part, Meruelo bid for and bought the land, despite protests from SCI-Arc officials and community members. The developer then rankled area stakeholders by announcing plans to build two 50-story residential towers in a Miami Beach style.
Last year, a judge rejected a SCI-Arc lawsuit over the property. Although Meruelo won the legal battle, he was hammered in the court of public opinion as the man wanting to build towering structures in the heart of the quaint Arts District.
Meruelo has since changed his tack, saying he wants to work with the school and community to create a project that would benefit everyone.
"I think what happened was that because we were not adept at working with the media, and the school was trying to angle for a better position and so the school used everything they could with the elected officials to portray me as being negative," he said. "I have never been in the public relations business, but I'm learning."
As part of that effort, Meruelo recently hired Michael Bustamante, former Gov. Gray Davis' spokesman. Now, when discussing the SCI-Arc project, he sprinkles his conversation with the need for "consensus planning" and community involvement.
"We need our neighbors to be in support of our project," he said. "The density that I originally proposed and the height was not the problem, it was the design. The school wanted a much more artistic design."
He adds, "They are a good neighbor to have because they can bring the right mix of people. We're working with them to come up with a plan that they like. We're much closer than the last proposal."
However not everyone is convinced of his turnaround. In fact, some powerful players remain skeptical about his claims of working with neighborhood stakeholders.
"I am not aware of any ongoing negotiations," said Councilwoman Jan Perry, who mediated negotiations between the two parties. "SCI-Arc is considering its strategic outlook and planning for the future. I'm doing everything I can to encourage them to stay. I would be quite surprised [if they were working together]. It's news to me."
Perry said Meruelo has done little to endear himself to the area in recent months. She said hundreds of UPS trailers were transferred in and out of the lot through November and December. Though they are now gone, residents complained of late-night noise, generator-powered lights and plumes of choking diesel fumes from the stream of traffic.
Looking Up
While Meruelo's public participation is up for debate, his business acumen is undeniable. In Miami Beach, Fla., where Meruelo spends about half the year, the company recently completed the 48-story Akoya condo tower. He has several other large-scale housing projects under construction in that area.
He expects that in the near future, increased density will be part of Downtown as well. Many developers already are pitching 20- to 30-story towers. Meruelo thinks those projects should be bigger and denser.
"The talk is of taller buildings, like the Hilton Hotel next to Staples or the Metropolis project," he said. "Pretty soon the question of scale will be should a building be 50 stories or 80 stories, not five stories or six. From a street perspective, whether you are standing next to a six-story building or a 60-story building you don't notice the difference. It's the first 30 feet that you notice. After that it could hit the moon."
In Little Tokyo, for example, Meruelo said Trammel Crow's condo project at Second and Alameda (since purchased by Intracorp) is a "tremendous underdevelopment." He notes the land was entitled for 1,200 units, but the project contains only 300.
"We have a lot of parcels and some parcels we don't have plans for," he said. "I do not want to underdevelop property and unfortunately I see that happening."
Meruelo has sold few of his holdings, leading some to label him a speculator who sits on properties, waiting for higher market prices instead of putting them to better use for the community.
Meruelo takes the criticism in stride. He counters that the company's offices are centrally located in the Industrial District, and therefore he is not an absentee landlord. He points out that he has an active construction crew that recently developed several projects, including a produce market at Eighth and Alameda and a freezer building on Washington Boulevard. Likewise, his properties are not third party managed.
Indeed, Meruelo is active in the district where the lion's share of his holdings are located. He has sat on the board of directors of the Central City East Association (CCEA), the local business improvement district, since 1999. He is also a member of the Community Redevelopment Agency's Central Industrial citizen advisory committee.
"He's a good landlord," said Estela Lopez, executive director of the CCEA. "He's someone who has his finger on the pulse of what's going on here. He's a significant player, one of a number of visionaries here who sees the area growing in the next few years."
Lopez said Meruelo donated a warehouse on Seventh Street for an innovative check-in center, where the homeless can store their belongings during the day - it also clears the clutter in front of nearby businesses. It serves about 500 people daily.
As he moves forward with his housing venture, Meruelo said he sees the potential Downtown had 30 years ago, when his mother bought Belinda's and seized on the market's momentum. Of late, Meruelo has been actively diversifying his Downtown properties, from the rehab of the Union Bank & Trust Building into 91 lofts to a prime Fashion District parcel on Olympic and Hill to a plot in South Park next to the former Transamerica Building. With the latter, Meruelo said he is planning a mixed-use development that could include high-rise condominiums, a hotel and offices.
