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Los Angeles Business Journal: Will Sleepy Larchmont Wake Up as Next Robertson?

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    Passing on an article from this week s Los Angeles Business Journal: Will Sleepy Larchmont Wake Up as Next Robertson? By DANIEL MILLER - 6/23/2008 Los Angeles
    Message 1 of 1 , Jun 25, 2008
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      Passing on an article from this week's Los Angeles Business Journal:

      Will Sleepy Larchmont Wake Up as Next Robertson?

      By DANIEL MILLER - 6/23/2008

      Los Angeles Business Journal Staff

      When real estate investor Albert Mizrahi paid $23 million for four
      buildings on sleepy Larchmont Boulevard last year, longtime retailers
      and residents began to worry.

      They wondered if Mizrahi, who took months to assemble the 20,000-
      square-foot portfolio, would jack up rents and drive away longtime
      businesses, possibly changing the character of the quaint retail
      district by adding more national franchises as tenants.

      So far this much is clear: Rents are up in Larchmont Village and
      several of Mizrahi's tenants have already closed shop, with a few
      more likely to leave the shopping district between First Street and
      Beverly Boulevard.

      What's less clear: whether the nearly 90-year-old Hancock Park-area
      neighborhood is headed for wholesale changes, or if it's simply in
      line for more of the modernization it has weathered in the past.

      "The retail needs to be updated," said Mizrahi, who offers no
      apologies for renting his new properties for $10 to $15 per square
      foot, about double the rest of the village. "They are afraid to
      change – any change whatsoever."
      Of course, in L.A., business owners have some reason to wonder when a
      shopping district appears on the cusp of change.

      Not far away, on Robertson Boulevard, what was once a quaint
      neighborhood retail district with reasonable rents has been
      transformed in a chi-chi hangout for celebrities, replete with luxury
      boutiques, tourists and paparazzi.

      However, if Larchmont is headed in that direction, the changes will
      not come easily.

      Mizrahi's efforts to give the street a facelift come as the city is
      considering a zoning regulation that would trim Larchmont Village's
      45-foot building height limit to 35 feet and limit street frontage
      for each business to 50 feet. Such limitations wouldn't prevent
      national luxury retailers from opening on the street, but they might
      discourage some.

      On June 19, the Los Angeles Department of City Planning held a public
      meeting to discuss the regulation, introduced by Los Angeles City
      Councilman Tom LaBonge last fall. The proposal could come before the
      City Council for a vote by year's end.

      "I am proposing certain restrictions that would preserve the
      character of the street, which is wonderful," said LaBonge, a regular
      on the street who is on a first-name basis with many of the business
      owners. "Larchmont is the model street of Los Angeles for local
      retail."


      Concerns heightened

      In fact, it was not Mizrahi's purchases that spurred the community to
      reassess its retail character or advocate the zone change. Instead,
      it was last fall's shuttering of La Luna Ristorante, which closed
      after a dispute with its landlord about a rent increase. There are
      only 75 storefronts on the blocks-long district.

      "At that point the local community decided they needed to pay more
      attention to the character of the street," said John Winther, manager
      of Coldwell Banker's two Hancock Park offices and president of the
      Larchmont Boulevard Association, which represents business owners.

      That concern was only heightened when Larchmont Hardware, Larchmont
      Village Jewelers and Melissa Levinson Antiques closed their shops
      after Mizrahi purchased their buildings.

      And more departures are on the way. Mizrahi said that two tenants at
      his 123 N. Larchmont Blvd. building – Silver Lining, a picture
      framer, and Floret, a florist – cannot afford his new rental rates
      and will leave.

      The owners of both businesses declined to comment.

      "The neighborhood has always been good to businesses along here,"
      said Linda Lennon, co-owner of Village Heights jewelry and gift
      store, who does not rent from Mizrahi. "The neighbors support the
      village and it is not the greatest economy but it's pretty steady. If
      Mr. Mizrahi thinks it's going to be another Robertson Boulevard or
      Grove I don't see anyone being comfortable with that."

      The stretch of Robertson Boulevard between Third Street and Beverly
      Boulevard was long a haven for hip, up-and-coming clothing designers.
      But in the last few years, luxury retail chains such as Chanel have
      opened. They are often patronized by young Hollywood starlets like
      Lindsay Lohan, followed by paparazzi.

