How the Ace Hotel Is the Invisible Hand Driving Downtown's Gentrification (VIDEO)
In April, a Downtown News reporter visited six of the new high-end retailers near Ninth Street and Broadway for an investigative piece about gentrification. The stores had popped up, she wrote, "like the moment in Wizard of Oz when Dorothy leaves behind black-and-white Kansas and emerges in a Technicolor land of Munchkins."
What the writer didn't know - nor did Los Angeles Magazine when it dubbed four of the new retailers "Boutique-licious" in its May issue - is that the neighborhood's new colors didn't randomly materialize, and weren't blown in by a tornado of zeitgeist-driven real estate speculation.
They were, for the most part, brought to Broadway by one man.
Jonathan Schley, 28, doesn't look like a real estate broker. He has a sort of calm, dignified, Western European air to him, with a face to match - Roman nose, well-defined smile lines and long, slicked-back black hair. He favors jeans and a T-shirt that reveals two tattoos on his right arm. One is the face of a woman.
Schley is director of retail development at Tungsten Property, a brokerage that re-creates neighborhoods. Tungsten Partners, its parent company, is part owner of that restorer of urban ruins, Ace Hotel.
Tungsten Partners acquires buildings around the globe to transform into Ace Hotels - an upscale, seven-location chain that first opened in a transformed Salvation Army halfway house in Seattle in 1999, then gave the same bespoke treatment to a historic hotel in Portland, Oregon, and a circa-1904 hotel in Manhattan.
Once a building is acquired for an Ace Hotel, instead of waiting for the street to become fashionable on its own, Tungsten Property brings in a cluster of trendy retailers, which then attract other shops - and media praise.
Tungsten first employed that strategy in Manhattan, prompting New York magazine to label Ace Hotel a "hot-neighborhood-starter-kit."
Tungsten is the starter kit's invisible hand.
"Organic development doesn't happen that quickly," says Schley, who has in the past 18 months convinced nine new retailers to open on two square blocks surrounding the Ace Hotel at Ninth and Broadway. "Development comes in waves, and usually it's residential first, then retail follows. We do it differently."
Having brought in nine of the dozen or so new high-end businesses now on Broadway, Tungsten has five more deals in the works. Schley used fashion connections in New York and Europe to convince retailers Acne Studios, Aesop, A.P.C., Tanner Goods and OAK, along with food sellers Il Caffe, Kinfolk Restaurant and Big Gay Ice Cream, to commit to Broadway. With the exception of A.P.C., it's their entry into Los Angeles.
Jonathan Schley: tapping into the monied elements who want to bring Broadway back
Photo by Isaac Simpson
Before Schley, the only new merchants on Broadway were Ross Dress for Less and low-profile furniture store angelo:HOME. Urban Outfitters opened after Acne and Ace Hotel.
But now an iconic section of DTLA is drawing major attention: Schley says Gucci toured the area last year. Bloomingdale's reportedly is seeking 170,000 square feet.
Some media, such as Los Angeles Magazine, attribute Broadway's new glamour to City Councilman Jose Huizar's Bringing Back Broadway campaign.
"The foundation we have laid for Broadway's revitalization has garnered the attention of prime businesses, like Acne, and others before them," Huizar says.
In fact, Bringing Back Broadway hasn't fueled the arrival of these high-end retailers as much as Huizar wishes.
But the BBB effort did establish a $750,000 lighting grant program to help businesses finance bright lighting that will restore Broadway's historic neon-sign glow. BBB also convinced the City Council to build gravel "pedestrian spaces" that extend the sidewalk into the street in hopes of making it more like Times Square.
The synergy between public and private is aimed at making the Broadway Theater District between Olympic Boulevard and Second Street, featuring Grand Central Market and the famous Bradbury Building, the "walkable" downtown that critics say L.A. has lacked for 50 years.
Broadway's string of 12 famed movie palaces, with their once-fabulous, now mostly defunct marquees, had its heyday in the 1930s and '40s. It was (and still technically is, according to the Los Angeles Conservancy) the largest cluster of such theaters in the world, and the first theater district recognized by the National Register of Historic Places.
But when the white and wealthy left downtown for the beaches or suburbs, the theaters went with them. Downtown's movie palaces became swap meets, and by the 1980s the area was a haven for gangbangers, homeless people and drug addicts - yet remained lively thanks to thousands of Latino immigrant shoppers drawn to its inexpensive shops.
By the early 2000s, all the theaters had ended full-time operation as cinemas, and most were shut for good.
But now, the monied elements want Broadway back. Well-off Angelenos are paying big money for New York - style community, walkability and architecture. Where the low-slung Arts District reflects elements of Berlin, tall, ornate Broadway is on its way to becoming a slice of Paris.
Inside the Ace Hotel
Photo by Anne Fishbein
There are still eight to 10 quinceañera dress stores and 20 or more jewelry discounters. And Grand Central Market is still geared toward working-class, Hispanic consumers. But its stalls hint at change: Half a dozen new counters have popped up, including a Kombucha brewery, an organic butcher and an artisanal juicer and vintage-recipes bakery.
"There are many more Americans here now," says Ramon, a produce-stand grocer. "Everyone is worried. When the [leasing] office says you have to leave, you only have 20 days to do it."
Ramon, who didn't want his full name used, isn't the only one worried about "Americans."
Dick, a white proprietor at a homeopathic pharmacy on Third Street and Broadway, says, "I don't want to leave here - these are my kind of people. But what's coming in is the white trade. ... Hispanics spend money on the essentials, like clothing, home goods, soap. The white trade is three things: cerveza, comida and sex."
Ali Krasfy, the Lebanese-immigrant owner of Family Pants between Fourth and Fifth streets, sells items such as Dickies jeans at extreme discounts. He's closing, having lost customers to Ross Dress for Less, which arrived next door last year.
Despite being forced to move, Krasfy is excited about the changes on Broadway.
"I'm from Beirut, and there's not even gum on the street there," Krasfy says. "But people come here and say, 'This is downtown Los Angeles?!' It's disgusting and embarrassing. It's the end for us little guys here, but all in all, the changes are good."
At Family Pants you can buy jeans for $7.99. The cheapest T-shirt at Acne down the street is $90. Since Tungsten arrived 18 months ago, rents have nearly doubled.
Schley is aware of some displacement under way but insists he wants to add to the area and help rebuild, not overrun existing culture.
"We want good places like Nails on 9th [salon], which has been there for 20 years, to stay, because they are offering a service and adding character to the neighborhood," he says. "We'd much rather have that than some sort of Beverly Hills spa."
Many new shops aren't displacing anyone - they're occupying vacant storefronts. Acne Studios, OAK, Kinfolk and Ace Hotel took over unused space, while the others displaced month-to-month renters.
Steve Needleman, a key property owner on Broadway and landlord of the new Aesop and Tanner Goods stores, says, "I could have leased to five pieces of crap that would've paid more than Aesop, but that's not what I wanted." One check-cashing company was on a monthly contract, for example, "and when I found a good fit for a replacement, I accepted."
Needleman still can't believe change is actually happening.
"I've been down here for 40 years, and I didn't ever think I'd live to see this," he says, staring pensively at the Eastern Columbia building, whose celebrated art deco façade rises above the chaos like a giant turquoise Pez. Its bottom floor contains the new Acne store.
He flashes a wide grin, saying, "I never thought it would get to this level."
Isaac Simpson has been an occasional events bartender at Ace Hotel.
Editor's note: An alteration was made on June 12 to clarify that Tungsten is a part-owner of Ace Hotel.
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