"All this has been an effort for 30 years and we plan to be here for another 30 years," he said. "I've been an investor for a long time, and we are not just jumping into the market as many others are. We've been here a long time and we are just continuing on the same path that we've been on for a number of years.
"There's a lot of property that some people would consider strange but I just see tremendous opportunity," Meruelo added. "There are a lot of other properties around here that I wish I had more money to buy. I can see what's coming down the tunnel. It isn't going to stop."
The Downtown Portfolio
Through his various companies and interests, Richard Meruelo owns more than 5 million square feet of space, 100 acres and 50 buildings in Downtown Los Angeles. These are some of the key properties.
Original Belinda's Bridal Shop
The first property in the Meruelo portfolio.
318-322 S. Broadway
Seventh Street Produce Market
Downtown's original produce market, built in 1917.
1318 E. Seventh St.
Southern Pacific Warehouse Building
Formerly the S.E. Rykoff facility, now home to American Apparel.
761 Alameda St.
Little Tokyo Square
Mitsuwa Market is the major tenant in this mall.
333 S. Alameda St.
Union Lofts Building
Being converted into 91 residential units by Meruelo.
760 S. Hill St.
Wall Street Market
An entire city block bounded by Eighth, Cecilia, Ninth and Wall streets.
857 S. Wall St.
Former Family Ford Building
At the northeast corner of Figueroa and Pico.
1248 S. Figueroa St.
Desmond Building
At the northeast corner of 11th and Hope streets.
336 W. 11th St.
717 Building
A planned 37-story condo tower to break ground this year.
717 Ninth St.
SCI-Arc campus
The recently battled-over home of the Arts District architecture school.
950 E. Third St.
Contact Kathryn Maese at kathryn@downtownnews.com.
page 1, 1/16/2006
© Los Angeles Downtown News. Reprinting items retrieved from the archives are for personal use only. They may not be reproduced or retransmitted without permission of the Los Angeles Downtown News. If you would like to redistribute anything from the Los Angeles Downtown News Archives, please call our permissions department at (213) 481-1448.
It was, after all, his real estate savvy mother who started the empire her son would eventually expand from a tiny dress shop at 323 S. Broadway. Today, Meruelo controls more acreage than nearly any landowner Downtown - more than 5 million square feet and 50 properties.
It all began at Belinda's dress shop, one of dozens of similar outlets along the dense boulevard that sells wedding gowns and rents outfits to giggling 15-year-old girls for their quinceañera. It was the late 1960s and the corridor's shifting demographics were bringing more Latino customers and merchants.
Sensing the market's potential, the family began buying a property every year, mostly in areas, Meruelo said, where a large Latino population made land prices cheap and opportunity abundant.
"There was a perception that these heavily Latino areas like Downtown were going downhill but [my parents] thought, 'What do you mean, there are all these people?'" Meruelo said. "I grew up in that frame of mind of looking at areas that were going to change. We knew from experience what kind of merchants we could put in our buildings, what kind of people we could rent to. That gave us a foothold."
In the 30 years since, Meruelo's consortium of companies and interests - Merco Group and Meruelo Maddux Properties among them - has amassed a string of properties on both coasts (largely in Miami and Los Angeles). The firm's sizeable Downtown portfolio includes 100 acres, with a heavy concentration of industrial holdings such as the bustling Alameda Produce Market on Seventh Street and the multi-building complex housing American Apparel's 3,400 employees. Meruelo also owns dozens of vacant lots, cold storage facilities and warehouses.
Meruelo's parents fled Cuba in the early 1960s for New York City, but quickly relocated to East Los Angeles. Richard was born in 1964 and his early playground was the Broadway Theater District with its dozens of office buildings near Third and Broadway. As a youth he shined shoes on the weekend near the Bradbury, Douglas and Victor Clothing buildings.
He got an early lesson in wheeling and dealing when his mother's shop was red-tagged after the 1972 Simi Valley earthquake rendered the building's top two floors uninhabitable. Though many merchants fled Downtown Los Angeles, Belinda improvised. Facing eviction, and several time-sensitive wedding orders, she convinced the Building and Safety Department to allow her to rebuild - without the upper floors, which were demolished. The family still owns the property.
Meruelo attended high school at Don Bosco Technical Institute in Rosemead and graduated from USC with a business degree. At 23 he negotiated his first solo business deal, buying a three-story medical office building in Huntington Park.
