Majestic Realty's Fran Inman Opines On Both: Industrial Development And NFL's Return To LA

The Planning Report did an interview with Richard Ziman from Arden Realty in November and we asked him how Arden evaluates development opportunities in the L.A. metropolitan area. Let's direct the same question to you. How does Majestic evaluate development opportunities and how does L.A. rank?

First of all, our core products are industrial projects and we have been building them for over 50 years. Within our core market, our true strength has been in developing master planned business parks. We currently have more than 40 master-planned business parks throughout the United States - typically we acquire the land, develop, build, lease, and manage our projects. And we are portfolio builders, building and holding for the long term. In addition to our industrial projects, we have a number of office, retail and hospitality projects as well.

When we look at development opportunities, we understand our basic planning parameters. However, our company has a reputation for seeing an open window when others do not and we are not afraid of a difficult deal - whether it's environmental issues, zoning or some other challenges. In fact, complicated projects seem to be one of our strong suits and we continually push to explore new opportunities either within our core markets or in other forms of development.

This past year, we were fortunate to launch the Grand Crossing, a 400-acre business park in the City of Industry and we recently completed the 449,000 square foot Steelcase facility which opened last December. But frankly, there aren't a lot of 400-acre parcels in the Los Angeles area so we continue to be creative and resourceful here.

Recently, we have also focused on projects near major airports, similar to the old days in which we always wanted our industrial projects to have access by rail. We've found that airports are natural transportation hubs and our industrial projects often make a lot of sense around major airports. We have major projects near the airports in Atlanta, Denver and Las Vegas. In fact, this past year our largest projects included a 900,000 square foot building for Kellogg in Atlanta and an 865,000 square foot project in Las Vegas.

And will you share where those targets of opportunity might be today?

We continue to look at airport or other large land opportunities in key markets across the nation as well as in the Southern California region.

Let's focus in on downtown L.A.. Is Majestic at all interested in bringing a NFL football team back to the City?

We have felt all along that the NFL and Los Angeles belong together.

How might the process of attracting a team play itself out? In Washington, D.C., for example, they are looking to attract a baseball team and they are giving their planning department the challenge of coming up with two, three or four alternative sites for the city's leaders to choose from. What should be the process in L.A.?

That's hard to say because it's a challenge to get one of these huge projects accomplished. I realize that the city just had the CRA study optimal sites for the team, but to get a project like this completed, it's going to take energy and work for a variety of sources. Different cities have different models that have worked in accomplishing those goals, but it is yet to be determined how Los Angeles will proceed. It is largely a California problem-lack of public funding, environmental laws, and not having a team make it difficult. It is not only a L.A. problem, San Diego, San Francisco and Oakland have many of the same problems, only they currently have a team.

Is there a reasonable timeline within which the city and the NFL must accommodate?

Well, there was just an article in the Times around Super Bowl Sunday talking about the media market and the NFL and how strong a market it is. Clearly, Los Angeles has been right up there at the top of the list for additional NFL franchises. Houston got the last nod for the expansion team, but Los Angeles is a huge, valuable market. So, the value and the interest are there, but I don't think there's any arbitrary deadline where you have to have it done by a pre-determined date, other than the next TV contract. However, there is a lot of interest now and the NFL seems focused on the issue so it may happen sooner than expected.

Fran, SCAG recently launched the nation's largest and most ambitious growth visioning program for the region's six counties-a two-year process. In this issue of The Planning Report, we're concurrently running an interview with John Fregonese, the lead consultant of that effort. Do industrial developers and Majestic ever participate in like ‘big picture' planning exercises? Or, are the targets of economic opportunity so visible that there is no need to so engage?

Well, we try to participate. I actually went to SCAG's visioning conference at USC, but I don't think we participate at an extensive level. However, we do have an interest in planning for sustainable communities, because accommodating more growth will increase the need for more development-more residential, more businesses, retail and the warehouses to store their inventories.

