When real estate investor Albert Mizrahi paid $23 million for four buildings on sleepy Larchmont Boulevard last year, longtime retailers and residents began to worry.

They wondered if Mizrahi, who took months to assemble the 20,000-square-foot portfolio, would jack up rents and drive away longtime businesses, possibly changing the character of the quaint retail district by adding more national franchises as tenants.

So far this much is clear: Rents are up in Larchmont Village and several of Mizrahi’s tenants have already closed shop, with a few more likely to leave the shopping district between First Street and Beverly Boulevard.

What’s less clear: whether the nearly 90-year-old Hancock Park-area neighborhood is headed for wholesale changes, or if it’s simply in line for more of the modernization it has weathered in the past.

“The retail needs to be updated,” said Mizrahi, who offers no apologies for renting his new properties for $10 to $15 per square foot, about double the rest of the village. “They are afraid to change any change whatsoever.”

Of course, in L.A., business owners have some reason to wonder when a shopping district appears on the cusp of change.

Not far away, on Robertson Boulevard, what was once a quaint neighborhood retail district with reasonable rents has been transformed in a chi-chi hangout for celebrities, replete with luxury boutiques, tourists and paparazzi.

However, if Larchmont is headed in that direction, the changes will not come easily.

Mizrahi’s efforts to give the street a facelift come as the city is considering a zoning regulation that would trim Larchmont Village’s 45-foot building height limit to 35 feet and limit street frontage for each business to 50 feet. Such limitations wouldn’t prevent national luxury retailers from opening on the street, but they might discourage some.

On June 19, the Los Angeles Department of City Planning held a public meeting to discuss the regulation, introduced by Los Angeles City Councilman Tom LaBonge last fall. The proposal could come before the City Council for a vote by year’s end.

“I am proposing certain restrictions that would preserve the character of the street, which is wonderful,” said LaBonge, a regular on the street who is on a first-name basis with many of the business owners. “Larchmont is the model street of Los Angeles for local retail.”

Concerns heightened

In fact, it was not Mizrahi’s purchases that spurred the community to reassess its retail character or advocate the zone change. Instead, it was last fall’s shuttering of La Luna Ristorante, which closed after a dispute with its landlord about a rent increase. There are only 75 storefronts on the blocks-long district.

“At that point the local community decided they needed to pay more attention to the character of the street,” said John Winther, manager of Coldwell Banker’s two Hancock Park offices and president of the Larchmont Boulevard Association, which represents business owners.

That concern was only heightened when Larchmont Hardware, Larchmont Village Jewelers and Melissa Levinson Antiques closed their shops after Mizrahi purchased their buildings.

And more departures are on the way. Mizrahi said that two tenants at his 123 N. Larchmont Blvd. building Silver Lining, a picture framer, and Floret, a florist cannot afford his new rental rates and will leave.

The owners of both businesses declined to comment.

“The neighborhood has always been good to businesses along here,” said Linda Lennon, co-owner of Village Heights jewelry and gift store, who does not rent from Mizrahi. “The neighbors support the village and it is not the greatest economy but it’s pretty steady. If Mr. Mizrahi thinks it’s going to be another Robertson Boulevard or Grove I don’t see anyone being comfortable with that.”

The stretch of Robertson Boulevard between Third Street and Beverly Boulevard was long a haven for hip, up-and-coming clothing designers. But in the last few years, luxury retail chains such as Chanel have opened. They are often patronized by young Hollywood starlets like Lindsay Lohan, followed by paparazzi.

The radical changes have allowed landlords to raise rents dramatically, which has forced out many locals tenants over the last two years. Robertson landlords even buy out the leases of their tenants so that the retail space can be leased to a national tenant for a much higher price. For example, in February the Horn women’s boutique closed after the owner, Susanne Zenker, sold her lease back to the landlord. The landlord has leased the space to eye wear chain Luxottica. On Robertson, rental rates are in the $25-$28 range, per square foot per month.

Mizrahi, who also owns property in Santa Monica, said that despite the departures on Larchmont, he does not envision transforming the area into another Robertson. He called Larchmont perhaps the best retail district in Los Angeles and he “tried to buy as much as (he) could.” But he added the street doesn’t have a good retail mix, with too many coffee houses and children’s stores.

Mizrahi said he’d like to see more stores that cater to adults and freely admits he would lease space to national tenants but maintains they would need to come up with concepts that jibe with Larchmont’s small-town charms.

“I saw it like a diamond in the rough, where it just needed a little bit of shining up,” said Mizrahi, who has leased space to Wachovia Corp. for a bank branch that will open this fall. It will be the fourth national bank in the district, providing little comfort to critics.

But Mizrahi has defied expectations, telling the Business Journal he backs the proposed regulation changes which local business owners uniformly support. Still, there is a suspicion among some that he’s likely only paying lip service to calm fears.

“I was surprised, but not necessarily encouraged,” said Edie Frere, owner of Landis Gifts & Stationery, who lives in the area and grew up nearby. “For a guy who has rented to a bank I assumed he’d want to rent big spaces to big people.”

Indeed, the regulation changes would limit Mizrahi’s ability to remodel his properties at 107, 123, 150 and 227 N. Larchmont Blvd. into multistory retail destinations. But that doesn’t mean he couldn’t bring in smaller national boutiques.

“Gucci and Pucci. That’s not what this neighborhood is about,” said Frere, who does not rent from Mizrahi but said she couldn’t afford his asking rents.

Blue blood

On a recent afternoon, children rode scooters slowly down the sidewalk in Larchmont Village while diners waited to be seated outside several pleasant cafes.

Winther said the street is reminiscent of idyllic Mayberry from “The Andy Griffith Show” fame. Others say the street resembles the commercial district of a picturesque New England town fitting for an area that is adjacent to Hancock Park, one of Los Angeles’ older neighborhoods.

But Mizrahi and his Charles Dunn Co. Inc. leasing agents appear to disagree with what the local community wants out of the shopping district. Mizrahi said locals “aren’t leaving enough money on that street,” adding that the street needs to support the community so that locals don’t go “somewhere like the Beverly Center because you can’t buy a belt” on Larchmont.

Charles Dunn leasing agent David Aschkenasy, who grew up nearby on June Street, said that he remembers about 10 to 15 years ago when several national retailers came to the street. At first, locals were unhappy with the new Blockbuster Video, Starbucks and Jamba Juice, among other businesses. But locals came to enjoy the new shops.

“People settled down and started using the products,” he said. “While people are scared of the unknown right now, I think they will be pleasantly surprised.”

Meanwhile, Mizrahi is making upgrades to his buildings as his agents seek out new tenants. He said he’d like to bring a restaurant into the 3,000-square-foot space at 107 North Larchmont, an attractive old home that formerly housed the jewelry store and antique shop.

He is also upgrading the structure of the 150 North Larchmont building, which used to house the hardware store. Mizrahi said he bought four residential tenants out of their leases on the second floor of the building and is converting those units into office space.

In fact, the story of the close of 82-year-old Larchmont Hardware on Dec. 31 encapsulates many of the issues at hand. It was a place that Frere said she shopped at least twice a week.

But Mizrahi said that the store was paying “way below market rent” and it wasn’t making money. He said store owner Russ Wilson was offered a smaller space but decided to close up and focus on running his West Hollywood hardware shop.

“The community loved the store and supported it, but they were also going to Home Depot,” Mizrahi said.