      The radical changes have allowed landlords to raise rents
      dramatically, which has forced out many locals tenants over the last
      two years. Robertson landlords even buy out the leases of their
      tenants so that the retail space can be leased to a national tenant
      for a much higher price. For example, in February the Horn women's
      boutique closed after the owner, Susanne Zenker, sold her lease back
      to the landlord. The landlord has leased the space to eye wear chain
      Luxottica. On Robertson, rental rates are in the $25-$28 range, per
      square foot per month.

      Mizrahi, who also owns property in Santa Monica, said that despite
      the departures on Larchmont, he does not envision transforming the
      area into another Robertson. He called Larchmont perhaps the best
      retail district in Los Angeles and he "tried to buy as much as (he)
      could." But he added the street doesn't have a good retail mix, with
      too many coffee houses and children's stores.

      Mizrahi said he'd like to see more stores that cater to adults and
      freely admits he would lease space to national tenants – but
      maintains they would need to come up with concepts that jibe with
      Larchmont's small-town charms.

      "I saw it like a diamond in the rough, where it just needed a little
      bit of shining up," said Mizrahi, who has leased space to Wachovia
      Corp. for a bank branch that will open this fall. It will be the
      fourth national bank in the district, providing little comfort to
      critics.

      But Mizrahi has defied expectations, telling the Business Journal he
      backs the proposed regulation changes – which local business owners
      uniformly support. Still, there is a suspicion among some that he's
      likely only paying lip service to calm fears.

      "I was surprised, but not necessarily encouraged," said Edie Frere,
      owner of Landis Gifts & Stationery, who lives in the area and grew up
      nearby. "For a guy who has rented to a bank I assumed he'd want to
      rent big spaces to big people."

      Indeed, the regulation changes would limit Mizrahi's ability to
      remodel his properties at 107, 123, 150 and 227 N. Larchmont Blvd.
      into multistory retail destinations. But that doesn't mean he
      couldn't bring in smaller national boutiques.

      "Gucci and Pucci. That's not what this neighborhood is about," said
      Frere, who does not rent from Mizrahi but said she couldn't afford
      his asking rents.


      Blue blood

      On a recent afternoon, children rode scooters slowly down the
      sidewalk in Larchmont Village while diners waited to be seated
      outside several pleasant cafes.

      Winther said the street is reminiscent of idyllic Mayberry from "The
      Andy Griffith Show" fame. Others say the street resembles the
      commercial district of a picturesque New England town – fitting for
      an area that is adjacent to Hancock Park, one of Los Angeles' older
      neighborhoods.

      But Mizrahi and his Charles Dunn Co. Inc. leasing agents appear to
      disagree with what the local community wants out of the shopping
      district. Mizrahi said locals "aren't leaving enough money on that
      street," adding that the street needs to support the community so
      that locals don't go "somewhere like the Beverly Center because you
      can't buy a belt" on Larchmont.

      Charles Dunn leasing agent David Aschkenasy, who grew up nearby on
      June Street, said that he remembers about 10 to 15 years ago when
      several national retailers came to the street. At first, locals were
      unhappy with the new Blockbuster Video, Starbucks and Jamba Juice,
      among other businesses. But locals came to enjoy the new shops.

      "People settled down and started using the products," he said. "While
      people are scared of the unknown right now, I think they will be
      pleasantly surprised."

      Meanwhile, Mizrahi is making upgrades to his buildings as his agents
      seek out new tenants. He said he'd like to bring a restaurant into
      the 3,000-square-foot space at 107 North Larchmont, an attractive old
      home that formerly housed the jewelry store and antique shop.

      He is also upgrading the structure of the 150 North Larchmont
      building, which used to house the hardware store. Mizrahi said he
      bought four residential tenants out of their leases on the second
      floor of the building and is converting those units into office space.

      In fact, the story of the close of 82-year-old Larchmont Hardware on
      Dec. 31 encapsulates many of the issues at hand. It was a place that
      Frere said she shopped at least twice a week.

      But Mizrahi said that the store was paying "way below market rent"
      and it wasn't making money. He said store owner Russ Wilson was
      offered a smaller space but decided to close up and focus on running
      his West Hollywood hardware shop.

      "The community loved the store and supported it, but they were also
      going to Home Depot," Mizrahi said.


      Los Angeles Business Journal, Copyright © 2008, All Rights Reserved.
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