More than a third of the approximately 110 residential projects proposed for downtown -- including the 50-story Zen tower on 3rd and Hill streets, the Mill Street Lofts in the industrial district, the multitower Metropolis off the 110 Freeway and the conversion of the former Herald Examiner building -- have been delayed or put on hold amid the rocky real estate market.
Both projects have pushed back their start dates in recent months as developers sought capital and construction loans in an increasingly difficult market and negotiated the various government approvals needed to begin construction.
Grand Avenue officials announced Friday that one of the project's original investors -- the California Public Employees' Retirement System -- was pulling out and that Istithmar, a fund controlled by the royal family of Dubai, was investing about $75 million in the $3-billion development on Bunker Hill.
The foreign investment, officials said, is designed to help jump-start the project by providing the capital needed for Grand Avenue to obtain a massive construction loan. Such loans have been harder to get amid the current real estate slump.
The fate of both projects is increasingly being seen as a tipping point for the future of downtown.
Though the area has seen an influx of loft dwellers over the last decade -- the population has doubled to 34,000 -- many urban planners see it as a work still very much in progress.
Even the most ardent of downtown supporters agree that the area has not yet reached a critical mass -- in part because most of downtown's rejuvenation is occurring in pockets rather than across the entire zone.
New downtown dwellers still complain about a lack of shopping and that for every newly vibrant street, there are others that still seem dead. The high-end retailers that downtown boosters would love to have in the city center have kicked the tires but still not agreed to put stores there.
Grand Avenue and Park Fifth are seen as crucial because they would bring a new kind of retail -- upscale hotels, gourmet markets, fancy gyms and boutiques that are usually found in high-end malls -- to downtown.
The flagship projects also are going after a segment of the buying market that so far has resisted moving downtown in big numbers: wealthy condo buyers who would be attracted to the architectural significance of their buildings as well as the high-end amenities they offer. Such people would include empty nesters moving in from high-end suburbs as well as people seeking second homes.
"Imagine you are a hedge fund manager," said Erika Nelson, vice president of marketing for Park Fifth. "Instead of building something in Pasadena or in the hills, you can have something to your tastes."
Experts say the two developments also would be "destinations" that could draw people into the city center.
"They add to the imagery of downtown," said Anastasia Loukaitou-Sideris, chairwoman of the Urban Planning Department at UCLA. "They put downtown on the map for the larger area."
Officials at Park Fifth and Grand Avenue insist that the delays will be brief and that the developers are on track.
The $2-billion Grand Avenue plan calls for building shops, condo towers and a boutique hotel -- as well as a civic park -- on city and county land near the Walt Disney Concert Hall downtown.
The project, now being called "the Grand" by its developer, was originally set to begin construction last fall but was delayed -- and then delayed again. Groundbreaking now is projected for this summer.
Bill Witte, chief executive of Related California, the developer, said the delays in starting construction were more a result of the time it took to develop designs with Gehry and get approvals from government agencies for the developmentthan of the credit crunch.