Struggling With Steep Slope, Developer Makes the Grade
By DANNY KING
Staff Reporter
Richard Shapiro likes a great view and a great challenge.
Shapiro, principal of Malibu-based real estate services firm Winco Asset Management Inc., surprised many in local real estate circles when he managed to develop and lease The Enclave, a 28,000 square foot office complex on Pacific Coast Highway in Malibu.
Malibu, of course, is not the easiest place to develop commercial property. “You’ve got to through the Coastal Commission and the City of Malibu,” said Hunt Barnett, senior managing director at Insignia/ESG Inc. “Most people just aren’t willing to take it on.”
Shapiro bought the property in 1997 from a local businessman who had spent seven years attempting to develop a mixed-use project but “ran out of gas,” according to Shapiro. He formed a partnership Maliview LLC to purchase and develop the site whose architecture matched the stunning surroundings.
“I wanted something that reflects Malibu,” he said. “We wanted to make sure that every office had an ocean view.”
So the complex was divided into three sections, or what Shapiro termed “bungalows.” The sectional set-up was also a response to Fire Department concerns over the site’s accessibility. “Fire was a big issue here,” said Shapiro.
So are earthquakes, but Shapiro thinks he has that in hand as well.
Despite 180-degree views of the Pacific, the Enclave site suffered from poor geology. Winco sunk into the ground 169 caissons, some as deep as 85 feet. “When the big earthquake comes, we’re still going to be here and everyone else will have floated off into the ocean,” said Shapiro.
The project was completed at the end of 2000 and fully leased by March 2001. Toy company Jakks Pacific Inc. took two of the complex’s three buildings at the end of 2000.
“He likes to take rough concepts and make them work,” said Jeff Woolf, executive director with Cushman & Wakefield. “He’ll find gold where others see rust.”
Change in plans
Shapiro, a 15-year resident of Hidden Hills and father of two, is a lifelong Angeleno who was raised in Holmby Hills. His early real estate education came by way of his grandfather’s purchase of City of Industry property for the purposes of developing a horse track. The track didn’t pan out, though the family business, which eventually became real estate investment trust Wincorp Realty Investments, developed Puente Hills Mall and Puente Hills East.
After the company was sold in 1984, Shapiro worked for Beneficial Standard and Elinf Development while developing three properties with Steve Soboroff. He founded his five-person firm in 1996.
Besides the Malibu property, Shapiro has locked up a 12-acre site in Calabasas and moved forward with plans for a 165,000-square-foot office building.
“The market has changed dramatically so I am analyzing all of the options for the property,” he said. “The office market certainly has enough available space in the West Valley. It makes financing more difficult.”
Office vacancy rates in the West Valley jumped to 12.6 percent in the third quarter, according to Grubb & Ellis Co. Adding to the West Valley market’s woes, 116,000 more square feet came onto the market than was leased in the third quarter.
Like the Malibu site, the Calabasas project is fraught with geological challenges.
Just off the intersection of Parkway Calabasas and Ventura Boulevard, it affords expansive views of the San Fernando Valley but has steep slopes that make 60 percent of the site unbuildable.
Shapiro’s primary option is going back to the county the site is in an unincorporated section of Los Angeles and seeking entitlements for residential use.
“It probably would be in Shapiro’s best interest to switch to residential, depending on the type of density he could achieve over there,” said Joshua Levy, a senior associate at Grubb & Ellis. “Right now, there’s nothing hotter than residential multifamily (housing).”
Levy estimated that Shapiro could build 100 to 150 residential units and ultimately sell out the property in the $20 million to $30 million range.
Still, not everyone is convinced Shapiro ought to dump the existing entitlements.
“If it’s up in about a year, he may be hitting the market at the right time,” said Bill Inglis, first vice president of CB Richard Ellis, who was responsible for leasing the 210,000 square foot Calabasas Park Centre. He estimated that space at Shapiro’s project, dubbed the Terraces at Parkway Calabasas, would rent for about $2.35 a foot.
“There are blocks you can put together at 25,000 (square feet) a shot, but this is the only space of that size in that subgeography,” said Mark Sullivan, exec vice president at Julien J. Studley Inc.
