A business that has been the staple of the Malibu community for more than half a century may close. Other businesses are feeling the “noose” as well.
By Laura Tate/Editor
A landmark business in Malibu may go the way of the highway if negotiations fail to complete a deal to keep it in business, and there are rumblings of other changes in the commercial landscape in the center of Malibu.
John’s Garden, a business that has served Malibu residents for more than 50 years, 28 in the Malibu County Mart, is currently negotiating with Koss Real Estate Investments to stay in its present location at Cross Creek Road.
If rent for brothers Jim and John Musante is not raised beyond their reach, the two said they might be able to continue their operations, which consists of serving a vast array of sandwiches, salads, smoothies and other healthy fare that has fed loyal customers for decades. However, the deal the two parties are working on would nearly halve the size of space they currently use, causing the brothers to lose space for storage, the covered patio where customers eat and for selling fresh produce, which was the original staple of the business their father started 52 years ago.
In a shrine-like set up at John’s Garden, a message, surrounded by photos of the owners and customers, foretold the possibility of the business’ demise.
“All good things must come to an end,” the message reads. “And so it must be that on June 23, we will be closing our doors. We bid you a sad fair well and thank you for your great patronage.”
Jim spoke of the reaction from customers, which ranged from tears to anger to disappointment, when they learned of the possibility of the store’s closing.
“[They have been] very supportive,” Jim said, adding that many have offered help to keep them in business, such as a letter writing campaign.
“It makes us feel good,” Jim said of the offers.
Many customers reminisce about years past, when they came to John’s as children.
Sara Hutter, who grew up in Malibu and now lives in the Pacific Palisades, said she came to John’s as a child.
“I’ll be totally bummed,” she said of the possibility of the store’s closing, adding that John’s is a “staple” in the community.
Rent and space are the issues at hand, Jim Musante said. The current lease expires July 1.
Jim said it was assumed that rent would go up but it was more than they thought it would be. The current rent is approximately $8,000 per month, which does not include triple-net fees for maintenance, taxes, insurance, landscaping and gardening.
What Jim and John do not want to do is raise prices. Already, menu prices are at the higher end-with sandwiches and salads going for $6 and $7. If rent goes up-they would be forced to raise the prices.
However, in a short phone interview on Tuesday, Jim said negotiations looked good, and he said he felt things could be worked out to the advantage of both John’s and Koss.
Greg Kozak, vice president and general manager of Koss, also said he thinks something may be worked out.
“I think we’ve reached something that makes him happy,” he said.
At press time, a meeting between the two was scheduled for Wednesday.
Changes galore
This is not the only business under fire at Cross Creek. Several stores have closed, others have lost space and there are rumors that across the street some may be replaced by commercial, conglomerate operators.
The eclectic gift boutique, Bella Fortuna, went out of business Monday because of the inability to reach a deal for a new lease with Michael Koss, owner of Koss Investments, and Kozak.
For owner Jacqueline Maddalena, who has been in business five years, she said rent was not an issue but length and other terms of a new lease were. She also charged that Kozak and Koss pulled a “bait and switch” tactic on her, verbally agreeing to one contract, but changing it when it came time to sign.
“[It is] absolutely one thousand percent not true,” Kozak said of the allegation. “If there was a misunderstanding that’s one thing … People may think of a lot of things about me, but I don’t bait and switch.”
“Terms of the length and commitments were unacceptable to the tenant,” Kozak said of the store’s closing.
Managing to stay for now, hair salon Bernie Safire, which has been in business at the Country Mart for nine years, lost more than half its space-going from nearly 1,800 square feet to less than 700 square feet.
A high-end automotive accessories store, called Automotive Legends, is taking over the space that was occupied by Safire. Remodeling is already under way, with the entire 1,200 square foot space gutted out exposing framing and insulation.
And expansion of the clothing store Planet Blue, which has quadrupled in size since its inception, has pushed the smaller boutique, Siblings, out, leaving only the Skidmore Gallery between its original store and the addition.
