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City Addresses the Loss of Retail Businesses

The council discusses ways to stem a rising vacancy rate in Beverly Hills' commercial properties.

Retail businesses have increasingly left Beverly Hills over the last two years, according to a staff presentation to the City Council earlier this month.

In 2010 and the first quarter of 2011, the city recorded a 14 percent vacancy rate for businesses such as restaurants and vendors of goods and services. Megan Roach, the city's marketing and economic sustainability manager, noted this compares with a 6 percent lack of occupancy in 2009.

The , including Robertson Boulevard, Olympic Boulevard and Beverly Drive, have experienced most of this economic exodus. The business triangle region between Wilshire and Santa Monica boulevards accounted for about 5 percent of the vacancy rate.

Council members attributed a lack of parking as a main contributor to the retail decline south of Wilshire Boulevard.

Tracking vacancy rates "is really important because it provides insights into the local economy, and we do use it to identify trends as part of our forecasting during the budget process," Roach told council members at a July 7 study session. "Business activity contributes 74 percent of the city's general fund revenue, although only 9 percent of the land is commercially occupied."

In an interview with Patch, Vice Mayor William Brien, who heads a task force established by Mayor Barry Brucker to make the city's permitting process less time-consuming and more efficient, said retailers "provide the tax base that allows us to have the great police, great fire and great services for both our businesses and our residents."

He called for streamlining the city's review and approval process for new businesses and land developments as a key step toward increasing retail occupancy. Brien said this move could also help attract large, office-based operations, which have big workforces that provide a market incentive for new, smaller service providers and merchants, and a refreshed customer base for existing businesses. 

Brien also noted the part that commercial real estate owners must play in attracting new businesses.

"We can't control what [landowners] lease for, and it's bad to have an empty building," he said, adding that those who own lease space are "going to have to participate in also figuring out ways that they can put something on the table that benefits the businesses ... because it can't just be a one-way street. It's going to have to be the city and the landowners working together for the common good."

At the study session Councilman John Mirisch, Councilwoman Lili Bosse and Brucker agreed on the need to find out specifically why businesses are leaving the city.

"Why are there vacancies?" Mirisch asked. "Some of that intelligence is something we can gather from exit interviews. We may find out for some of them the fact that it's difficult to get a permit could be a problem, but we may also find out ... that the rental rates simply are too high."

According to Roach's presentation, "The city utilizes several different approaches and partners to pursue business development objectives." She said officials are considering the following options to attract businesses:

  • Five-year Economic Sustainability Plan initiatives
  • Fee deferral programs for small businesses
  • Business expansion and attraction loans and grants
  • Broker commission program targeting vacant retail space
  • City-owned property lease terms for vacant properties
  • "Shop local" and other business incentive programs that have been enacted in cities such as Santa Monica and Lancaster

Anita Zusman Eddy, director of economic development and government affairs for the Beverly Hills , said that "a real uptick in activity" in the last few months may indicate that a recovery is on the horizon.

"Beverly Hills' retail environment was impacted just like every other community in the country by the recession, so we certainly saw vacancies and stores closing doors," she said. "But what we're also seeing now is a renewed interest in coming into Beverly Hills."

Eddy also described an annual business development mission that takes place each fall in which chamber executives and council members travel to New York to reinforce ties with core brands that occupy much of the business triangle district. The outreach effort also aims to attract new additions to the local business community.

Councilman Julian Gold heads an ad hoc committee established by Brucker to address the small business decline.

"We cannot be complacent—I'm very uncomfortable over the notion that because other stuff is going on, we're not going to stay focused on this," Gold said at the study session. "I see this as one of the cornerstones of what we have to do in order to keep this city healthy in this fiscal year and in the next."

