By Emma Rault, Columnist
For a brief moment, on Saturday, March 9th, the candy-pink facade of Dancing Waters teetered perilously, held up only by cables attached to a pair of excavators. Then, almost a century’s worth of San Pedro history came crashing down onto a lot filled with rubble, the two excavators sitting before it with bowed heads as if paying their last respects.
The demolition of this legendary venue on the 1300 block of South Pacific Ave and the adjacent structures — the former Enigma Bar, and the brick building longtime locals know as LaRue’s Pharmacy — is almost finished. What’s planned for the site is a four-story, 102-unit apartment building in a joint venture between Root Real Estate/Square One Homes and Ketter Construction. The same developer is behind another project on the 2100 block of South Pacific Ave, which will replace a vacant lot and longtime neighborhood bar, The Spot.

Froylan Alvarez, whose Thousand Oaks-based company handled the demolition, has torn down about a hundred buildings all over LA. It doesn’t usually get to him. “But this one,” he says, “is special for the city of San Pedro.”
Over the past month and a half, “a lot, a lot of people” have stopped by and shared memories from when Dancing Waters was a thriving music venue drawing big names like Black Flag, Blue Oyster Cult and the Cramps.
The plans for the site have met with widespread opposition from locals. In 2020, a community group called Citizens Protecting San Pedro appealed the project to the city council, with the support of all three of San Pedro’s neighborhood councils.
A different community group called Residents for an Equitable San Pedro Today (RSPCT) echoed the concerns in a letter with more than 60 signatories. “Why is more market-rate housing being built in a community that can’t afford it?” the letter asks.
According to 2022 data, 55% of San Pedrans are “rent burdened” — meaning they spend more than 30% of their household income on rent. Another 29% are severely rent-burdened, spending over half of their income on rent. Current market rates are beyond reach for many. Yet the project at 1331 S. Pacific Ave will include only 12 very-low-income units, alongside 90 market-rate rentals — and nothing in between.
“Buildings like this make the housing crisis worse,” San Pedran Army Linderborg wrote in a March 2020 letter of her own to the City Planning Commission. “Livable apartments sit empty while people sleep on sidewalks.”
James Campeau, one of the appellants, laments the lack of ground-floor storefronts on what has traditionally been a commercial thoroughfare. “That pretty much closes [the building] off to the rest of the community,” he told Random Lengths — part of a trend often described as the privatization of public space.
But in June 2021, the community-led appeal was denied by the Los Angeles City Council, paving the way for the plans to move forward.
The planned project isn’t just a hallmark of change coming to San Pedro — it’s a new kind of change, part of a model sometimes called the “financialization of housing.”
Square One Homes is funded by Fundrise, a crowdsourced online real estate investment platform (or “eREIT”). By its own account, Fundrise likes to “buy low, sell high.”
This model steers developers toward the construction of dense, predominantly market-rate housing. To satisfy their investors, the property value must be pushed up. And how do you increase the value of a parcel? By building more and charging more.
In this scenario, housing is no longer just a way for individual homeowners or mom-and-pop landlords to build wealth — and for some of that wealth to flow back into the community through spending and property taxes.
Instead, the profit is being extracted by “corporations that are dispersing it to shareholders around the world,” explains Leslie Kern, a Canadian urban scholar who is the author of the 2022 book Gentrification Is Inevitable and Other Lies.
“Some people call it a predatory process,” Kern says. “Developers and the investors behind them are always looking for the next place, but not really having an interest in the place itself or its history.”
Anya Hanson, co-owner of The Winthrop Gallery of Art and Curiosities in downtown San Pedro, grew up in Venice and watched it change beyond recognition in a way she feels is a cautionary tale.
“In the early 2000s, you started to see generational families being offered a million dollars for their house by developers who would buy it, demolish it and build apartments,” she recalls. Rents skyrocketed as developers courted wealthier newcomers and almost everyone of her generation ended up being displaced.
It dramatically changed the fabric of what had been a diverse, mixed-income community. Before, Hanson says, “Everybody hung out and went to bars together. There was a commingling. Now everyone is either tech companies and hot yoga, or they’re homeless.”
Often the housing-as-investment-vehicle approach leads to what Kern calls “cookie-cutter models,” with developers giving little thought to how they fit into the community aesthetically or practically.
Hanson fears the wave of development sweeping over San Pedro will be the same. “Because they’re not doing it right. They’re spending the least possible amount of money, they’re overcharging, and they’re making it uninteresting. There’s no soul in it.”
Sometimes, the developer’s involvement goes no further than getting all the necessary approvals, or “entitlements,” for housing. If they can get land “up-zoned” — have the zoning changed for greater density, for example from single-story commercial to multi-story residential — this alone increases the value, allowing them to sell at a profit to another company without having so much as broken ground. This is known as “land flipping” (analogous to “house flipping,” where a house is quickly upgraded and sold on) and drives prices up for everyone.
Square One Homes already tried to flip this land twice. They bought Dancing Waters in March 2020 for $2 million and the other two buildings in December 2020 for $1.1 million each, for a total of $4.2 million. A 2022 offering memorandum lists the combined parcel, with entitlements (planning approvals), at $6.1 million. According to Zillow, it was briefly listed the previous year for $6.375 million. (The developer could not be reached for comment; the realtor who prepared the offering memorandum told RLn the parcel is not currently on the market.)

The memorandum describes a “102-Unit Development Opportunity” on what they categorize as “Vacant Land.” But before the demolition crew began work some six weeks ago, it was not vacant. The Dancing Waters building began in 1940 as a bowling alley. Its varied life since then reflects the diversity and brilliance of San Pedro: It served as a gay club, a punk venue and, most recently, a norteño club called La Zona Rosa, before shuttering around 2014.
The then-owners, based in Fullerton, had bought it from longtime owner-operator Helio “Al” Cordeiro in 2005 for $1.1 million and allowed it to fall into disrepair before selling to Root Real Estate, an affiliate of Square One Homes, in 2020.
Right until the end, a small community of homeless people has been clinging to what is left of the building. First, the stage and backstage area in the rear of the lot, which were finally razed this week. Now, a tent is perched on a stack of salvaged bricks. In the ultimate irony, as a commercial building makes way for housing, these people are being displaced from their makeshift home.
So what would a more ethical, sustainable approach to development look like? “Actually responding to local housing needs rather than … building for newcomers,” Kern says. “Is there a need for affordable housing for seniors? Is there a student community that’s in need of housing?”
According to Kern, pushing for more robust policymaking — like penalizing land flipping — is one way to hold developers accountable. Another possibility is communities becoming involved in housing development themselves. Communities all over the world are forming community land trusts, securing government funding and negotiating the right of first refusal on buildings to keep harmful speculators at bay. Successful examples can be seen in cities including Oakland and Montreal.
Kern’s book reminds us that neighborhoods can change without this resulting in longtime residents being priced out, and without it coming at the expense of their cultural heritage. While some look at Dancing Waters as a lost cause, many see it as just one battle in what they hope will be an increasingly effective war to protect San Pedro’s most precious assets — its community spaces.