TURPIN: Broadway Rents ‘Match’ Beverly Hills’ : Battered Old Broadway Has Surprising Numbers

It’s the closest thing to a 24-hour street in these parts.

Most of the people who go there use the bus.

Most of the people who shop there pay cash.

You wouldn’t call it trendy or posh, by any means.

Its street is in terrible condition, with a variety of pot holes and bumps.

But if you want to talk about pedestrian use, a huge volume of business and activity, look at Broadway in downtown Los Angeles, a bustling center of commerce for mostly Latinos (90%) and Asians.

In appearance, it certainly doesn’t compare with Rodeo Drive, 5th Avenue or Michigan Avenue.

But dollarwise, it’s another and very surprising story.

Broadway, with its street warts and all, its very old--for Los Angeles--buildings and facades, can match the dollar volume of business it does on a per square foot basis with its grand crosstown “rival,” Beverly Hills’ Golden Triangle shopping center which includes Rodeo Drive.

Curious as to Broadway’s place as a business center after reading a Wall Street Journal article last year on activity in the “downtowns” of the nation’s major cities, Robert Charles Lesser & Co., Beverly Hills marketing and realty consultants, decided to doing some comparing.

To its surprise, and to that of the Beverly Hills owners of swank stores, boutiques and restaurants, the business volume on Broadway turned out to be amazingly high.

While rents per square foot in the so-called Golden Triangle of Beverly Hills--bounded by Santa Monica Blvd., Wilshire Blvd. and North Canon Drive--range from $5 to $8 and from $8 to $12 on Rodeo, the asking price on Broadway is from $5 to $8, mostly $5 to $6.

Shopkeepers in Beverly Hills usually operate on a percentage lease, but rents being so high, few stores reach the percentage threshold, according to Lesser. Based on rentals on a square-foot basis, the stores have from $300 to $1,000 income but only a few--Gucci and Giorgio among them--reach the high mark. Most of the others are in the $500 to $600 per square-foot range.

Sales per square foot on Broadway--from 3rd to 8th streets but with most of the activity between 5th and 7th streets--as found in Lesser’s study, show the range to be from $200 to $700. But there is a very sensitive matter which could alter the $700 figure upward because of the “possibility,” where most sales are in cash, that merchants may “under-pay” sales taxes.

For that reason, the Lesser firm obtained estimates from merchants and real estate brokers, rather than using California taxable sales information as its source. A resultant higher amount, of course, could easily match Beverly Hills/Rodeo Drive rates.

While Broadway stores record less money per unit of merchandise, they have more sales than Rodeo Drive shops where there is a higher per-unit cost of goods. Most Broadway customers pay cash, most Beverly Hills customers use credit cards and house charges.

Most of the latter shoppers arrive by car or limousines provided by the stores; 67% of Broadway shoppers come by bus.

There is a great mix of foreign buyers, mostly Latinos and Asians downtown while Beverly Hills stores serve a variety of nationalities, including many Middle Eastern, French and Italian customers and the wealthy, the curious and tourists.

Most of the retail business on Broadway takes place on weekends, and 85% of all stores there are open on Sunday, according to Lesser. In Beverly Hills, most shops are closed on Sunday and have limited hours on Saturday.

As to the size of the stores, Broadway’s shops average 2,100 square feet but as leases expire, many stores are divided now into smaller spaces; in the Bevely Hills high-rent district, stores average between 1,000 and 1,500 square feet.

Historically, Broadway--particularly at its interesection with 7th Street--was the center of business and motion picture entertainment. Within a block or two of that juncture, were a score of theaters, good restaurants and the big department stores--Bullock’s, May Co. and The Broadway.

When the decline of that area occurred and business moved away in droves to regional shopping centers, to Century City, Beverly Hills, Westwood and other satellite downtowns, Broadway lost its bustle, its attractions and its customeers.

The Lesser firm calls today’s Broadway “the Rodeo Drive of East Los Angeles.” Merchants in East Los Angeles may take exception to that. It might be better to call Broadway the Rodeo Drive for residents of East Los Angeles.

Citing data from the survey conducted by the Lesser firm, its president, Chris Leinberger, noted that apparel (26%) and shoe stores (19%) account for nearly half of the shops on Broadway. Major chains such as Thrifty or Newberry’s have percentage leases but most other stores are flat rents.

Grand Central Market, with its 52 stalls, “will not be upscaled or yuppie-fied,” he predicted. The landmark now has a whole new clientele--those who live in Bunker Hill’s apartments and condominiums.

Stores on Broadway are stable in their ownership, with 74% having been in business for at least seven years. On average, they have been in business for 27 years. But as properties change hands, most of the new owners are Middle Easterners.

Traditionally, storekeepers have been Jewish with Latino employees but that has been changing as large numbers of Koreans take over the businesses. The latter merchants deal mostly in food, electronics and toys.

The hustle and bustle of Broadway represents a fair microcosm of Los Angeles as a Third World City and the return of that shabby but prominent street to the plus-side of the ledger.