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LAofAnaheim July 25, 2011 at 05:13 PM
Maybe if you had a subway station at Wilshire/Rodeo...............?
the suspect July 25, 2011 at 05:33 PM
High rents, taxes, horrible parking, ghost town after 6pm. I don't know if the city gets taxes from the rental income the commercial property owners, but I do know the city taxes the business owners for the number of employees, plus business licensees are taxed according to the number of hours worked, it all adds up to major drain on resources. Any wonder why retail businesses close up early and the city is a virtually ghost town except for the restaurants ( they open later, so can stay within the basic 40hr week, more than that they have to pay more license tax). Other cities have stores that stay open later. I find the city is very business unfriendly. It is assumed it is a good place to do business because people that live here have money. I have read the business taxes account for most of the tax base Beverly Hills has. Although it it will not be popular, perhaps they need to seek additional revenue from property taxes, as the residents enjoy they benefits the of living in Beverly Hills thanks to the businesses. Not all business owners live in multi million dollar homes, drive cars that cost as much the national debt. I consider this like a form of welfare placed on the back of businesses. The parasitic governments, especially Los Angeles want the commercial property owners to pay higher real property taxes, which will be passed to the lessee, which will be passed to the customer in the form of higher fees and prices.
Jon Gluck July 25, 2011 at 05:43 PM
Important article, Joe. I agree with Anita from BH Chamber that there seems to be an uptick in BH business activity. But there's no doubt it can grow faster and we need to keep the pressure on. Great to see City Council paying special attention to this and I look forward to their innovative approaches to tackling this issue. Perfect example of great growth vs. work in progress is Lower S. Beverly Dr. vs. Upper S. Beverly Dr. Lower is thriving with multiple new biz in past few months while E side of upper has a noticeable row of vacancies.
Jett July 25, 2011 at 05:46 PM
Exactly LAofAnaheim... there wouldn't be such a parking nightmare in Beverly Hills if there was a way to get there via subway. I hope that this leads to some of the business owners of the city stop protesting the subway stop. They may be right that the super-rich clientele of some places will not take the subway, but if middle-class people who might enjoy a Beverly Hills restaurant every now and then (like me) are able to take it, then it'll free up parking for the uber-rich.
Ellen Lutwak July 25, 2011 at 08:29 PM
Who's responsible for cleaning up the trash and old newspapers that pile up in front of these empty buildings? Property owners? The city? We see so much when we walk by.
LAofAnaheim July 26, 2011 at 04:07 PM
How much more parking does Beverly Hills need? You already voted for free parking earlier this year. There's areas in LA that don't have that much parking (i.e. Venice, Hollywood, etc..) yet are striving economically. It's not the parking..let's stop keep advocating for more parking. More parking = more convenient to drive = more traffic on roads = higher gas prices (more demand), etc.. It's a cycle.
Mark Elliot July 26, 2011 at 04:38 PM
From my perspective as a cyclist and localist, I see our relative over-reliance on sales taxes as a structural challenge that keeps us vulnerable. It drives city hall support for development that residents say they don't want: over-sized hotels and commercial structures out of scale with the local environment. (There is no better illustration than the 100 block of North Beverly.) It keeps our civic leaders chasing the kind of retailers that local residents don't need, too. This was shown during the downturn, when South Beverly and Robertson high-margin specialty shops closed in a blink. Only big shops with deep pockets weathered the storm. Not long ago, these districts were a diverse mix of services that could weather a storm: shoe repair, locksmiths, grocery/liquor. They drew support from the community and endured. Once priced out, though... We must focus on the local, and more parking is not the answer. We need to accommodate people, not cars. Let's make our streets inviting to cyclists. We're the ultimate economic 'locavores': we shop where we live, and the city needs to recognize that. We can't direct property owners how to lease, but we can create conditions that increase local traffic. Making our city bike-friendly is a good place to start. It's good for cyclists and good for small businesses too. We're doing our part at betterbike.org.
the suspect July 27, 2011 at 11:09 PM
I'm not going to bike from LA to Beverly Hills. I can't patronize the stores and lug my purchases while biking, I love bikes. Its fun, good for your health, and ecologically sound. When I go shopping in the Hills, which has declined substantially, due to miserable parking and getting a ticket within 3 mins of parking which I wholeheartedly blame on that parking restriction sign along Bedford next to the Neiman Marcus, the day after xmas, I swore I never shop in BH again. I now go South Coast Plaza or Fashion Island. Can't bike that far by any stretch of the imagination. 44 miles at least. I like to see the statistics of the locals that actually patronize the shops in BH. I doubt the stores can stay in business with such a small demographic "supporting" the merchants. As one in business knows for every one customer I get, another business loses one. You need to remember all businesses are struggling to win the same people as customers. Being not everybody is wealthy, or has great disposable income, they go to where the best deals are. If parking is a hassle they go elsewhere. I stopped going to the Beverly Center because they charge for parking, As for betterbike.org. I doubt fat assed people in supertight spandex are going to be riding to the stores, how do I know? I'm a fat ass person that would look like a beached whale riding a bike that does my hemorrhoids no good!
the suspect July 28, 2011 at 05:37 PM
Follow up to my rants. A lot of the commercial property in BH has been held by the same people for a very long time, paid off for the most part, some tapped the equity and reinvested the gains. The owners don't really care if the buildings remain vacant, because they can leverage the lack of rental income as write offs as losses on their taxes. The properties are held as assets on their DB eventually the properties will increase their value over time because of the location, and they can tap the equity again. The same reason why wealthy people buy income property as tax writeoffs and exchange them for higher price properties when the numbers don't work any more. Eventually when they die , their life insurance policies pay the estate taxes and the families get the properties and the whole cycle continues...it's nice to be rich..

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