Forget the graffiti. LA's most notorious skyscrapers have a much bigger problem

He described Oceanwide in its current state as “a carcass of an overscale development.”

Witte was behind downtown L.A.’s most recent mega-development — the Grand LA, designed by architect Frank Gehry. The complex on Bunker Hill contains 1.2 million square feet and cost $1 billion to build. In addition to high-rise apartment and hotel towers, it has 176,000 square feet of retail space that includes chef-driven restaurants.

More tenants have agreed to open there this year, but it still has ample empty retail space. The challenge of finding tenants would also be significant at Oceanwide Plaza, which has more than 160,000 square feet of retail space that would need to be filled with stores and restaurants or some other use.

The prospect of leasing that much space is daunting at a time when many shopping malls are suffering. Prospective buyers have reportedly considered a variety of solutions for Oceanwide’s shopping center, including turning it into a cosmetic surgery center.

Witte said he calculated before the pandemic that Oceanwide’s retail space could be converted to offices for rent, as has been done at other Los Angeles malls such as the Sherman Oaks Galleria and the Westside Pavilion. But with downtown office vacancy climbing, that option no longer makes sense, he said.

Morkun pursued a novel solution for Oceanwide’s retail conundrum: a casino. He envisioned the casino as one of a handful in the neighborhood that would form a small gaming district and perhaps help other real estate projects nearby get built.

“I saw how the Lakers could be part of an ownership group of the casino and have it branded and named Showtime Casino,” he said. “It’s just so natural right across from the arena. The sticky wicket is, how do you get a gambling license?”

Morkun researched how other cities such as Detroit have managed to bring in casinos in recent decades, but couldn’t crack California restrictions that limit gaming operations to the territories of federally recognized Native American tribes. The Gabrielino-Tongva Indian Tribe, whose ancestral lands include the Los Angeles Basin, is not recognized by the federal government, Morkun learned.

On the residential side of the equation, the units would have to be rented as apartments, not sold as condos, said developer and landlord Scott Dobbins, who oversaw construction of the $500-million Circa residential high-rise next to Oceanwide Plaza.

Condo owners often sue developers, alleging construction defects in their units or buildings. The long pause in construction at Oceanwide Plaza increases the risk of such claims and liability concerns manyfold, Dobbins said.

“I’m afraid that with a project that’s been sitting there for five years, you would get sued by so many owners,” he said. “Nobody is going to give you an insurance policy to protect you” from liability lawsuits.

Dobbins’ company, Hankey Investment Co., has been interested in acquiring the stalled development for years at what it considers the right price, “which has basically been zero,” he said.

Industry observers have put the price of knocking down Oceanwide Plaza at as much as $100 million, because it would be a painstaking slog. And any demolition, if it happened, could be historic in the city of Los Angeles. Real estate data provider CoStar reported that the city building and safety department said it doesn’t have records of any buildings demolished exceeding Oceanwide Plaza’s height and size.

A dramatic, explosive demolition of the sort used to level old Las Vegas casinos would be out of the question because it’s too close to other structures, demolition expert Ken TerBorch said.

It would have to be done gradually from the top down, said TerBorch, director of projects for Penhall Co. in Burbank, a construction contractor that does demolition.

“You’d get little excavators and little Bobcats and you’d remove a floor at a time,” he said, breaking it into pieces small enough to drop down a chute through an elevator shaft or some other opening. When the structures got low enough, large-scale excavators could be brought in to finish the job.