Clock ticking on strategy for First National Tower

By Steve Lackmeyer

Published: March 25, 2008

After sending out chocolates to tenants and bathing First National Tower in red lights for Valentine's Day, owners of the downtown landmark were hoping to win over any skeptics that are genuine in their desire to bring the property back to its lost grandeur.

The family-owned Milbank Real Estate has been battling ghosts of former owners against years of negligence by former owners who made big promises that were never delivered.

To date, the Los Angeles owners have spent $1.5 million on basics that can't be seen by the naked eye — new fire alarm and sprinkler systems, roof and electrical repairs. And now they are launching into their next round of renovations — a $1.5 million renovation of the first floor retail arcade.

The improvements outshine anything done by the last four owners, so why are some tenants less than impressed?

Let's start with the recent "groundbreaking,” which consisted of Lt. Gov. Jari Askins using a jackhammer to break up the marble floor in the original tower. M. Aaron Yashouafar, chief executive of Milbank, proudly announced that Milbank, unlike its predecessors, was determined to deliver on its promises. Wasn't he doing just that?

Several tenants privately say they would have preferred that Milbank instead start replacing broken windows and adding restrooms to each floor (currently they are between floors — a throwback to the building's 1931 construction).

And why, tenants asked, was this marble floor being torn up? John Hefner, 55, is a third generation tenant who is one of the few tenants willing to publicly say he's heard enough promises.

"What are the owners thinking?” Hefner asks. "The marble floor is part of that "A” quality. Why would the owners break up big squares of marble?”

Hefner and several other tenants I've spoken to worry whether the floor's destruction is evidence that the owners have no regard for the tower's history. They previously were upset when an attempt to increase rent on the tower's original barbershop ended with the tenants moving their booths elsewhere. A year later, the barbershop — still adorned with black and white Art Deco tile and fixtures — stands dark and empty.

The barbershop, Hefner says, is evidence that the current owners have too much in common with successors who failed to retain the Beacon Club on the top floor and the Post Office in the retail arcade.

All of this leaves Yashouafar a bit chagrined. After all he's spending money to restore First National as a first-class office tower. And while he admits he doesn't understand why people might consider the barbershop to be a historic space, he promises he's committed to protecting the tower's Great Banking Hall.

He promises more renovations will follow — including window repairs, new elevator cabs and renovated common areas on each floor. His architect, Don Beck, meanwhile, has provided original architectural drawings that show the tower lobby floor initially was designed to match that of the Great Banking Hall.

The new floor, Beck said, will match those original drawings — a detail not made clear to tenants or at the groundbreaking.

But will these responses placate all the tenants? As the improvements continue, the owners have sent out new leases with rent increases and some tenants, burned by broken promises by previous owners, are not thrilled with the idea of paying Class A rent rates based on yet more promises.

The clock continues to tick. In a few years, a new landmark skyscraper will be home to Devon Energy, creating vacancies at newer downtown properties and First National itself. Only then will we learn whether Milbank's strategy of raising rents and phasing in improvements will have succeeded in ending years of decline at First National — or only hastened even tougher times ahead.

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