GAINING TRACTION

By Roger Vincent

Jan. 20, 2013 12 AM PT

When Gideon Kotzer set out to open a discount electronics store in the mid-1990s, he deliberately chose an old warehouse in the cultural middle of nowhere -- the arts district of downtown Los Angeles, which charitably could be called sketchy.

Crazy Gideon’s on Traction Avenue became an island of commerce in an area that saw little other retail activity beyond illegal drug sales. The store’s remoteness in an otherwise unwelcoming warren of aging brick and concrete industrial buildings was central to Kotzer’s business strategy.

“He bought that space with the mind-set that if people would drive to a desolate, faraway neighborhood, they wouldn’t want to leave empty-handed,” his son Daniel Kotzer said.

Crazy Gideon’s has closed, and its formerly shabby space in the 1917 structure is expected to open to the public again this year as an expansive brew pub serving house-made beer with meals. The upgrade is emblematic of changes going on throughout the arts district.

The neighborhood along the Los Angeles River east of downtown’s Civic Center is drawing favorable comparisons to New York’s meatpacking district, where trendy shops, restaurants, hotels and offices have taken over many industrial buildings that were strictly blue collar for decades.

The transformation has such momentum that some of the neighborhood’s biggest supporters expect that it will be difficult to find artists in the arts district in another decade as gentrification drives up rents and pushes low-paid artists to cheaper locales.

An area in flux

But for now, the arts district is in a sweet spot of transition for many. Vegetable wholesalers and furniture makers share streets with top-flight restaurants and front-line technology and entertainment firms. Its walls sport elaborate murals -- and foreboding razor wire.

“There are very rough patches,” said architect Scott Johnson, who lives in a condominium on Industrial Street. “It’s muscular. It’s complicated. It’s interesting.”

Part of the appeal for Johnson, who lived in the meatpacking district in the late 1970s, is the roughness most suburbanites would find off-putting. He calls it “authenticity” in a time when “we’re getting bombarded with fake stuff.”

The spine of the arts district is Mateo Street, a truck-laden thoroughfare named after early landowner Matthew “Don Mateo” Keller. The district evolved from agricultural uses including Mateo’s winery in the mid-1800s to being the city’s industrial heart in the early 20th century.

One of the most ambitious private developments of that era was Union Terminal Annex, which was connected by rail to the city’s seaport and was the second-largest wholesale terminal in the world. Two of the four large remaining buildings are occupied by clothing manufacturer American Apparel Inc., and the owners are improving and divvying up long-vacant remaining space for other business tenants including the makers of Splendid and Ella Moss apparel.

The advanced age of the neighborhood’s buildings worked against the district in recent decades as businesses moved to more modern, efficient industrial properties elsewhere in the region. Those that remained often barricaded themselves behind tall gates and barbed wire as the area gained a reputation for crime and homelessness.

“There were drug addicts and prostitutes on the corner when we started,” said restaurateur Yassmin Sarmadi, who began working on French bistro Church & State seven years ago. “Now limousines pull up on a regular basis.”

Sarmadi opened her bistro in the former West Coast headquarters of National Biscuit Co., a seven-story factory built in 1925 that was renovated and converted to condos in 2006. She was attracted to the historic nature of the building, she said, and the fact that it was remote from the elite restaurant enclaves of the Westside.

“It was far more exciting for me to be in a place that wasn’t already ‘there,’ so to speak,” Sarmadi said.

She lives in the arts district and enjoys the company of artists who are neighbors, but knows that the march of prosperity will make it hard for some of them to stay. It may take 10 more years to become as affluent as once-lowly Venice, Sarmadi said, but gentrification will come.

“I think it’s inevitable,” she said. “It brings a tear to my eye, but it’s also progress.”

Guiding change is Tyler Stonebraker, who helps young businesses such as film and television production company Skunk set up shop in old warehouses and factories.

Stonebraker’s real estate firm Creative Space caters to creative companies that consider nontraditional offices essential to their identities and part of their appeal to desirable workers in the millennial generation.

“It’s part of their brand now,” Stonebraker’s partner Michael Smith said of the creative firms. “They make up the bleeding edge of early adopters. And they like to be near each other.”

Among Creative Space clients is Urban Radish, which Stonebraker calls an “ultra artisanal” gourmet food market set to open in March. Urban Radish is being built inside a metal warehouse on Mateo Street -- bedecked with a mural of giant chipmunks -- that was last used for glass manufacturing.

Flanking its parking lot is an electric car charging station owned by the market’s landlord, Linear City, the developer of Biscuit Company Lofts, where Nabisco once made cookies, and the adjacent Toy Factory Lofts condominiums.

Charging more rent

Such developments have drawn numerous entrepreneurs who run small businesses from their units, Stonebraker said. Major corporations including Nike Inc. have followed with outposts of their own. The sports apparel retailer rents 8,000 square feet in an old brick building with an exposed bow truss ceiling in the Factory Place Arts Complex. Its offices are made from shipping containers and include an elaborate skateboard park, he said.

Gentrification of that sort has reinvigorated buildings that were otherwise obsolete for most industries, real estate broker Armen Kazaryan of Lee & Associates said. When the arts district loft conversion trend took off in the mid-2000s, landlords realized they could get more rent from tech and design companies than they could from warehouse and manufacturing businesses.

Commercial rents can top $2 per square foot per month and can surpass the prices paid for space in ritzy high-rises visible on the downtown skyline a few blocks away.

The industrial buildings were not originally intended to support many occupants, however, which has led to a chronic shortage of parking in the area, Kazaryan said. One parking space may cost as much as $100 a month to rent. Older buildings often lack air conditioning as well.

“It’s one of the hottest, most desirable areas” of Los Angeles, he said, but “it’s still got some way to go.”

With so many prosperous newcomers making the neighborhood into an urban frontier with hip amenities, some residents are laboring to keep art in the arts district.

Daniel Lahoda, owner of Lala Gallery on Willow Street, works with artists to get them financial support from landlords to paint murals on the sides of buildings. There are now more than 100 murals in the district, he said, including the chipmunks at Urban Radish painted by Belgian graffiti artist Roa.

A mural becomes an identifier for its building and adds creative energy to the neighborhood, Lahoda said. “Otherwise, it’s just a collection of run-down warehouses with cool renovated interiors.”

Rising rents are putting a strain on local artists, though.

“It’s already too pricey for the majority of artists,” he said, and some are moving across the river to less trendy Boyle Heights. The monthly rent on his Mateo Street residential loft has risen from to about $1.50 a square foot from about $1.10 in the last five years.

“I hope my artist friends can grow with the district,” Lahoda said, and he and his girlfriend will try to do the same.

“We will endure the increases as long as we can,” he said, “because we love the neighborhood so much.”

[email protected]