Development in the Playa Vista territory – a tiny stretch of coveted property near the Pacific Ocean in West Los Angeles – has met with significant difficulties over the years, and labor leaders often complained that when there was work, too much of it went to non-union contractors. But Horizons, a 100-percent union project, comes at an opportune time.
"This project has been an anchor in the midst of the economic turndown we've seen in the construction industry," says Richard Slawson, executive secretary of the LA/OC Building Trades Council. "Funded with union pension money, the project has not only created hundreds of good-paying construction jobs, but has also provided a great return on the investment to all our pension contributors – much better than what we've seen in the stock market."
A joint venture of Lincoln Properties Company and ASB Real Estate Investments, with additional funding from Ullico, Horizons is being built under a 100-percent union labor agreement.
"Honestly," adds Rusty Roten, business rep for IBEW 11, in whose territory the project falls, "it's refreshing to see this, because originally Playa Vista started out union, but then it started to go all non-union." This time around, says Roten, it's turned out well for all the Building Trades – thanks in part to "the hard collaborative work of the building trades and IBEW 11 Business Manager, Marvin Kropke," who helped turn the project around, he says.
"We estimate that by the time it's completed we'll have created over 1,500 full-year union construction jobs, and over 3 million man hours of union construction work," says Ken Meister, a Ullico representative.
And Phase I, which consists of two five-story buildings and a five-level parking garage, has already been leased. In a massive deal with Fox Studios, developers signed a 12-year lease agreement with the entertainment giant, which is not known for being especially pro-union.
But the union clause was built into the contract, so the developers hired all union labor – including O'Bryant Electrical for tenant improvement, Morrow Meadows for sounds and communication, and RMS for alarm systems and other work.
In fact, the 421,000 square feet of Class A office space – the largest deal in the region in more than a decade at a reported $350 million over the 12-year term – Horizon will become the new corporate headquarters for Fox Interactive Media, which includes subsidiaries like MySpace. The company plans to move more than 2,000 of its employees to Horizons by June 2009.
"Our electrical contractor got up to almost 60 guys on the first phase at one point," says Roten. "We did real well, did some overtime, got the project done."
Phase II will include two more five-story office buildings, adding another 483,000 square feet of office space – and bringing the total to nearly 1 million square feet of high-tech, state-of-the-art facilities.
But due to current economic conditions, says Roten, developers scaled back by the time they reached Phase II, perhaps fearing extended vacancies. "They're just going to put sleeves in, a minimal shell – blackouts and electrical hook-ups (until a tenant comes in)," he says.
About Playa Vista
Situated between the Westchester Bluffs and Ballona Creek, and south of Marina Del Rey, Playa Vista is a new mixed-use community under construction in West Los Angeles – and the first such development in the area for more than 50 years. Home to Howard Hughes Aircraft Company for most of the 20th century, the territory was pegged for commercial development since the late 1970s but hit legal obstacles along the way.
Eventually, a modified agreement between planners and the Trust for Public Land emerged that aims to preserve the Ballona wetlands, with more than 70 percent of Playa Vista's 1,087 acres dedicated to open space – including several parks, six of which have already been built.
Other standout and forthcoming developments include the Los Angeles Clippers training facility – which will be built with union labor, the Playa Vista branch of the L.A. public library, Rick Caruso's "Village" entertainment complex, and community amenities. Also in the works, are plans for discounted housing for many working men and women – such as firemen, teachers and nurses.
With direct access to LAX, the 90 and the 405 freeways – and the Pacific Ocean 2 miles away – the Playa Vista enclave is a coveted parcel of westside space that developers hope will become a lucrative mixed-use center.
About the Developers
ASB is a union pension fund advisor with more than $3.1 billion in gross assets in 87 properties throughout 28 major U.S. markets. Through reliable local partnerships, the company invests union pension funds in 100-percent union developments to ensure the highest quality of construction and longevity. ASB has partnered with Lincoln Properties Company on several previous developments.
Founded by unions more than 85 years ago to create life insurance for members, Ullico is now the nation's only fully-unionized provider of multi-line insurance, financial services and administrative products. Ullico also sponsors union investment in construction jobs that create thousands of jobs for building trades members across the country.
Despite the downturn, says Meister, the company is pushing forward with construction loans. "We're loaning on 70-percent on the value," he says.
And while much of the equity money that would normally go into a project is no longer available, accounting for a marked slowdown, Meister says that the company's mortgage fund, founded 40 years ago, has $3.4 billion – 100 percent of which is currently invested.