Here’s why a busy downtown Honda dealership is moving to South L.A. near the Coliseum

One of the country’s busiest Honda sellers will move from downtown’s auto row to South Los Angeles as billions of dollars worth of development flow to blocks near the historic Memorial Coliseum — and online car shopping makes dealership locations less significant.

Honda of Downtown Los Angeles is set to break ground Thursday on a once-blighted corner of Martin Luther King Jr. Boulevard to put up an unusual five-story dealership valued at more than $30 million nearly three miles from its current location.

The existing dealership across Figueroa Street from the Los Angeles Convention Center is getting cramped as sales and leases have topped 500 new and used cars per month, putting it in the top 20 of the more than 1,000 Honda dealers in the country, said owner Joe Shuster.

“With the advent of the Internet, many customers buy almost entirely online,” he said. “You can be off the beaten path and do exceptionally well. I don’t know if big, horizontal dealerships make sense anymore.”

Still, at 210,000 square feet, it will be one of the biggest dealership structures in the country, according to architect Walt Wagner of Oceanside, who specializes in designing auto dealerships and drew the plans for Honda.

And it will join other large-scale developments in the neighborhood.

Substantial projects planned or underway include the $350-million Banc of California Stadium for professional soccer, “Star Wars” creator George Lucas’s $1-billion Museum of Narrative Art and the $700-million USC Village residential and retail complex.

But the timing for Honda of Downtown Los Angeles’ expansion is atypical, auto industry analyst Matt DeLorenzo said, because the recent boom in car sales that followed the Great Recession appears to be ending.

After three straight years when dealers sold more than 17 million cars nationwide, April sales were down 5% compared with the same month a year earlier. Honda reported U.S. sales were down 7% for its Honda-branded vehicles and Acura luxury division.

“Now that the market has peaked … you may see some manufacturers trying to cut back on the number of dealerships,” said DeLorenzo, managing editor of Kelly Blue Book.

The dealership’s decision to expand “is a reflection more of what is happening in downtown Los Angeles as opposed to any industry trends,” DeLorenzo said.

Downtown has been on a sustained building boom that is now flowing south to the blocks around USC and the Coliseum, according to real estate broker Onno Zwaneveld of CBRE Group.

“It’s just a natural progression of what we’re seeing downtown,” he said, adding that the coming sports and museum attractions should inspire more investments in the area.

Other major projects in the works south of the 10 freeway include the planned $1.2-billion Reef Project residential, hotel and retail complex on Broadway at Washington Boulevard.

City officials also are reviewing plans for the Fig, a proposed mixed-use project with apartments, student housing, shops, restaurants and a 21-story hotel. If approved, it will rise on the 3900 block of Figueroa Street near the new Honda dealership.

Honda will leave a building erected in 1919 as a Dodge dealership that was later Kaiser Brothers Oldsmobile. Today, the facility at Figueroa and Venice Boulevard is not only busy, Shuster said, but sometimes difficult for customers to visit due to traffic from events at the convention center and Staples Center.

The coming vertical dealership will have customer parking and the new-car showroom on the ground level. The second floor will house business offices, the customer lounge and additional guest parking. Cars will be washed and detailed on the third floor. The fourth floor will be the service and parts departments and the fifth floor and roof will be parking for inventory.

“We are used to limited space,” Shuster said. “Having everything under one roof will make us more nimble.”

The exterior will include a mural, green screens with plant life and two large plasma video screens to show advertising and announcements. Solar panels will be installed on the roof to increase energy efficiency.

A typical dealer selling as many cars as Honda of Downtown Los Angeles does would have a building less than a third that size costing about $6 million and served by acres of surface parking, said Wagner, the architect.

“The economics of this are a huge challenge,” he said of the move.

Shuster said he expects to move 6,000 cars this year and that the new location will support more business when it opens in about a year.

“Most of our customers and employees live closer to the Coliseum and the surrounding communities of USC,” he said. “We feel like we are gaining opportunity by going south.”

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Twitter: @rogervincent

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