Monthly Archives: March 2005

Gardena In Crisis


Gardena is on the brink of insolvency because of a failed insurance investment and poor governing. While desperate to right itself, Gardena’s effort points to a generation of bad decisions. As we enter a period of scarce State and Federal resources, cities like Gardena will be even more dependent on their own management abilities.

From its past in berry growing and plant nurseries, Gardena moved into small shop industrialization during World War II by supplying larger aircraft and auto plants. Gardena provided an excellent life because of its climate, centrality to major manufacturing hubs, and enterprising citizens. Card clubs also play a colorful role in the City’s history since they are some of Gardena’s larger taxpayers and employers. Gardena never fully recovered from the recession of the early 90’s when many of the local job shops that supplied the aircraft factories closed. General blight and the deaths of many pioneering industrialists left a void. Bad political decisions further ruined Gardena finances. Recently, a bid to create new retail revenue by starting a redevelopment agency failed convincingly on election day. The major emphasis was the Rosecrans corridor that contains a foul smelling transfer station and an 11-acre site recently acquired to house the Gardena Municipal Bus Yard. These are planning mistakes that should never have happened.

Gardena’s latest idea is to discourage businesses that warehouse, distribute, or wholesale merchandise and products. Gardena enforces this by requiring companies to obtain a Conditional Use Permit if they want to occupy a building for warehouse related purposes. While Gardena may not want truck traffic and clogged streets, it will lose more businesses and jobs. Gardena can return to the days when it housed many successful companies headed by dedicated entrepreneurs.

Immediate measures might include eliminating the sub-standard, non-conforming residential uses that dot the industrial park. Creating public employee parking lots will allow trucks to use designated areas to make deliveries. Cleaning up and improving rundown areas will attract new business. Moving the Gardena One-Stop to the north part of the City will create synergy where it is needed the most.

Gardena has many location and physical advantages. Its one of the few places in Los Angeles where owner/users can affordably purchase their own property. There is an excellent freeway nexus, a proud history of industrial entrepreneurialism, and a unique Asian character. The basics are in place for Gardena to revitalize its business core, but Gardena will need to be more accommodating to business than it has recently shown.

Underutilized Sites




The value proposition is overwhelming when comparing old, obsolete structures to developing say, a 3-story residential condominium. We often see redevelopment returns of 2 and 3 times compared to what is currently being generated at an older property. All industrial property with a decent location is open to reuse. A growing population, increased densification and worsening traffic mean there is continual opportunity in underutilized property.

The demise of big manufacturing in this region coincides with new forms of work, education, and living. Work force housing, transit developments, live/work lofts, school construction, mixed use, and industrial condos are a few of the new project types. While large, vertical manufacturers are faltering, new, smaller organizations are often taking their place at the same location. In the age of the knowledge worker, more income can be generated on a per foot basis than in the past. Thus for the right combination of location and design, higher rents can be achieved with new development projects.

On a broad policy level, more needs to be done for failing manufacturers and their workers. Substantial land appreciation also applies. If someone held a piece of worn out industrial over the past 15 years, they would have witnessed almost a 20% nominal appreciation rate per year. In my market land has appreciated roughly from $8.00 per foot to $25.00 per foot since 1990. This doesn’t even include the rents that might have been generated over the same period.

Large institutional buyers have caught on. Instead of competing for low cap-rate buildings, many are turning to speculative construction where there are better returns. However, with a few exceptions, “in fill” locations are too small for these large investors. This explains why we’ll be seeing a continuation of “big box” development all the way to Palm Springs and into Bakersfield. With Los Angeles in the forefront of the hyper-changing, post-industrial economy, the existence of World War II era manufacturing plants is an anachronism. However, these sites continue to be sources of future development for the region.