Movers & Shakers - immigrants revive dying neighborhoods

Reason, Dec, 2000 by Joel Kotkin

How immigrants are reviving neighborhoods given up for dead

For decades the industrial area just east of downtown Los Angeles was an economic wreck, a 15-square-block area inhabited largely by pre--World War II derelict buildings. Yet now the area comes to life every morning, full of talk of toys in various South China dialects, in Vietnamese, in Korean, in Farsi, in Spanish, and in the myriad other commercial languages of the central city.

The district now known as Toytown represents a remarkable turnaround of the kind of archaic industrial area that has fallen into disuse all across the country. A combination of largely immigrant entrepreneurship and the fostering of a specialized commercial district has created a bustling marketplace that employs over 4,000 people, boasts revenues estimated at roughly $500 million a year, and controls the distribution of roughly 60 percent of the $12 billion in toys sold to American retailers.

"In December we have about the worst traffic problem in downtown," proudly asserts Charlie Woo, a 47-year-old immigrant who arrived in 1968 from Hong Kong and is widely considered the district's founding father. During the holiday season, thousands of retail customers, mostly Latino, come down to the district seeking cut-rate toys, dolls, and action figures, including dubious knockoffs of better-known brands. For much of the rest of the year, the district sustains itself as a global wholesale center for customers from Latin America and Mexico, which represent nearly half the area's shipments, as well as buyers from throughout the United States.

Few in L.A.'s business world, City Hall, or the Community Redevelopment Agency paid much attention when Woo started his family's first toy wholesaling business in 1979. "When Toy-town started, the GRA didn't even know about it," recalls Don Spivack, now the agency's deputy administrator. "It happened on its own. It was a dead warehouse district."

How dead? Dave Zoraster, an appraiser at GB Richard Ellis, estimates that in the mid- 1970s land values in the area--then known only as Central City East--stood at $2.75 a square foot, a fraction of the over $100 a square foot the same property commands today. Vacancy rates, now in the single digits, then hovered at around 50 percent. For the most part, Spivack recalls, development officials saw the district as a convenient place to cluster the low-income, largely transient population a safe distance from the city's new sparkling high-rises nearby.

To Charlie Woo, then working on a Ph.D. in physics at UCLA, the low land costs in the area presented an enormous opportunity. Purchasing his first building for a mere $140,000, Woo saw the downtown location as a cheap central locale for wholesaling and distributing the billions of dollars in toys unpacked at the massive twin ports of Long Beach and Los Angeles, the nation's dominant hub for U.S.-Asia trade and the world's third-largest container port. Woo's guanxi, or connections, helped him establish close relationships with scores of toy manufacturers in Asia, where the vast majority of the nation's toys are produced. The large volume of toys he imported then allowed him to take a 20 percent margin, compared with the 40 to 50 percent margins sought by the traditional small toy wholesalers. Today Woo and his family own 10 buildings, with roughly 70 tenants, in the area; their distribution company, Megatoys, has annual sales in excess of $30 million.

Toytown's success also has contributed to a broader growth in toy-related activity in Southern California. The region--home to Mattel, the world's largest toy maker--has spawned hundreds of smaller toy-making firms, design firms, and distribution firms, some originally located in Toytown but now residing in sleek modern industrial parks just outside the central core. Other spin-offs, including a new toy design department at the Otis College of Art and Design in West Los Angeles and the Toy Association of Southern California, have worked to secure the region's role as a major industry hub.

Woo envisions Toytown as a retail center. But whatever its future, the district's continuing success stands as testament to the ability of immigrant entrepreneurs and specialized industrial districts to turn even the most destitute urban neighborhoods around. Woo notes: "The future of Toytown will be as a gathering point for anyone interested in toys. Designers and buyers will come to see what's selling, what the customer wants. The industry will grow all over, but this place will remain ground zero."

For much of the 19th and early 20th centuries, immigrants filled and often dominated American cities. With the curtailment of immigration in the 1920s, this flow was dramatically reduced, and urban areas began to stiffer demographic stagnation, and in some places rapid decline. Only after 1965, when immigration laws were reformed, did newcomers return in large numbers, once again transforming many of the nation's cities.

This was critical, because despite the movement of young professionals and others into the urban core, native-born Americans continued, on balance, to flee the cities in the 1990s. Only two of the nation's 10 largest metropolitan areas, Houston and Dallas, gained domestic migrants in the decade. As over 2.5 million native-born Americans fled the nation's densest cities, over 2.3 million immigrants came in.