MADE in Long Beach: What Can Happen When a Landlord Cuts the Community a Break

For a city supposedly on the rise for the last decade, Long Beach has consistently been full of prime property that sits vacant for months or even years. While there may be many factors in play, the most common theme is a landlord more interested in the idea of getting the rent a particular spot is “supposed” to generate than in keeping the space active and helping the community to grow.

Dev Mavi, owner of the Pine Avenue building housing the Starbucks south of 3rd Street, is an exception, and not because of the Starbucks, a store that does brisk business for a corporation that can afford to pay “fair market value.” But what’s happening next door is a model for what can happen when capitalism is applied with a long view.

Walk into 236 Pine Ave., a large space that was a Crate & Barrel Outlet at the turn of millennium and went through a couple of iterations as a discount bookstore between extended periods of vacancy, and you are greeted by a quiet spectacle that is unique to and uniquely of Long Beach: MADE in Long Beach, a consignment store selling a redoubtable variety of goods—jewelry, ceramics, books*, records, clothing, cold-brew coffee, kombucha, balsamic vinegar, food, soap, furniture—all of which are made by (you guessed it) Long Beach residents.

This wasn’t the original idea. Originally Mavi and Scott Hamilton of DOMA Properties looked into subdividing the 12,500 sq. ft. space into parcels of a few hundred square feet to be rented as independent stall spaces. But the more they investigated that possibility, the more unwieldy it seemed.

Enter DW Ferrell, whose Localism has for the last three years been on a mission to “enable a more connected community, influence people to choose locally owned merchants, local growers, and other local organizations.” Hamilton met Ferrell four years ago when Ferrell wandered into DOMA Properties from an office next door. As Ferrell tells it, “I couldn’t find a printer, and I asked [Hamilton] whether I could use his printer. And he took a look at [what would become Localism’s] business plan, and we started a conversation from there. [Localism] wasn’t even called anything at that point; it was called the ‘Here’s what I want do’ business plan.”

Hamilton had already been looking to create pipelines between downtown Long Beach residents and all the local goods, services, and events available just outside their front doors, so the two connected over their overlapping visions. Fast-forward to 2014, and it was natural for Hamilton to see about bringing Ferrell into the Mavi mix. The timing was perfect, because by then Ferrell was on the hunt for a permanent physical space to reify his concept.

“When I founded Localism, I was just thinking about encouraging people to think about where things are made,” Ferrell says. “Separately I was talking about doing a space for Localism. Then those ideas lined up, and I started looking for property owners who would be interested in doing something like this. So I was ready go, and then [Hamilton] called me. […] Localism had already built up a network of makers and merchants, so we were able to get [MADE in Long Beach] going right away. […] This kind of pulls together all that we’ve been doing behind the scenes the whole time.”

MADE in Long Beach, which opened its doors on Black Friday 2014, never could have happened if Mavi had not been willing to forsake doing business as usual in the real-estate game, because there was zero chance that a consignment store of any sort—never mind one whose raison d’être is to hock the wares of local, independent artists and artisans for no up-front costs—could have come up with the rent typically expected for a storefront in the very heart of downtown, which Mavi says is between $1.50 and $1.60 per square foot.

Mavi accepted was what Ferrell labels a “very gracious stair-step leasing agreement,” which has Mavi getting only a fraction of fair market value, with the understanding that rent will increase with the growth of the business.

“We want to make sure we get to a point where he’s able to get market value for the lease, so I’ve been transparent with him about what we’re making and how we’ll get there, and bringing on partners to help us get there,” Ferrell says. “His upside is going to be down the road. When it’s flourishing, he’ll be able to get full market value for the rent. He’s hasn’t reached that yet, so he’s still taking a risk.”

There is, of course, some present-tense upside for Mavi, as right now he’s setting something in the way of rent rather than the nothing that would be coming in were the space sitting idle waiting for a renter who might not materialize for years, an unfortunate condition that has plagued local real estate for decades.

Why Long Beach landlords have persisted in such behavior is a mystery even to Hamilton, whose business is the business of downtown real estate.

