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Urban housing trend comes to region

10:00 PM PDT on Sunday, September 24, 2006

By JOSEPH ASCENZI
jascenzi@theBizpress.com

Coming to a downtown near you: apartments, condominiums and maybe even retail lofts.

Photo By Dan Elliott
Sue Dang, director of finance for the Ontario Convention Center, looks over plans for the new housing project.

Long a standard practice in Europe and parts of the East Coast, multifamily residential development in downtown locales is becoming one of the hottest trends in Southern California. In the Inland Empire, Cathedral City, Riverside and Indio have committed to - or are already building - downtown high-end multifamily projects.

Ontario became the latest local city to join the trend when it broke ground Sept. 19 on Ontario Town Square, a $200 million development that will be built next to Ontario City Hall and the municipal library. A senior center and a branch of University of La Verne College of Law are nearby.

A joint development of the Ontario Housing Agency and J.h. Snyder Co. in Los Angeles, Ontario Town Square will include residential units alongside restaurant pads and about 80,000 square feet of retail.

The residential units will consist of 160 three-level townhouses, 140 apartment units about 200 single-level condominiums, said Clifford Goldstein, senior partner with J. h. Snyder Co.

Cost of those units hasn't been determined, Goldstein said.

Ontario Town Square is part of the city's broader plan to revive its downtown and the Euclid Avenue business district, City Manager Greg Devereaux said.

"This is only the start," Devereaux said. "It's about one-fourth or one-sixth of what we want to accomplish."

When it's finished Ontario Town Square will cover 12 square blocks and will include, besides its residential units, retail and restaurants, both sit-down and quick service.

No tenants have been signed, but Starbucks and Jamba Juice are an example of the kind of tenants J. h. Snyder will try to attract, Goldstein said.

Projects like Ontario Town Square are becoming popular for several reasons. Cities want to revive - or create from scratch -- a downtown, so they're including space for multifamily housing in their downtown redevelopment plans.

At the same time, some demographic groups - mostly couples without children and older people whose children have moved out of the house -- are leaving the suburbs.

"Cities want a thriving downtown with a lot of retail, and you need people to make that happen," Devereaux said. "And people want to live in a place where there is a sense of community, which you don't always get in the suburbs."

But downtown housing has been slow to develop in Southern California because not all cities have been receptive to the idea, said Frank Williams, president of the Baldy View chapter of the Building Industry Association of Southern California.

"The hardest part has always been getting the local governments to go along with the idea," he said. "The problem has always been with the politicians, and I wish I knew why. We've been trying to get [Inland Empire] cities to try downtown multifamily housing for years, but we haven't been able to do it. Now other cities are trying it."

"We're doing a lot of projects like Ontario Town Square all over Southern California," said Jerome Snyder, senior partner with J.h. Snyder. "It's always a combination of residential and retail, and sometimes office. This [downtown Ontario] is a perfect location because it's between the 10 and the 60 freeways. But this concept can work in a lot of places."

Photo By Dan Elliott
Ontario Town Square is part of the city's broader plan to revive its downtown and the Euclid Avenue business district.

The key to making downtown housing work is to get the right mix of retail and residential in one place, Goldstein said.

"The appeal of living downtown is that you don't have to drive a long way whenever you want something," he said. "So we have to get the right kind of retail and services. If we just deliver residential, then we won't succeed."

Besides Ontario, Riverside, Cathedral City and Indio have each committed to developing multi-family residential projects in their downtown areas.

In Riverside, MetroPacific Properties in San Francisco and The Nicholson Co. in San Jose are developing Fox Plaza, a retail and residential project in the 3800 block of Mission Inn Avenue across from the Fox Theater.

The $200 million project will include 500 luxury condominiums along with 65,000 square feet of retail and a full-service hotel. The developers, operating as MetroRiverside LLC, hope to break ground next year.

In Cathedral City, apartments, restaurants and retail shops are expected to open in the city's downtown during the next two years, and a 300-room Sheraton Hotel is expected to be open in about one year.

In Indio, the Polo Square project will occupy 48 acres next to Highway 111 at Shields Road. The project - named for polo fields near the construction site - will be built in four phases and will consist of 450 condominiums, two hotels, a 350,000-square-foot retail center and 200,000 square feet of office space.

Indio officials expect to have an environmental impact report completed in three to four weeks, and construction could start on Polo Square's first phase by late 2007, City Manager Glenn Southard said.

Different demographic groups are starting to live in downtown areas, Southard said.

"It's hard to stereotype," he said. "Some of it is young people; some are baby boomers whose kids have left the house, the so-called empty nesters," he said. "It's a small percentage compared with single-family home sales, but it's growing."

Most people want to live downtown so they can avoid long commutes to work, said John McIlwain, senior fellow with the Urban Land Institute, a nonprofit in Washington, D.C.

Some places, like Paseo Colorado in Pasadena, have put lofts above retail malls, with great success.

"The trend toward living downtown is very real, and it's happening because people are tired of spending so much time sitting in traffic," he said. "And downtowns are bringing in more high-end retail, which is making [living downtown] more attractive. Those are the two trends that are spurring the downtown housing boom, and it's happening all over."

Cities have spent the last two decades trying to revitalize their downtowns, and for those cities all of that work is starting to pay off, McIlwain said.

"There aren't a lot of numbers because it's difficult to track," he said. "Everyone's definition of downtown is different, so the evidence is anecdotal. Just visit different cities and you see it. It's happening in Atlanta, Miami, Dallas, Denver, Chicago, and I see this lasting at least another five or 10 years. There are about 78 million baby boomers out there, and not all of them are going to retire to Phoenix or go live next to a golf course."

The main difference between those cities and Riverside and San Bernardino counties is the cost of land, Goldstein said

"You probably wouldn't build a three-level townhouse in some of those markets because the cost would be too high," he said. "So you aren't going to pay as much for land in the Inland Empire, but you aren't going to charge as high a price, either."

The trend is not likely to slow anytime soon, McIlwain said.

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