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Tuesday, Mar 21, 2023

Retailers Sold On Boulevard?

Blue Bottle Coffee Co. is set to sign a 10-year lease on Robertson Boulevard, and the street’s boosters feel bullish that the gourmet roaster will perk up the long-struggling retail strip between Beverly Boulevard and Third Street.

Two other restaurants, a bar, and gym could soon follow Blue Bottle’s lead, said Jay Luchs, executive vice president at Newmark Grubb Knight Frank, who brokered the Blue Bottle deal, possibly boosting foot traffic and attracting other tenants in a roughly two-block area where about a quarter of the storefronts are vacant.

“The street has major potential,” Luchs added. “Nothing happens overnight but I feel the energy will come back.”

The energy has been gone since the recession, when a stampede of stores fled Robertson after its growth in the 1990s and early 2000s into a chic shopping destination. While many other upscale shopping districts have recovered, Robertson has struggled to reinvent itself.

Despite some leasing activity, the bleeding isn’t over. Lululemon Athletica Inc. will close its outpost on Robertson at the end of the month and relocate to the Melrose Avenue shopping district. M.A.C. Cosmetics shuttered its location on the boulevard last week, after opening a store on Melrose in December. A Ralph Lauren Corp. shop and Gregory’s both left last year.

“It’s like a ghost town. It can be very depressing,” said Robert Cohen of brokerage RKF, which is listing a sublease for the Ralph Lauren space. But he thinks Robertson is finally poised for an upswing, despite tough competition from popular retail strips on Melrose and Abbot Kinney in Venice.

“The street is bottoming out, that’s the good news,” he said.

With the exodus have come lower rents and that has allowed up-and-coming brands and boutiques to test the waters. With monthly rents about $8 to $10 a square foot, Robertson offers a substantial discount compared with prime L.A. shopping streets. Monthly rents on Melrose and Abbot Kinney begin at $15 a square foot.

Activewear brand Carbon 38 is scheduled to open a 1,400-square-foot storefront on Robertson this week for a four-month stint. The site is the first brick-and-mortar location for the 3-year-old Beverly Grove company, which until now has only operated online.

“If all goes well, we’ll extend the lease and move in permanently,” said Katie Warner Johnson, Carbon 38’s chief executive. “Robertson was once a fantastic shopping destination and it’s certainly not going away.”

Luxury sleepwear company Sleepy Jones recently opened a pop-up next door. The 3-year-old company, with other locations on Montana Avenue in Santa Monica and in New York, also might extend its lease.

“The L.A. retail scene is constantly evolving and Robertson Boulevard has been going through a little bit of a transformation,” Sleepy Jones co-founder Chad Buri said in an email.

Women’s fashion shop Reservoir decided to stay on Robertson after a successful pop-up there last year. The location was plan B after a deal in Silver Lake fell through, but Alissa Jacob, Reservoir’s chief executive, said it turned out to be a blessing in disguise, given that the spot attracts both locals and tourists.

“We’ve been here a year and have no plans to leave,” she said.

Ron Kates, a property owner on Robertson for 25 years, said other companies are making more substantial commitments. In the past couple of months, he signed long-term leases with two retailers – IDD Inc. with Italian fashion items and a boutique from Peri Arenas. His philosophy is to match rents with the volume of sales.

“The wise property owners are being very careful,” he said.

Buzz cut

In its heyday, Robertson attracted shoppers to buzzy boutiques Kitson and Lisa Kline, upscale brands 7 for All Mankind and Tory Burch, plus designer names including Ralph Lauren and Dolce & Gabbana.

Kitson, in particular, drummed up business when it opened in 2000 near celebrity hot spot restaurant the Ivy, becoming a favorite of it girls such as Paris Hilton and Lindsay Lohan.

The buzz that attracted paparazzi appealed to investors, too. About a quarter of the properties on Robertson sold during this period, including to institutional buyers, Cohen said, affecting about 35 percent to 40 percent of the storefronts.

The deals were massive. In 2008, Thor Equities, a property owner on Manhattan’s Fifth Avenue, acquired several properties that together accounted for 4,600 square feet of retail space for $14.6 million, or $3,144 a square foot.

The high trades forced landlords to bump rents to astronomical levels – as much as $25 a square foot monthly. Then the financial crash knocked everything off course.

“It was a house of cards, because rents got so high,” Cohen said. “The minute something falters, the whole thing collapses.”

The stores that had made Robertson such a draw began to leave, including trend-setter Lisa Kline. Kitson held on, although mounting debt in recent years forced owner Fraser Ross to shutter his stores and relaunch on Robertson as Kitross. Chanel S.A. is the last big name on the street – and its lease is up in two years.

While other shopping areas eventually rebounded, Robertson never recovered from its sky-high rents that, for years, landlords were unwilling or unable to drop to lure tenants.

Dan Blatteis, co-chairman at Blatteis & Schnur Inc., which owns the Ted Baker shop and former M.A.C. store on Robertson, said most local property owners are now taking a practical view.

“Landlords realized their buildings can’t stay vacant forever,” he said. “It’s sticker shock mentality, … but I think it’s sunk in at this point.”

New vision

Today, Robertson is reinventing itself in much the same way many L.A. centers are attempting to stay relevant in the age of e-commerce – by turning to food and service-oriented businesses.

In projects such as Westfield Corp.’s $800 million redo of its Century City mall or Taubman Centers’ $500 million upgrade of the Beverly Center, food halls and restaurants are a key part of the calculus.

At Robertson Plaza, the Decurion Corp.-owned office center where Blue Bottle is moving in, Luchs is in lease talks with a Phoenix restaurant group. That venture would sit alongside another eatery and a speakeasy-type bar, rejuvenating a space that was once home to just one restaurant in a smaller footprint – the Newsroom, which closed in 2014.

“When one of these restaurants at Robertson Plaza opens and brings a flood of people, then you’re going to start seeing vacancies fill,” said Luchs.

He said he wishes he could fill Robertson’s empty spots with more restaurants but the lack of parking makes it difficult for eateries to comply with parking codes.

Just a few new food and drink joints will likely make a difference, however, said Gabe Kadosh, a vice president at Colliers.

“It’s part of the overall entertainment,” Kadosh said. “When you don’t have that, people don’t really want to hang around.”

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