3:00pm | Call this miniseries “Downtown Commerce for Dummies” — the dummies being people like me, people who know next to nothing about business and finance and real estate, but who can’t help but notice that Pine Avenue, Long Beach’s main downtown drag, is overpopulated with empty storefronts.

I am far from qualified to attempt an in-depth take on this topic (which might be too involved for this format, anyway). But that’s part of the point. Most of us wandering the illuminated jewel of downtown can’t help but wonder if there isn’t something that can be done to give that jewel the polish of fully populating what is supposed to be the prime commercial real estate in the 2nd District.

So I decided to take my wonderings to three sources with a broader view of the situation than I could ever hope to have: real-estate brokers dealing with downtown property, 2nd District Councilperson Suja Lowenthal, and the Downtown Long Beach Associates.

Undoubtedly there are many more perspectives that would shed light on the subject (e.g., bankers, business owners), and perhaps those are stories for another time. But for now we’re going with the aforesaid three.

Up first: The Brokers.

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My sampling of real-estate brokers was somewhat random and far from comprehensive, and the only criterion was that they were in some way connected to downtown real-estate. They spoke with me on the condition of anonymity, which I offered in an effort to facilitate their willingness to speak candidly.

The Brokers had little to offer in the way of specific solutions, instead tending to focus on diagnosing the problems.

“If you’ve got a lot of vacant office space downtown here, you won’t see a daytime population,” I’m told. “And we’ve got some buildings that are 60 percent occupied or lower. … But a full floor was just leased at 200 Pine. That’s 100 employees who will be here downtown.”

I heard a good deal about the challenges Long Beach faces geographically: “It’s a very of unique area. I think that’s one of the reasons Long Beach has problems. … To get here [from outlying areas] you have to take the 710, which is mostly trucks … so a lot of people don’t want to drive on it. It’s mostly known as a big-rig type of freeway.”

Despite the promise of anonymity, The Brokers would offer little more than vague grumblings of discontent with the DLBA. “I could say enough for a whole article on them,” I’m told once, “but I’m going to have to say, ‘No comment.'” “Even anonymously?” I ask. “Even anonymously,” I’m told.

The Brokers were more willing to talk about the City, giving it somewhat of a pass because of factors beyond its control, but also pointing to some expenditures that were missed opportunities:

  • “The City could [help attract businesses] by providing redevelopment money. But they don’t have any.”
  • “The City doesn’t seem to have any funds to foster the businesses. … [For example,] they used to give façade-improvement grants, but not now … I don’t see anything happening.”
  • “You look at what’s already there. You look at the Pike and what a messed-up project that is…. The layout is just weird.”
  • “Zoning regulations kind of hurt getting some businesses in here.”
  • “The City needs to focus their money on different things than, like, the bike lanes. … What if they took that money and said, ‘I’m gonna call Forever 21 or the Apple Store and said: This is the City of Long Beach. We’re going build out your store, and we’re going to pay for your rent … for five years right here on 3rd and Pine’?”
  • “How much did the 14th Street Skate Park cost: $600,000? $800,000? They could have done the same thing at a quarter of the cost and invested that money on Pine.”

The Brokers are unanimous about the problem of bank-owned property. As an example I hear the story of a developer who planned to knock down a swath of Pine Avenue real estate and build a multistory development with retail on the ground floor and residential above, until the bottom fell out of the housing market and the property eventually went back to the bank, which had no interest in renting spaces out, holding on to the notion that the swath might be developed. “It just sat there. They didn’t do anything. They didn’t care about leasing it. There were tenants that wanted to go in there.” But it was only when property changed hands — less than a year ago — that tenants were able to start getting in. “”Normally when it’s a bank-owned property it’ll sit there, because they don’t want to lease it. They’ll wait ’til somebody comes in and wants to buy it.”

A similar problem exists with property owners who bought when the market was inflated and now are reluctant to settle for current market rates:

  • I hear about the former Z Gallerie space, which has been vacant for 14 months. There have been many inquiries about leasing it, I’m told, but the owner only wants to sell.
  • I’m told about a property that the buyer, because of a $5 million purchase price, wanted to lease for somewhere in the neighborhood of $3 per sq. ft. “They have to get their higher rates to meet their investment criteria. But when the market crashed out, those rates are no longer achievable — but they’re still trying to get them. … But now this guy comes in and buys it for $2 million, he can seek realistic, marketable lease rates and start getting people to come in.”
  • “When you lease below market value, you’re locking in the value at a lower rent, because it’s a function of the income. … Let’s say you do a five-year lease [at such a rent level]: you’re pretty much destroying the value by capping it. … It’s all based off of the income. … I think this area has especially been hit just because the demand is not there. Retailers have to sell to make money and pay there rent, and if they’re not selling, they can’t pay their rent, and they go out of business. “
  • “A lot of the landlords here are offering six months free rent. Then they’re offering teaser rates like $1 per sq. ft. … But a lot of people are still holding on to their money.”

The Brokers are also unanimous about a necessary critical mass that Long Beach has not figured out how to reach. “Here everyone might think it’s prime [real estate],” I’m told, “but it still needs a little more mass to get people to come out and shop. But it’s getting there. … We’re a small little niche market. … You’ve got some creative space, you’ve got some really cool businesses, but it’s kind of like a secret little spot. Once something big happens, then it will take off. One big thing has to come, and then the rest will follow. So maybe what the City could do is focus on that one thing, whatever it is.”

Is the answer retail? Whether or not that’s the case, The Brokers tend not to believe that’s in the offing right now. “Everyone argues that they’d like to see more retail,” one says. “Well, I’d love to see more retail, but retail is not coming. What’s coming is more restaurants and entertainment.”

But all agree that population density is a partial solution. And a recently-inked deal to turn the former AMC Theater complex into high-end loft units is supposed to be a step in that direction.

And believe it or not, I’m told, things are on an upswing. “For years I couldn’t pay people to come in,” I’m told. “I’ve seen it when it was a lot worse than this. This is actually starting to really pick up.”

Suja Lowenthal concurs. But you’ll have to read about that tomorrow.

Click here for part two: Three Perspectives on Pine Avenue Vacancies – Part 2: The Councilmember