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Medallion Back on Track
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| Developer Saeed Farkhondehpour said he will resume construction on the $125 million Medallion project. He had halted construction due to concerns about the sagging economy. Photo by Gary Leonard. |
Developer of $125 Million Project Reverses Himself, Says Construction Will Resume
by Richard Guzman
One week after the announcement that the Medallion project was being halted in the midst of construction shocked Downtown, the $125 million mixed-use effort on a key plot near the Historic Core, the Toy District and the Civic Center is back on.
Last week, project developer Saeed Farkhondehpour told Los Angeles Downtown News that despite his previous concerns about the economy, construction will resume. He offered no further details.
The about-face was greeted with relief by Downtown stakeholders. It came after Farkhondehpour met his leasing agent and spoke with developer Tom Gilmore, whose Old Bank District is just south of the Medallion site at Fourth and Main streets. Area players sought to persuade him that the community's retail appetite is strong enough to support his project.
"I spoke to him and basically said anything I can do to help, I'm happy to do. We're happy to help with leasing too because we have a great interest in making sure that it's leased up nicely and that it adds to the neighborhood," Gilmore said.
Farkhondehpour, a longtime Downtown Los Angeles property holder, previously told Downtown News that the sagging economy led to his decision to halt construction for at least a year. Although the project broke ground in July 2007, Farkhondehpour said conditions have changed recently on wholesale projects he developed in the Fashion and Toy districts, which caused him to lower rents for some of the approximately 800 retail units he owns in the Toy District.
"That's been the concern for the past seven or eight months as it's been getting worse every month. The contractor came up with some 20% cost increases and that was like, let's just shut the damn thing down and forget about it," Farkhondehpour said at the time.
Gilmore said he thought Farkhondehpour "had a misperception of this micro market." He said leasing momentum is strong in the Old Bank District.
Farkhondehpour did not take Gilmore up on his offer for help, but called him a few days later to report that the project is back on.
"I think this will turn out to be a good decision for him. I think he'll have a little egg on his face for six months, but once it's all built and leased up all that egg will become cash," Gilmore said.
The two-phase development calls for 200 market-rate apartments averaging 1,000 square feet, plus 750 parking spaces, an outdoor plaza and an amphitheater. The key element that led Farkhondehpour to temporarily postpone the project is its 203,000 square feet of retail space.
Postponements and delays are common in housing and cultural projects, but as developers search for funding, they almost always go forward after the building breaks ground. This would likely have been the first time in years that an under-construction Downtown development had stopped.
Pleasant Surprise
While the project's delay caught many Downtowners by surprise, news of the reversal had them pleasantly shocked.
"That was the shortest closure I've ever heard of," said Downtown Los Angeles Neighborhood Council President Russell Brown. "That's a very good project that links the Old Bank District to the Civic Center."
Ninth District Councilwoman Jan Perry said she called Farkhondehpour to set up a meeting and talk about his decision to stop the project before she heard it was back on.
"Now that it's back on I'm just thrilled," she said. "I was very surprised but pleased that he'll be finishing the project."
Derrick Moore, director of urban retail for CB Richard Ellis, who is the leasing agent for the Medallion's retail space, said he was also surprised when he heard the project was shutting down, considering he had significant interest from businesses eyeing the space. Days after the news broke, Moore and Farkhondehpour met to discuss the retail leases.
"What happened [from his decision] was a huge groundswell of comment back to him from members of the city, the local business community, interested retailers with a strong desire to go forward," Moore said.
"I think after a lot of careful consideration, after looking at all of the different various tenants we had with interest in the retail space, he decided that he absolutely should and would go forward."
Contact Richard Guzman at richard@downtownnews.com.
page 1, 5/26/2008
© 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 re-distribute anything from the Los Angeles Downtown News Archives, please call our permissions department at (213) 481-1448.
Last week, project developer Saeed Farkhondehpour told Los Angeles Downtown News that despite his previous concerns about the economy, construction will resume. He offered no further details.
The about-face was greeted with relief by Downtown stakeholders. It came after Farkhondehpour met his leasing agent and spoke with developer Tom Gilmore, whose Old Bank District is just south of the Medallion site at Fourth and Main streets. Area players sought to persuade him that the community's retail appetite is strong enough to support his project.
"I spoke to him and basically said anything I can do to help, I'm happy to do. We're happy to help with leasing too because we have a great interest in making sure that it's leased up nicely and that it adds to the neighborhood," Gilmore said.
Farkhondehpour, a longtime Downtown Los Angeles property holder, previously told Downtown News that the sagging economy led to his decision to halt construction for at least a year. Although the project broke ground in July 2007, Farkhondehpour said conditions have changed recently on wholesale projects he developed in the Fashion and Toy districts, which caused him to lower rents for some of the approximately 800 retail units he owns in the Toy District.
"That's been the concern for the past seven or eight months as it's been getting worse every month. The contractor came up with some 20% cost increases and that was like, let's just shut the damn thing down and forget about it," Farkhondehpour said at the time.
Gilmore said he thought Farkhondehpour "had a misperception of this micro market." He said leasing momentum is strong in the Old Bank District.
Farkhondehpour did not take Gilmore up on his offer for help, but called him a few days later to report that the project is back on.
"I think this will turn out to be a good decision for him. I think he'll have a little egg on his face for six months, but once it's all built and leased up all that egg will become cash," Gilmore said.
The two-phase development calls for 200 market-rate apartments averaging 1,000 square feet, plus 750 parking spaces, an outdoor plaza and an amphitheater. The key element that led Farkhondehpour to temporarily postpone the project is its 203,000 square feet of retail space.
Postponements and delays are common in housing and cultural projects, but as developers search for funding, they almost always go forward after the building breaks ground. This would likely have been the first time in years that an under-construction Downtown development had stopped.
While the project's delay caught many Downtowners by surprise, news of the reversal had them pleasantly shocked.
"That was the shortest closure I've ever heard of," said Downtown Los Angeles Neighborhood Council President Russell Brown. "That's a very good project that links the Old Bank District to the Civic Center."
Ninth District Councilwoman Jan Perry said she called Farkhondehpour to set up a meeting and talk about his decision to stop the project before she heard it was back on.
"Now that it's back on I'm just thrilled," she said. "I was very surprised but pleased that he'll be finishing the project."
Derrick Moore, director of urban retail for CB Richard Ellis, who is the leasing agent for the Medallion's retail space, said he was also surprised when he heard the project was shutting down, considering he had significant interest from businesses eyeing the space. Days after the news broke, Moore and Farkhondehpour met to discuss the retail leases.
"What happened [from his decision] was a huge groundswell of comment back to him from members of the city, the local business community, interested retailers with a strong desire to go forward," Moore said.
"I think after a lot of careful consideration, after looking at all of the different various tenants we had with interest in the retail space, he decided that he absolutely should and would go forward."
Contact Richard Guzman at richard@downtownnews.com.
page 1, 5/26/2008
© 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 re-distribute anything from the Los Angeles Downtown News Archives, please call our permissions department at (213) 481-1448.
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