With Herald's Death, Its Downtown Site Is Put Into Play
Newspaper: Landmark status expected to protect historical structure from demolition or drastic changes when property sells.
By SHERYL KORNMAN, Kornman is a free-lance writer.
The investment banking firm of Lazard Freres & Co. in New York City is involved in the Hearst Corp.'s effort to sell the Herald Examiner property at 11th Street and Broadway in downtown Los Angeles, sources close to the matter say.
The site became available when the Herald Examiner ceased publishing Nov. 2.
A spokesman for the Hearst Corp. at its headquarters in Manhattan said that Hearst has not retained "any broker" and "there are no plans at this point for the property." The spokesman, Jim O'Donnell, said "we have made no announcement about the future of the property."
Hearst Corp.'s Los Angeles office indicated, however, that Lazard Freres in New York is handling the matter for the company.
In Los Angeles, John Torgeson, resident manager of Coldwell Banker's commercial division said his company is "working the property--I can't tell you (in) what capacity"--but said "there's no sale pending that we're aware of. Obviously, it's a pivotal piece of real estate. . . . We want to make a deal. They have a very valuable asset there."
Torgeson said any prospective buyer would not be "another newspaper" or "garment-industry related."
Jim Kinetz, a commercial broker at Coldwell Banker in L.A., said he anticipates the property will remain on the block for a couple of months in an attempt to drive the price up on what is already a "very desirable piece of property." Kinetz said he expects the interior to eventually undergo extensive renovation to attract tenants able to support a substantial investment by a "creative developer."
City tax records list the assessed value of the property, designated for light manufacturing and printing, at $2,001,692 and the assessed value of the land at $548,738. Annual property taxes in 1989 were listed as $79,794.
Commercial brokers at Grubb & Ellis estimate the value of the land at $20 million and the value of the building, completed in 1915, at between $20 million and $30 million.
Designed by architect Julia Morgan, the Herald Examiner building has an ornate two-story lobby reminiscent of the interior work at the Hearst property at San Simeon, which was also designed by Morgan.
Grubb & Ellis commercial brokers Ken Rubendall and Kirby Greenlee said the Herald Examiner property is located in a part of downtown Los Angeles where the office market is not strong.
Rubendall said it is best suited for continued use as a newspaper production facility or for clean light industry, perhaps sewing, toys or electronic.
The property is a "very attractive" mixed-use site suitable for garment industry-related uses, located near the heart of the garment district, Rubendall said, although "another newspaper makes the most sense."
Even though it would not be impossible to build, a high-rise on the site "would be hard to finance in a location of that type," Greenlee said. "Any lender that looks at that property would be skeptical of the tenant interest. Going into the area south of 9th Street is "like going into a foreign country in terms of tenant activity.
"Rubendall said he anticipates that the buyer will be "someone who knows the area very well, someone who already operates within a 3-mile radius" of the site.
"There's a very good likelihood (the new owner) will be an entrepreneurial foreign investor" from Korea, Iran or Taiwan, Greenlee said, but not Japan. "The Japanese are probably not going to buy in that location. They're interested in very well located assests (near the downtown financial center). They are conservative buyers.
"Demolition of the building, which is unlikely, would be a difficult and time-consuming process.
Major changes to the building, which has been designated a Los Angeles historic landmark, would have to be approved by the city's Cultural Heritage Commission.
The panel has the authority to delay building permits seeking to demolish the property, make substantial alterations to it or relocate it, said Assistant City Atty. Mark Brown, legal counsel to the commission. The commission's recommendations are made to the City Council.
Brown said the panel could stall activity on the property for up to a year.
The building also falls under the jurisdiction of the Community Redevelopment Agency, which has additional oversight authority on the property because it is located within the boundaries of South Park, one of the agency's designated redevelopment areas.
Robert Tague, chief of operations for CRA, said an environmental impact report probably would not be required if new owners plan only "adaptive reuse of the existing structure"--minor interior alterations "not historical in nature."
If the changes were minimal, building permits could be issued by the Department of Building and Safety several months from the date the plans are submitted.
"The key is adaptive reuse," Tague said. "It's an historic building. We always prefer they be retained, utilized and adapted to other uses. We are not interested in having historical buildings demolished. We're extremely concerned about anything along that line. Our objective would be to save it, if at all possible."
Jay Oren, staff architect and community liaison for the city Cultural Affairs Commission, said the difficulty in dealing with a preservation-minded community might slow a new owner's intent of demolishing or substantially altering the building.
"Any investor would have to come to terms with the Cultural Heritage Commission and California environmental-quality law," Oren said.
"The Los Angeles Conservancy would most likely mount a concerted campaign to preserve the building," Oren predicted. "It's one of the few examples we have in L.A. of (architect Morgan's) work," he said. "Some parts of the building are truly outstanding, especially the lobby."
Oren said he would recommend the 1111 S. Broadway site be used by new owners as an office building and that any other reuse be "as close to its original use as possible."
Rumors circulating in New York that New York Post publisher Peter Kalikow is interested in operating a newspaper at the site are false, said a Kalikow spokesman, Martin McLaughlin. He said Kalikow is "not even casting an eye on L.A. He's putting all his energies into bringing back the New York Post to where it was. I don't think he has any interest in acquiring anything right now in Los Angeles."