Old J.C. Penney Store in Reseda Is Reborn as Retail-Office Complex
Sherman Way in Reseda, the aging main street of the once-grand San Fernando Valley community, is getting a new retail and office complex in place of the J. C. Penney store that had stood on the site since 1953.
Developer Abraham Guny has turned the old department store building into 17,000 square feet of ground-floor retail space and an equal amount of second-floor office space. The renovation project cost $22 to $25 a square foot, Guny said, or about $800,000.
The result is a sort of mini-mall, with shops fronting Sherman Way and the interior of the complex. Parking is in back.
With leasing terms requiring tenants to pay taxes, utilities, maintenance and up to $1.25 a square foot monthly in rent, the almost-finished project could pay for itself in about two years. After then, the cash flow would pour in.
‘Return Is Terrific’
“The return is absolutely terrific,” Guny said. “It’s better than a new building.”
By contrast, new construction would cost about $45 a square foot, and might bring only $1.60 a square foot in rent, said Raymond Sealy, executive vice president of the California Building Industry Assn.’s Los Angeles division. On top of that, Sealy said, at $45 a square foot, the construction would probably be inferior.
The renovation came about because of Guny’s desire to make more money from his 18341 Sherman Way property and, at the same time, improve the retail climate in Reseda. The latter is very much in his interest, because Guny’s New Building Co., also known as NBC Development, owns 75,000 square feet of retail and office space in the neighborhood, which has seen better days.
“In the 1950s it was the place to shop, with a capital T,” said Linda Shepherd, program coordinator for the Reseda Revitalization Corp., a nonprofit group that helped to ease red tape for the Guny project.
But in the 1960s and ‘70s, shopping malls began to sap old-fashioned main streets like Reseda’s. About 10 years ago, fashionable stores started bypassing Sherman Way and Reseda Boulevard, the community’s main commercial streets, for the tonier precincts of Sherman Oaks, Encino and Woodland Hills. Shoppers followed suit.
More Residents
Shepherd’s group is trying to reverse the trend. She said the maximum residential density of the area surrounding the central business district has been increased, providing more consumers close to shops, and Reseda is the site of several new condominium developments along Sherman Way.
Reseda Revitalization has also sponsored some street improvements--trees and benches, for example--and has encouraged the conversion of a few retail structures into offices to put more shoppers into the area, Shepherd said.
Guny said he bought the building housing the Penney store in 1978 and found himself stuck with the giant retailer as a tenant. He was unhappy because the lease only called for Penney to pay a percentage of its gross as rent.
He would not reveal how much that was, but said the store was not one of Penney’s star performers, particularly when contrasted with the much larger Penney’s in Northridge.
‘Dumping Merchandise’
“To me, it’s a junk store,” Guny said of the old Penney’s. “They used it for dumping merchandise.”
Penney spokesman Hank Russman said a few Penney stores are designated to dispose of “heavy markdown merchandise,” but he said he did not know whether the Reseda store had been one of them.
He did say, however, that it was a “soft line” store, meaning it carried only family apparel and furnishings. Penny’s soft line stores have a limited selection and do not sell anything heavy enough to require delivery, Russman said.
Guny also said the store was becoming run down, but it did not generate enough income for him to fix it up properly.
“I made suggestions to Penney to upgrade their merchandise, and in return I was going to face-lift the property for them,” he said. “They weren’t interested.”
Penney also aroused the ire of community activists by selling T-shirts saying: “Will the last person who leaves Reseda please turn out the lights?” and “Reseda, gateway to nowhere,” Shepherd said.
Finally, Guny negotiated an end to the Penney lease--he won’t reveal the terms--and the store closed in January, 1984. The property has been under renovation virtually ever since. Guny said the work was extensive and time-consuming: The building was gutted; windows and doors had to be cut, and the exterior was sandblasted.
Guny said the renovated retail space is renting for $1.25 a square foot and the office space for $1.15. Those prices are “triple net,” meaning tenants pay taxes, utilities and maintenance.
‘It’s Real Nice’
Guny said about half the office space has been rented, mostly to the Southland Corp., best known for its 7-Eleven chain.
Southland’s Chief Auto Parts unit uses the space for its regional accounting department, which moved from cramped quarters at Reseda Boulevard and Saticoy Street.
“It’s real nice,” said Jerry Nigh, the unit’s district accounting manager. “We have 15 girls that work here. When they take their break, there’s all kinds of nice little shops. They have places to go to get away from things for a while.”
Guny said about 75% of the retail space is taken by tenants, including Talbert Jewelers, Radio Shack, H & R Block and a beauty salon.
The jewelry store moved from up the street, where it occupied quarters that were “pretty run down” and bigger than necessary, company president Arthur Talbert said.
“They way they’re upgrading Reseda,” he said, “I thought this would be a good move.”
