Owners Keep Promenade in Local Hands

By Olin Ericksen
Satff Writer

October 14 -- Around lunchtime each day, Dr. Alan Mont slips out of his office on Wilshire and 7th Street and strolls several blocks to the Third Street Promenade.

The cuisine isn't much better on the retail strip, nor is the eye doctor particularly fond of shopping. Rather, he keeps the almost daily rendezvous because of a building.

"I go around and pick up paper, walk up the stairs and generally just check in on how things are going," said Mont, who shared a practice with his late father for several years in one of two buildings his family owns on the Promenade.

It was his father, according to Mont, who saw a diamond in the rough when he bought the first property in 1967 for about $65,000.

“People thought we were nuts for moving the practice there," Mont said. "We were parked right next to a bar that was always being cited for drugs and prostitution."

But over the years, the Mont family’s property value has skyrocketed especially after Third Street was transformed in the late 1980s from a blighted strip that closed at sundown into a visitors’ Mecca bustling well past midnight.

“If I resold them today, the properties would probably be worth a lot, but I don’t like to think of that," said Mont, who now leases the spots to a stationery store, Noteworthy, and the clothing outfit, Giorgio Vasari. "I look at it as a family investment, not as just money in the bank."

And the Monts aren’t alone in their thinking.

In fact, they are but one of several families and individuals who have forgone reselling their property to investment groups and conglomerates who pay millions to land a spot on the Promenade, where retail spaces fetch as much as $10 a square foot, among the highest rents in Southern California.

"Most of the properties on the Promenade, excluding Santa Monica Place, are owned by individuals and families, with a handful of properties per person or family as opposed to larger conglomerations," said Kathleen Rawson, executive director of the Bayside District, which manages the Downtown, including the Promenade.

That mix, Rawson said, is one of the reasons for the strip's success, with individual property owners taking on a more hands-on approach and longer-term vision.

"These smaller owners take pride in the buildings and are careful in who they lease to," Rawson said. "There's also not a lot of turnover among property, not such a grab and dash when it comes to the properties."

Individuals and families are also often easier to work with than large corporations and more responsive to the City's requests, said Jeff Mathieu, head of the City's Resource Management Department, which oversees the Promenade.

"The primary benefit of there being more individuals and families who own the property is that the City can interact directly and often with them," said Mathieu. "Individuals or families who own properties in the area are more likely to participate in operational and security-based issues.

"They're also more likely to participate in improvement projects. They know the area intimately, so their advice on such issues is valued."

Although Mathieu said out-of-town investment groups or conglomerates have more "significant capital" to back their business investments on the street, those added dollars can't compete with the care of families who personally look after their properties.

The Mizrahis are one such family.

Fleeing political and social upheaval in his native Syria, the late Joseph Mizrahi and his family immigrated to the United States when he was 13. Eventually the family moved west to Los Angeles, where Joseph promptly began selling linens on Hollywood Boulevard to turn a buck, according to his son, Albert Mizrahi.

"They came here with nothing, and my dad worked very hard and became more and more successful in retail," Albert said. "Several years later he made the move to Santa Monica to be near the sea. He truly loved living near the ocean."

Around 1970, the elder Mizrahi, who died five years ago at the age of 85, bought the building where his linen shop had been located on the "worst block" of Third Street.

"This was traditionally the Spanish part of the City, not very upscale at all," said Albert. "And by that time, I had several other businesses which were doing well around town, and I would say to him, 'Dad, why don't you move.’ But he knew better."

“He always had a green thumb with property,” said Renee Mizrahi, Joseph's daughter-in-law. The Mizrahi family began leasing their spaces nearly 30 years ago to such large retailers as Guess and Urban Outfitters. One of the family’s latest buys is the historic Gotham Hall building, purchased nearly 15 years ago.

As with the Monts, Joseph stayed put, with his investment paying off significantly after the street went from blight to boom, drawing an estimated 4 million visitors a year from across the region and around the world.

Although the Mizrahis now live in Beverly Hills, the family remains rooted in the densely packed beach town for the foreseeable future, Renee said.

“I think the family always felt good here in Santa Monica,” said Rene, who added that the profit turned leasing properties on the Promenade keeps them tied to the seaside city. “It’s major revenue, but the money that comes in goes into a family trust, so it will be there for the family for generations to come.”

But while property owners have seen profits mushroom with the Promenade's boom, they caution that the street still faces problems that could tarnish its success.

“The worst thing are the homeless, and there are more homeless now than ever,” said Marios Savvides, who leases out space near the Promenade to Hooters, lululemon athletica and Burke Williams Spa. "It's bad for business."

Savvides, who emigrated from Greece in the 1980s, studied real estate at the University of Southern California and began investing in Santa Monica properties in the early 1990s.

In addition to the homeless, Savvides said Promenade landlords must also deal with the heavy burden of property taxes – which are directly linked to the high property values – and a City permit process that bogs down businesses in bureaucratic red tape.

“Property management is by nature a risky business," said Savvides, "but there are things the City can do to make it better and easier for us."

Bill Tucker, the newly appointed chair of the Bayside District board, said he's hearing these concerns loud and clear from his fellow property owners.

"With the homeless, we need to be proactive," said Tucker, who owns two properties on the Promenade. "We cannot tolerate the sleeping in our doorways, and if it's happening, we need to call the police. More so though, it’s the vagrants who show they are aggressive that we should really be proactive towards."

In addition to tackling the homeless issue, Bayside officials need to remain on the "cutting edge" if the area is to remain successful, Tucker said.

"The universal concern is that we ... freshen our look and infrastructure," he said.

The City can do this by revamping some of the hardscape on the street, cleaning up the trash in back alleys and continuing to explore mass transit solutions for the area, such as a shuttle system, Tucker said. Doing so will help the family and individual property investments continue to flourish.

"No matter what happens," said Tucker, "the City needs to stay involved in the area."

Carl Schober, whose family has owned multiple properties in Santa Monica since the turn of last century, agrees with Tucker's assessment, pointing out that property owners have shouldered much of the burden in transforming the Promenade into a success.

"It’s the property owners, many of who are local families, who have underwritten a large portion of the infrastructure for the Third Street Promenade," said Schober, who coyly admits he owns "one or two" properties near the street, buying his first in 1986.

"For example, people who own property between Broadway and Wilshire and between Second and Fourth streets have underwritten nearly two-thirds of the cost for the garages alone," Schober said. Those six parking garages, he added, allow the Promenade to sustain the throngs of shoppers who descend on the strip seven days a week.

Aside from the tax dollars they pump back into the City's coffers, property owners give back to the community in other ways as well.

"For years, we've allowed an Alcoholic's Anonymous group of between 60 and 80 gentlemen to meet upstairs," said Marina Case, who with the help of her two sisters and 77-year-old Italian-born mother, Anna Maria Angelinni, runs the Italian eatery, Mario’s, located in the building the family owns on the Promenade.

"They’re a great bunch of guys coming to terms with their troubles," said Case. "It all started in 1991 when we moved to Santa Monica from Westwood. One of our waiters was meeting with the group at another restaurant when they closed down. He asked, and we said yes."

The decision wasn't hard, said Case, because the people who work at their establishment are more like family than employees.

"Many of our staff started here as 16-year-old busboys and are still with us as 40-year-old waiters," said Case.

As for Dr. Mont, he believes the individual property owners on the Promenade give back to Santa Monica simply by being themselves.

“There are a lot of property owners who care about the area and are not just into making a buck,” said Mont. “Different owners make the area eclectic. To me, that’s what makes the Promenade different.”