Paul Hibler and David Sanfield have been in the pizza business for years and thought they knew a thing or two about running a restaurant.
Then they tried opening in a 100-year-old building in downtown Los Angeles only to face two years of red tape and an investment of $750,000. “It’s been challenging, that’s definitely fair to say,” said Hibler, whose Pitfire Pizza opened earlier this month at the corner of Second and Hill streets.
Finding enough tenants like Hibler and Sanfield willing to take a chance on the area’s renaissance will be challenging, too. A glut of ground floor retail space will be coming on the market as thousands of high-priced apartments and condominiums are built or converted from older buildings.
Nearly 1.5 million square feet of new retail space is planned, according to the Downtown Center Business Improvement District more than the Glendale Galleria, the county’s fourth-largest mall and that doesn’t include mega-projects like the remake of Grand Avenue and a massive Staples Center development.
“It’s going to take a lot of convincing for retailers to believe they can do business in downtown Los Angeles,” said Shaul Kuba, a principal with CIM Group Inc., which has developed several properties downtown. “Go downtown on a weekend and except for a couple of places, there’s really nothing there. It’s still pretty dead.”
Filling those storefronts could take nearly a decade, downtown’s boosters concede. Already, attracting those businesses has become a priority for the city of Los Angeles, which has initiated a program that provides free consulting services, site selection assistance, loan packages and marketing assessments.
In its two years of existence, the Historic Downtown L.A. Retail Project has helped open 20 businesses, assisted 139 others with various services and put together 28 loans worth a cumulative $700,000.
Retailers are followers
Even so, most of downtown’s new storefronts remain empty, as developers find scant interest from retailers. At the Gas Co. lofts, open nearly three years, Kuba has nearly given up on leasing the ground floor space, where currently there’s one tenant an IHOP restaurant.
CIM is still moving forward with its Market at Ninth and Flower project, anchored by a Ralphs supermarket and topped-off by nearly 300 condominiums. But the project also has several storefronts, which Kuba says will be hard to lease.
“When retailers run the numbers they still see a very limited amount of people,” he said. “What retailers are looking for are two things: density and income. And right now that’s not downtown.”
Rob York, a retail consultant with Santa Monica-based Fransen Co., said big-name retailers like Gap Inc. are hesitant to go into untested areas. “In retail there a lot more followers than leaders,” he said. “You need a few anchor tenants to do well and once that is proven out, others will follow. If they fail, you could tarnish the image for a longer time and impede things from moving forward at a better pace.”
Carol Schatz, president of the Central City Association, believes that the pattern will be similar to that of revivals in other cities. “First comes the arena, then comes the restaurants, then comes the nightlife,” Schatz said, “and only after all that comes the retailers.”
Pitfire Pizza was one of the first businesses involved in the city’s retail recruitment program and the restaurant is off to a strong start. Lunchtime lines stretch out the door at the eatery, located a block from the new Caltrans District 9 headquarters. At night, residents from the condominiums above come down to lounge on the patio and grab dinner.
Hibler and Sanfield said business is 40 percent above expectations and weekend business is growing quickly. “We expect to break even after a year at this rate, maybe even sooner,” Hibler said.
Finding loyal customers
It wasn’t easy weaving through city approvals and regulations. A big problem was finding a way to vent the kitchen without building a 10-story chute to the roof something that would have cost as much as $300,000. “That would have killed us,” Sanfield said. “There was no way we could have afforded that.”
The answer was a $40,000 electronic filter that cleanses the grease and smoke as the kitchen vents carry air out the side of the building.
Fitting the restaurant into a converted ground floor space was also difficult. The numerous columns needed to support the building made designing the dinning room and kitchen a challenge. “It’s a 100-year-old building,” said Sanfield. “There are some limitations.”
Another pioneering retailer, Loft Appeal, on the corner of Ninth and Hill streets, sells furniture used by movie studios in motion pictures. It struggled when it first opened two years ago. Had the shop’s rent not been below $1 a foot, it may not have survived, said co-owner Rich Reams. Recently, however, business has been up 20 percent, as residents have begun moving into nearby lofts.
“You have to be here when people first come,” said Reams, who plans to open two more furniture stores downtown. “We want to hook them in the beginning and make loyal customers out of them.”