Now, he is poised to step into a new arena: the Downtown housing market. And as is his style - big, bold and unapologetic - the 41-year-old is looking to make a statement.
In his industrial-looking headquarters atop a bustling produce mart, Meruelo laid out his ambitious plans during a recent interview with Los Angeles Downtown News. A scale model depicting a 40-story condominium project dominates his corner office. Dubbed 717 Flower, the 214-unit structure adjacent to the future Ralphs supermarket will break ground in March and rise in the next two years, he said.
If it proceeds as planned, it would be the tallest ground-up housing structure in Downtown. Meruelo Maddux's in-house architects designed the towering residence as an "aquatic metaphor" for the city. Plans call for a dramatic, watery glass curtain wall along the façade, along with a colorful "kelp garden" sculpture. Architectural elements include a coral bed and a bridge reminiscent of a diving board. Even the ground floor seafood eatery Mari will carry the theme.
"Downtown is one of those places that needs more density," Meruelo said. "We have not built housing in Southern California since the late 1980s. This building begins the first high-rise residential construction for us in Southern California."
The $120 million project's location, at the gateway to the red-hot South Park District and next to one of the most anticipated amenities in Downtown - a grocery store - is about to propel Meruelo's profile even higher.
While Meruelo made his fortune through real estate, Downtown's political and business circles know him for two other things: big checks and big fights.
Meruelo found himself in the center of a media hubbub during last spring's mayoral race, when he gave $193,000 in independent expenditures to Villaraigosa's campaign, making him the largest individual donor. After that became public, reporters and incumbent Mayor Jim Hahn pounced on the size of the donations.
Meruelo said he and his family have always been politically active. He blames Hahn for the negative press. "What got the most attention has been my economic support to Latino candidates," Meruelo said. Then, referencing the infamous Carlos Vignali television ad that helped Hahn defeat Villaraigosa in 2001, he adds, "Hahn used anything he could find. He turned me into the next smoking crack commercial that ran four years prior."
Meruelo has also tangled with Downtown stakeholders, most prominently in a five-year development scuffle with the Southern California Institute of Architecture (SCI-Arc) and Arts District leaders. The school, which relocated to an old railroad depot in 1999, had plans to purchase an adjacent lot on Traction Avenue to expand the campus and create student housing and parking.
After lengthy negotiations, and a lack of funding on the school's part, Meruelo bid for and bought the land, despite protests from SCI-Arc officials and community members. The developer then rankled area stakeholders by announcing plans to build two 50-story residential towers in a Miami Beach style.
Last year, a judge rejected a SCI-Arc lawsuit over the property. Although Meruelo won the legal battle, he was hammered in the court of public opinion as the man wanting to build towering structures in the heart of the quaint Arts District.
Meruelo has since changed his tack, saying he wants to work with the school and community to create a project that would benefit everyone.
"I think what happened was that because we were not adept at working with the media, and the school was trying to angle for a better position and so the school used everything they could with the elected officials to portray me as being negative," he said. "I have never been in the public relations business, but I'm learning."
As part of that effort, Meruelo recently hired Michael Bustamante, former Gov. Gray Davis' spokesman. Now, when discussing the SCI-Arc project, he sprinkles his conversation with the need for "consensus planning" and community involvement.
"We need our neighbors to be in support of our project," he said. "The density that I originally proposed and the height was not the problem, it was the design. The school wanted a much more artistic design."
He adds, "They are a good neighbor to have because they can bring the right mix of people. We're working with them to come up with a plan that they like. We're much closer than the last proposal."
However not everyone is convinced of his turnaround. In fact, some powerful players remain skeptical about his claims of working with neighborhood stakeholders.
"I am not aware of any ongoing negotiations," said Councilwoman Jan Perry, who mediated negotiations between the two parties. "SCI-Arc is considering its strategic outlook and planning for the future. I'm doing everything I can to encourage them to stay. I would be quite surprised [if they were working together]. It's news to me."
Perry said Meruelo has done little to endear himself to the area in recent months. She said hundreds of UPS trailers were transferred in and out of the lot through November and December. Though they are now gone, residents complained of late-night noise, generator-powered lights and plumes of choking diesel fumes from the stream of traffic.
While Meruelo's public participation is up for debate, his business acumen is undeniable. In Miami Beach, Fla., where Meruelo spends about half the year, the company recently completed the 48-story Akoya condo tower. He has several other large-scale housing projects under construction in that area.