“I don’t know why they left,” Kozak said of Siblings’ closing. “I don’t think it was a profitable business. It’s hard to sit by and watch next-door neighbors do really well in sales.”
Many other businesses have doubled and tripled in size. The Malibu Colony Company, which sells candles, potpourri and gifts, almost doubled its space; Room at the Beach, a furniture store; Malibu Lifestyles, a clothing store; and Toy Crazy tripled. Tops Gallery, which sells eclectic furniture, metaphysical store Malibu Shaman and children’s clothing store 98% Angel have all doubled in size.
The Malibu commercial landscape
Real estate has unmistakably gone up in Malibu, not just the homes are pricey.
Because of the shortage of valuable commercial and retail property, landlords are on a “gravy train,” is how Tony Dorn, vice president of a realty services company and 23-year Malibu resident, put it.
“The biggest problem is the last time new square footage was added to the Civic Center area (where the Malibu Country Mart and Cross Creek Shopping Center are located), was almost 11 years ago,” Dorn said.
Compounding the problem of space, Dorn said, “Malibu has grown up a lot; the residential base has not only changed, but also gone up in scale. It is a lot less casual and more fancy. [There’s] more disposable income.”
Explaining the dynamics of the two largest shopping centers in Malibu, Dorn describes the Malibu Colony Plaza as having a large, anchored center with the grocery store, Ralphs, Sav-On Drugs and several large restaurants, such as Granita and Coogies. Subtracting those, there are not a lot shops left Dorn said. Of the ones that are there, they “are pretty large in size-1,200 to 1,500 square feet-large in Malibu standards.”
Dorn said the going rate for space at the Colony is $5 a square foot, plus triple-net charges that are more than $1 per square foot.
At Cross Creek, the shopping center owned by Steve Soboroff, a former candidate for mayor of Los Angeles, consists of almost 50,000 square feet. The only movie theater in town is located there, as well as a Wherehouse and Washington Mutual Bank.
Dorn described the square footage price raises year-to-year of several stores in that center.
“The Banana Republic deal was done around $3 [a square foot] two to two-and-a-half years ago. The Ballet [Studio By The Sea] deal was done around $3.5 about a year ago, and the latest hot spot, Pizza Hut, is now $5 in the asking.”
Dorn explained that the larger the space, the less is charged per square foot.
At Koss’ Country Mart, “the reason he’s able to charge through the roof is because of the size of the spaces,” Dorn said. “When he’s got 500 to 600 square feet [spaces], he’s got no competition.
“A landlord like that can pretty much charge anything they want.”
Asked about the base rate that Koss charges, Kozak said, “There’s competition out there. We’re in the zone where we need to be …”
Built a little at a time
The Country Mart (not its name at the time) was built 28 years ago, owned by clothing mogul Fred Segal. He converted a motel into retail space and added a few buildings. In 1978, Taverna Tony’s was built. Starbucks and the five kiosks across the street, which now houses Malibu Wine and Cheese, clothing store Stella Maris, and a children’s clothing store, were added to the collection. Segal sold the center to a bank, and then Koss stepped in. Three to four years ago it was named the Country Mart. John’s Garden is one of the original tenants.
Speaking of the type of tenants the Country Mart has, and of the successes and failures, Kozak described most of them as “Mom and Pop” stores.
“That’s the tenant we really have,” Dorn said. “A lot of dreams… A lot of dreams have not hit the market, and a lot have …”
The ingredients for success, in Kozak’s opinion, are the “product mix” and “quantity of product.”
“When you have high rent, you need to cram the store full of merchandise, like planet Blue, like John’s. That works, you’ve got to get as much as you can into the store,” Kozak explained. “Each store needs to act like a general store, [with] multiple items … try to have something for everyone out there.”
Meanwhile, Dorn, who no longer conducts real estate business in Malibu, laments the changes in Malibu commercial real estate. “The rents are crazy, the commissions are low. It’s not a lot of fun anymore.”
“We’re a small community, but at the end of the day, if you don’t put some supply in there, [landlords] are going to be able to tighten the noose around tenants necks.”