
Locals complain of higher-end retail stores squeezing out mom-and-pop shops.
By Nora Fleming / Special to The Malibu Times
“Coming soon. Sorry for the inconvenience,” reads the message scrawled across the brown paper covering the windows of Malibu’s Ben & Jerry’s.
In 2005, an electrical fire destroyed or damaged several of the Cross Creek Plaza shops. Nearly three years later, all the stores have re-opened except for the once popular ice cream favorite.
Rumored reasons for its continued absence circulate, as do other stirrings of suspicion among Cross Creek businesses of their own futures and dealings with new landlords, Pouya Abdi and Michael Shabani who purchased the plaza, which extends from the Malibu movie theater down to Banana Republic, and then from Guido’s restaurant down to the Super Care drugstore, from Steve Soboroff last year.
Yet, while much of the surrounding commercial real estate plazas in Malibu have seen either a change in ownership or the arrival of new stores, Cross Creek had seen few in the past several years until Soboroff sold the plaza last year. Some of the tenants have been called institutions in Malibu, such as European Shoe Repair, open for several decades. But this may change, as rumors of rising rent costs, $1,000 late fee notices, infrastructure changes and ending leases loom ahead.
“There has been no direct impact yet, but the rumors might very well be true,” said one Cross Creek tenant who wished to remain anonymous. “The new owners don’t have a good bedside manner.”
Abdi and Shabani did not return repeated phone calls for comment on potential changes to the plaza.
It is rumored that these new tenants paid $60 million to $64 million for the plaza. Due to Proposition 13, which bases property taxes on the last sale price, many of the Cross Creek tenants could see a dramatic rise in rent costs. The range in length on these leases vary from newly signed leases for restaurants Casa Escobar and Marmalade Café to stores that may only have a year or two left.
“Unless someone is interested in philanthropy, [the landlords] want a return on their investment,” Soboroff said. “Rents are not going to fall.”
Many of the local tenants might be unable to pay large increases and be forced to look elsewhere, while the new landlords will be looking for large national and regional businesses able to afford a rent that some estimate could be three times as high as it has been.
“Locals know this isn’t a locals place anymore,” one tenant owner said. “It’s no longer like Malibu. Local people will not be shopping here or across the street.”
Malibu had remained, to a degree, community friendly and locally owned until step-by-step changes occurred, or what Tony Dorn, 23-year commercial real estate broker and longtime Malibu real estate specialist called, “the selling of Malibu.”
Malibu Colony Plaza, Point Dume Village, Trancas Country Mart and stores and office buildings on Pacific Coast Highway have all changed hands since 2005.
Richard Sperber of ValleyCrest Co. and Richard Weintraub of Weintraub Financial leased the site of Malibu Lumber Yard, owned by the city of Malibu. The deal they set, of which the 39-year lease could be extended to 54 years, will supposedly allow some of the smaller revenue businesses to escape escalating rent costs in their own centers by paying a reduced rate for their locations on the second floor of the center.
Weintraub and Sperber agreed to designate 10 percent, or 3,000 square feet, of the complex for local businesses. Three businesses, McLean gallery, Bernie Safire’s Salon and Tops, have been considered for a move into the location, slated to open in summer 2008. Filling out the higher rent spots, rumored to be in the range of $15 per square foot, boutiques such as Intermix, Scoop, James Perse and Maxfield have already signed on to set up shop in the plaza.
“I believe they will more than fulfill their 10 percent requirement of local businesses,” Dorn said. “But I don’t think it’s a good deal economically for local businesses. It was the one piece of commercial property the city owned and they gave it away.”
Many owners of Cross Creek look in all directions and see what many believe is an inevitable future.
“They are not looking for Malibu locals to shop here,” one tenant said. “They want to create more walking traffic, like the shopping center across the street.”
Malibu could be headed down a path similar to communities like Laguna Beach and Ventura, whose mom and pop businesses were quickly replaced with brand name chain stores and high end shopping.
Already, stores like Ralph Lauren and Banana Republic have made a home in Malibu’s limited commercial real estate space. With a population of 13,000, however, these stores may not see the sales they do in other locations, even with an influx of summer tourists and vacation home residents.
“This is a historical moment for a new city council and planning department,” said one Cross Creek storeowner. “They need to decide how they want the city to be. It will be a question of how Malibu defines itself and what power steps up to the plate.”
Many Malibu residents already leave town to shop, unable to find the mass-produced and general need items chains like Target and Best Buy sell. Mayor Pro Tem Pamela Conley Ulich drafted the Formula Retail Ordinance to try to prevent big box chain stores from coming into the community. The ordinance never went before the council.
“The big chains really don’t want to be here because it’s expensive and the population is small,” Dorn said, regarding what businesses should be prevented from entering. “But these issues deserve to be on the table because it’s an election year. It’s going to be a problem if Malibu ends up with a vast array of high-end clothing boutiques and nothing else.”
However, some of the people who complain that Malibu is no longer the place they thought they knew are actually likening to the idea of local trendy shopping or the plan for a Whole Foods grocery store.
Soboroff, who called the potential loss of small businesses “the perfect storm,” does not believe it is an inevitable fate.
“It’s easy to paint a doomsday scenario, but the solution is easy,” Soboroff said. “Shop Malibu. Eat Malibu. Get your hair cut in Malibu. Shop when you’re home. Support the merchants you want to save.”