“It’s a good question,” Hamilton laughs. “I wouldn’t do it. In the Walker Building [i.e., the Pine Ave. building where DOMA is located], we just lowered our rent [for prospective tenants], and we sucked it up. We had the ability to do that. Some landlords really don’t—like, if they don’t get the rent they’re asking, they won’t be able to service their debt. But I don’t think that was really the case for most of the stuff on Pine and in Long Beach. At one time I think there was 60,000 square feet of vacant space [on Pine Ave.], and it was very difficult to get landlords to understand that they couldn’t get the rents that they were asking. And it honestly doesn’t make any sense to me why they wouldn’t just lower their price and get some rent as opposed to no rent. But some landlords are like that. They figure they’re just not going to lower their price, and they’ll just wait it out. They’d rather not deal with a tenant, and they’ll have it vacant. It does not make sense, so….” He laughs again. “If you’re looking for me to make sense out of it, I can’t.”

Obviously, Mavi is a different breed of landlord, although he labels MADE in Long Beach an experiment and that eventually he will need to get rent that’s in line with fair market value. So far, so good, he says, partly because of MADE’s own progress, and partly because he likes the way the city’s business climate is trending.

“If I see that there is something happening, I’m interested to keep [MADE in Long Beach] going,” he says. “[…] The City may be [being] a bit more proactive about bringing people into the city, more residents and making the city a little more lively. In the past people were here, but they went [outside of Long Beach] for shopping, to the malls and things like that. There was hardly anything here.”

Ferrell is even more optimistic.

“We started with 20 local makers and merchants, and now we have over a hundred, which is kind of crazy,” he reports. “I think what’s remarkable is that we didn’t take out a loan to start, and we’ve been in the black from Day 1, and we keep reinvesting in our capacity.”

Jessica Reyes has seen that growth first-hand from behind the counter, where she has worked since MADE opened its doors. Community members regularly patronize the space, she says, as do visitors staying at nearby hotels, including a steady stream of flight attendants.

“The community’s always here,” she says. “We get a lot of support from locals. A lot of people want to see [MADE] succeed. It’s good to see the focus on locally=made products. Long Beach needed something like this.”

The upside of MADE’s success for the city as a whole is self-evident, as not only does downtown’s main drag have one more draw—not to mention one of the few retail spaces amid a cluster of restaurants—but it’s got one fewer empty storefront, which helps with the perception of downtown Long Beach as a place where things are happening.

And that perception is a reality, with MADE additionally activating the area as an event space. In December, for example, MADE hosted the 6th Annual Secret Santa Toy Drive, which featured four bands local bands and attracted donations of over 150 new toys for needy kids.

Ferrell says the hope is to grow MADE in Long Beach by adding a “tech incubator” in the currently unused upstairs space, hopefully within nine months. After that, Ferrell foresees adding a “culinary incubator.”

“Think of [the tech incubator] like a fabrication lab, [with] 3D printing, laser cutting, and other prototyping facilities,” he explains. “For the culinary incubator, specialty food-makers and caterers will be able to rent out full kitchen facilities in four-hour blocks. Maybe a better term is ‘commercial kitchen accelerator.’ It’s for culinary artisans who already know what they’re doing and are trying to scale up.”

In the meantime, Ferrell says just about everyone who walks in from Pine Ave. is enthusiastic about what she sees—so much so that he is in discussion with at least three developers “who are looking to us to find local makers and merchants to fill up their retail space.” And MADE’s already got a little shelf space in the gift shop at the Renaissance Hotel on Ocean Boulevard.

“Every day we have somebody coming in who says, ‘I had an idea like this! Wow, you made it happen,'” Ferrell says. “And that’s what tells me that we’ve really hit on something. […] This a community-coming-together kind of thing. […] That’s our true equity. The equity of the incubator concept is community equity, not financial.”

MADE in Long Beach is located at 236 Pine Ave., Long Beach, CA 90802. Hours: 10-6 Tuesday through Saturday, noon-6 Sunday. But swing by beginning at 8pm Thursday, June 11, for an after-party linked to Renaissance Hotels’ “Global Day of Discovery.”

(Full disclosure: The author’s novel is among the books for sale, and on July 25 he’s putting on a bitchen event there.)