Tuesday, October 25, 2016

Pay Up Or Move Out: Echo Park and Silver Lake business owners have few options as rents jump



From corner groceries in Echo Park to hair salons in Silver Lake, many small business owners have either moved out, closed down or paid up as rents have spiked. Since the city’s rent control laws don’t apply to commercial space, business tenants without a lease are at the mercy of landlords, who can raise the rent as much as they want to take advantage of gentrifying shopping and commercial strips.

“I don’t know what you can do for the independent retailer,” said Living Room owner Steve Melendrez, who plans to move his Silver Lake furniture store to Venice before his rent jumps to an estimated $16,000 a month.

The Eastsider spoke to some business owners who recently had to relocate to find out they handled their moves:

Dust Muffin

Dust Muffin relocated into the storefront left behind by Sumi’s

In April, Kerry Vitiello, Diana Jacobs and James Clark moved their gift dispensary and home decor shop several blocks down Sunset Boulevard, claiming the spot of another small business – Sumi’s – that had just moved from Silver Lake to Los Feliz.

They had to move after their building switched ownership months before, and their space was let to the higher-end French clothing line A.P.C. Vitiello saw the change coming and, as she searched for any vacancies in the area, she tried to keep in mind her would-be neighbors at each location.

“No one’s going to go to a check cashing place next door and spend the money that they didn’t already have on a $30 candle (at your store),” she said.

For Vitiello, having a moving sale and staying calm helped her get through the process, especially when the shop had to stay closed for a month – something she would never recommend to anyone else.

She concentrated on the positives that come with a new start. The renovation took thousands of dollars and eight samples of mint green paint before she settled on “mother nature,” “verde” and a third color she can’t remember.

“It’s kind of a cleansing when you move, going through all your stuff,” she said. “You learn what you wanted and what you didn’t.”

Flounce Vintage


Lisa Gerstein pictured in her former Echo Park storefront

The Flounce Vintage “microbusiness” stayed in Echo Park for 12 years until owner Lisa Gerstein reopened a few months ago on Virgil Avenue in East Hollywood. Now, Gerstein’s collection of vintage dresses, apparel and accessories hangs in several racks on silky plush hangers in a store that used to sell kids’ toys.

“It’s become very clear to me that you only have control over your business if you own the building,” Gerstein said.

Gerstein managed to transfer her entire shop in three days to the new location. At the time, she debated whether she should even re-open. She thought about moving to Vermont and living with a good friend or selling all her items online.

“It’s hard moving out of a place that you felt so connected to, which is weird because I don’t even live in Echo Park,” she said.

She said she’s learned the importance of “knowing your demographic” when choosing a new place and of understanding your neighborhood. The latter in particular pushed her to start searching for store vacancies early on when she sensed that commercial real estate prices were going to spike.

“The writing on the wall is that rent is going to go up,” Gerstein said.

While some business owners prefer short-term leases to give them flexibility, negotiating a long-term lease protects owners from sudden or unexpected rent hikes, said David Bramante of BRE Investment, a real-estate sales and property-management group.

“Unless you have a long-term lease or a good relationship with the (building’s) owner, it’s very hard to stay (in your shop,)” he said.

Amanda Schallert is a fourth-year UCLA student and the news editor at the Daily Bruin.

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  1. It sucks that rentiers can sit on a building collecting rents, paying taxes from 1979, have the surrounding community build the infrastructure and community that brings value to their building – and then extract that increased value out of people and take it wherever they like. That just doesn’t seem right – everyone doing actual work pays a landlord who has the option of doing no work other than cashing checks.

    Comrades! We must mobilize against the rentiers!

    • The best way to stick it to rentiers is to become an owner.
      Mucking with Prop 13 might help, though I could see repealing or modifying Prop 13 for commercial property as potentially having a negative impact on rents (ie might increase).

      • The rents are going to go up anyway.
        Who knows if the buildings taxes go up each year for sure?
        If they don’t and the landlords of the buildings just profit on increased rents then there is a real problem.
        I would suggest selling your products online. The market is greater and you are not paying off some greedy landlords mortgage.
        I live in Silver Lake and my rent has consistently gone up 3 to 5 percent. It is pure greed.
        I have a slum lord and no rent control.
        It is a sign of the times.
        I can’t wait to move out of Silver Lake.
        If you rent a retail space here you are just working for the landlords. Don’t do it!
        This areas housing prices went from 250000 to one million range. It is crazy.
        Give it 2 years and the properties will drop after the water shortage hits and the stock market crashes because of no easy money.
        Good luck!

        • It’s my opinion, that if you’re continually paying exorbitant rents, especially if they are above the recommended percentage of your income… then you are part of the problem.

          Rents are high because there are people willing to pay the rents.

          It’s all part of the natural selection process.

        • Real estate is global. Your landlord is probably some REIT or private equity. There are fewer mom and pop landlords such as myself. Many of us understand the value that these people bring to our properties while others don’t.

        • Couldn’t agree more. I’m also a landlord not willing to price out good tenants who have also been good caretakers, neighbors, and contributors to the community. They literally do increase the value of mine and surrounding property. The big picture(?).

    • ubrayj02, admit it, you’re a communist……

      • We must throw off the shackles of the ownership class … umm … except for the people who make the stuff I like and .. uh … yeah … I want a cut too.

        Sort of a half-hearted bolshevik. My ideas will grow more radical the more I can live without having to rent my life from someone or something else.

        You gotta admit that treating real estate like a commodity (like corn or pork bellies) is not a just system. Speculation in sugar will shift buyers to corn syrup, speculation in real estate will destroy livelihoods and tear apart communities that don’t have title documents in their name.

        The more I think about it, the more I like the business model underlying the LA Eco Village – a limited equity trust. You buy into a cooperative and can sell your stake only for what you paid for it (plus something extra if you improved it materially).

    • I’m landlord and I agree. The problem is that real estate today is global. You have REITs, private equity, and foreign investors buying real estate like mad. Many only look at the bottom line and don’t consider the value added by the these great community builders. That’s what they are. Such a shame…

  2. Prop 13 was sold as a way to ensure “grandma and grandpa don’t get priced out of their home”. But in reality, it was a just a trojan horse to give wealthy commercial property interests a handout, forcing the rest of us to pick up the lost revenue over the years through a 101 regressive taxes.

    Simple solution: phase out prop 13 for all properties that aren’t owner occupied. And get rid of the 2/3 supermajority nonsense on tax increases (especially idiotic when you consider prop 13 didn’t even get that many votes.)

    • Without Prop 13, poor latino and black families will be pushed out certain areas. For example, along the LA, the government plans to spend 1 Billion.

  3. oh woe, if your $30 candles weren’t enough to support rent in a neighborhood that you think WANTS $30 candles…maybe you’re just wrong. as a business owner it’s incumbent on you to provide products and services that people want to buy, thus allowing you to create a sustainable business.

    If you can’t keep up with the market you get left behind.

    There is a reason that APC can afford that rent and you can’t, they offer a superior product, bar none.

  4. Like MR. T said ” SEE ya FOOL ! ” hahhahahaha I have seen more business fail in 5 years in EP . really are you supporting the neighborhood or trying look cool . Go back to east coast . This is LA !

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