He expects that in the near future, increased density will be part of Downtown as well. Many developers already are pitching 20- to 30-story towers. Meruelo thinks those projects should be bigger and denser.
"The talk is of taller buildings, like the Hilton Hotel next to Staples or the Metropolis project," he said. "Pretty soon the question of scale will be should a building be 50 stories or 80 stories, not five stories or six. From a street perspective, whether you are standing next to a six-story building or a 60-story building you don't notice the difference. It's the first 30 feet that you notice. After that it could hit the moon."
In Little Tokyo, for example, Meruelo said Trammel Crow's condo project at Second and Alameda (since purchased by Intracorp) is a "tremendous underdevelopment." He notes the land was entitled for 1,200 units, but the project contains only 300.
"We have a lot of parcels and some parcels we don't have plans for," he said. "I do not want to underdevelop property and unfortunately I see that happening."
Meruelo has sold few of his holdings, leading some to label him a speculator who sits on properties, waiting for higher market prices instead of putting them to better use for the community.
Meruelo takes the criticism in stride. He counters that the company's offices are centrally located in the Industrial District, and therefore he is not an absentee landlord. He points out that he has an active construction crew that recently developed several projects, including a produce market at Eighth and Alameda and a freezer building on Washington Boulevard. Likewise, his properties are not third party managed.
Indeed, Meruelo is active in the district where the lion's share of his holdings are located. He has sat on the board of directors of the Central City East Association (CCEA), the local business improvement district, since 1999. He is also a member of the Community Redevelopment Agency's Central Industrial citizen advisory committee.
"He's a good landlord," said Estela Lopez, executive director of the CCEA. "He's someone who has his finger on the pulse of what's going on here. He's a significant player, one of a number of visionaries here who sees the area growing in the next few years."
Lopez said Meruelo donated a warehouse on Seventh Street for an innovative check-in center, where the homeless can store their belongings during the day - it also clears the clutter in front of nearby businesses. It serves about 500 people daily.
As he moves forward with his housing venture, Meruelo said he sees the potential Downtown had 30 years ago, when his mother bought Belinda's and seized on the market's momentum. Of late, Meruelo has been actively diversifying his Downtown properties, from the rehab of the Union Bank & Trust Building into 91 lofts to a prime Fashion District parcel on Olympic and Hill to a plot in South Park next to the former Transamerica Building. With the latter, Meruelo said he is planning a mixed-use development that could include high-rise condominiums, a hotel and offices.
"All this has been an effort for 30 years and we plan to be here for another 30 years," he said. "I've been an investor for a long time, and we are not just jumping into the market as many others are. We've been here a long time and we are just continuing on the same path that we've been on for a number of years.
"There's a lot of property that some people would consider strange but I just see tremendous opportunity," Meruelo added. "There are a lot of other properties around here that I wish I had more money to buy. I can see what's coming down the tunnel. It isn't going to stop."
The Downtown Portfolio
Through his various companies and interests, Richard Meruelo owns more than 5 million square feet of space, 100 acres and 50 buildings in Downtown Los Angeles. These are some of the key properties.
Original Belinda's Bridal Shop
The first property in the Meruelo portfolio.
318-322 S. Broadway
Seventh Street Produce Market
Downtown's original produce market, built in 1917.
1318 E. Seventh St.
Southern Pacific Warehouse Building
Formerly the S.E. Rykoff facility, now home to American Apparel.
761 Alameda St.
Little Tokyo Square
Mitsuwa Market is the major tenant in this mall.
333 S. Alameda St.
Union Lofts Building
Being converted into 91 residential units by Meruelo.
760 S. Hill St.
Wall Street Market
An entire city block bounded by Eighth, Cecilia, Ninth and Wall streets.
857 S. Wall St.
Former Family Ford Building
At the northeast corner of Figueroa and Pico.
1248 S. Figueroa St.
Desmond Building
At the northeast corner of 11th and Hope streets.
336 W. 11th St.
717 Building
A planned 37-story condo tower to break ground this year.
717 Ninth St.
SCI-Arc campus
The recently battled-over home of the Arts District architecture school.
950 E. Third St.
Contact Kathryn Maese at kathryn@downtownnews.com.
page 1, 1/16/2006
© Los Angeles Downtown News. Reprinting items retrieved from the archives are for personal use only. They may not be reproduced or retransmitted without permission of the Los Angeles Downtown News. If you would like to redistribute anything from the Los Angeles Downtown News Archives, please call our permissions department at (213) 481-1448.
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