Any planning lessons learned from Majestic's experience with the Cornfields?

Not really. We actually had an acceptable result. We would have preferred to develop the project because we believed that jobs were important for the area. However, we recognize the need for inner-city parks and we were glad to help facilitate that result. Since that time, we have worked on several projects that provide both jobs and recreational uses on the same site. If anything, maybe a combination of both on the Cornfield would have been best, but with the group that was against us, it was all or nothing.

What role does Majestic typically play in the planning of regional airport expansion efforts, i.e the debates over LAX growth, El Toro, Ontario, Palmdale or airports to the east?

We try to get involved upfront to help them develop properly and efficiently. It has been a win-win situation in other markets because frankly around the airports there are a lot of restrictions – by that I mean they don't want high density housing, they don't want a lot of people residing there, and we've found that our industrial products work well and make a lot of sense. From the business side, industrial development can be a huge catalyst as well.

Fran, the Los Angeles Area Chamber of Commerce has effectively revitalized itself this year and is looking for stronger leadership. What role will Majestic play in like civic and regional business institutions, whether it be the Chamber or educational institutions like USC?

We like to play an active role. Our owner, Ed Roski, Jr., sets a wonderful example and our key management likes to follow his lead by sincerely investing our time and talents to improve civic life in Los Angeles. Ed Roski is a trustee at USC, a Board of Trustee at Loyola-Marymount, and serves on the Board of Regents at Loyola High School. He also sits on the boards of the County Museum of Art and the California Science Center. John Semcken serves on the Executive Committee of the Greater LA Chamber and the Central City Association as well as the Greater YMCA. This spirit of civic engagement spills over to our foundation and to our business development. We try to take an active role in the Chamber and other organizations throughout in all our key markets. We worked very closely with Rusty Hammer and Carol Schatz last summer in the effort against secession. Key issues now are the reform of the business taxes and we are working to encourage the participation of local businesses in the neighborhood councils.

Changing gears, describe for our readers the genesis and goals of the Majestic Foundation.

Our Majestic Foundation was launched last summer, which is really the formalization of our corporate giving program. We have a strong history of giving that started with the late Ed Roski, Sr. and has continued under Ed Roski, Jr.. But, last year, we decided to formalize the company's efforts by establishing our separate 501(c) 3 foundation. We're probably swimming upstream a little bit-not many people are launching foundations these days. But, we think it makes good moral sense, as well as good business sense.

Elaborate on the focus of the Foundation? What goals have you established for it; what specific targets of opportunity have been identified?

The Foundation has five key investment areas: youth, education, family, violence prevention, and health. These broad targets came from our corporate history of giving. Also, our giving programs follow along our geographic markets, so we have area planning teams in Atlanta, Denver, Los Angeles, and Las Vegas. Each planning team gets to prioritize and allocate foundation resources in their area. As you can imagine once you open a foundation, the requests go around the block three times because, reportedly, Los Angeles is the poverty capital of the world. So, we figured out a funding strategy and developed a funding pro formas that assesses each of our new developments. Based on our current portfolio, we can reasonably expect to fund the Majestic Foundation at least a million dollars a year. We also have matching funds from Ed Roski, Jr. and Dave Wheeler, our president.

Our very first project was a partnership with the Wells Fargo Foundation, putting together the Queens of Care Parish Nurse Program at the Pico-Union Red Shield. We've also sponsored a new coalition of inner city youth centers - the Los Angeles Youth Leadership Council. We work with high school leadership groups to encourage kids to get involved in their communities. To that end, we just started a program on gang and violence prevention with the leadership students from nine different youth centers. Gangs and violence prevention are hot topics now with law enforcement, but we believe that the real solution lies in working together to build sustainable neighborhoods. To that end, we are working with a number of existing youth centers and helping to expand their positive impact in the neighborhoods.

We're pretty excited and hope to make a difference.