Commercial Real Estate Mutiny In Downtown LA

[CrackSmokeRepublican]

Commercial Real Estate Mutiny In Downtown LA

Numerous merchants in LA's Grand Central Market did not pay their February rents for more than two weeks. The merchants were protesting high rents and advertising fees as described by Los Angeles DownTown in Mutiny at the Market.

    A tenants' mutiny at Grand Central Market was resolved last week after a group of merchants who had withheld their February rents came to an agreement with the landlord and paid up.

    As part of the resolution with landlord The Yellin Company, rents will be lowered and advertising fees charged to the tenants will be eliminated.

    Adele Yellin, president of the Yellin Company, said that the move will lower costs for the 40 merchants.

    "We do understand the pressure that our tenants are under in these times and we've taken steps to reduce their rent by eliminating the advertising budget," Yellin said.

    The situation had been bubbling for months, and began to come to a head in late January. That is when Ralph Leech, an attorney representing some of the Grand Central Market tenants, sent a letter to the Yellin Company citing the deteriorating economy and asking for a 30% reduction in rents and a discontinuation of the monthly publicity charge that pays for advertising the market.

    The crisis quickly escalated, as most of the tenants withheld the rents that were due Feb. 1. That led the Yellin Company to send notices to those who had not paid, threatening eviction.

    Last week, both sides said they had reached a tentative agreement that should alleviate some of the financial woes.

    Yellin and tenants who spoke with Downtown News said there will not be an-across-the-board 30% reduction, but instead the landlord will deal with each tenant individually. The monthly publicity fee paid by the merchants, which can vary from a few hundred to more than $1,000 a month, was removed from their lease requirements.

    "The businesses are very slow. People are using lines of credit to pay rent. It's a bad situation, but hopefully we'll survive. We just need help," said Robina Sookasya, owner of Kabab and More, a Mediterranean food vendor.

The mass mutiny at Grand Central Market provides a strong hint at what's coming.

With rising unemployment and falling discretionary spending, the economy is not coming back anytime soon. Thus, tapping credit lines to pay rent is a tactic guaranteed to fail. Yet, the economic situation is such that using lines to pay bills will continue until every cent of those credit lines are used up. After all, what vendor will voluntarily go out of business now?

Those lines of credit will eventually be defaulted on and that in turn will sink the regional banks who made the loans.

This crisis was "resolved" for now, but how many more rounds like this can the tenants take? Equally important, how many more rounds like this can the Yellin Company take? Next, multiply this scene by every similar market in the US. A conclusion is not hard to reach: A massive fallout on commercial real estate is right around the corner.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com




------------------------------------
September 12, 2002
Eulogies:Ira Yellin
Urban Pioneer,Dies at 62

Ira Yellin, recognized throughout Los Angeles as an urban pioneer for his tireless efforts to rebuild the city's historic core, and most recently a principal of real estate development company Urban Partners LLC, died Sept. 10 at his home in Los Angeles from lung cancer. He was 62.

Yellin, the son of the founding rabbi of Temple Mishkon Tephilo in Venice, was a major philanthropist and activist on behalf of Jewish causes.

When few developers and entrepreneurs cared about downtown Los Angeles' historic and urban landmarks, Yellin was the exception. From the restoration of the legendary Bradbury Building to the renovations of Union Station and the dilapidated Grand Central Market, Yellin's vision of Los Angeles helped transform the city during his 27 years of urban development.

"Los Angeles owes him a debt of gratitude," said California State Librarian Kevin Starr. Yellin is "unique for what he wants for the city, and what he has helped build."

Although born in Springfield, Mass., Yellin developed a deep love for Los Angeles, when his father, the late Rabbi Isaac Yellin, moved his family here in 1948.

Yellin's contributions to the city of Los Angeles included running the international design competition to pick the architect for the new Cathedral of Our Lady of the Angels, one of the city's new cultural centers.

As a community leader, his commitment to the city of Los Angeles extended to include significant cultural, religious and philanthropic involvement. Yellin served on the board of trustees of the J. Paul Getty Trust; the board of trustees of the California Institute of the Arts; the board of governors and former president of the American Jewish Committee; the board of directors of the Los Angeles Police Foundation; the executive committee of the Central City Association; the board of advisers of the Rand Institute of Education and Training; and the board of advisers of the WATTS Health Charities. He was also active on behalf of Bet Tzedek Legal Services.

Yellin graduated with a degree in history from Princeton University in 1962 and received his law degree from Harvard Law School in 1965. After completing his master's degree in law at UC Berkeley in 1966, he served in the U.S. Marine Corps Reserve, returning to Los Angeles in 1967 as a partner at the law firm of Rosenfeld, Meyer & Susman. In 1985, he started The Yellin Co., overseeing some of the best-known development projects in Los Angeles. From 1996 to 1999, he served as senior vice president of Catellus Development, focusing on complex, mixed-use projects with a community and urban significance.

Yellin founded Urban Partners with real estate professionals Paul Keller and Daniel Rosenfeld. Their current projects include the Del Mar Station in Pasadena, the Los Angeles County Hall of Justice, the California Department of Transportation District 7 Headquarters, the Herald-Examiner Building, the University Gateway, the Wilshire/Vermont Station and the Ambassador Hotel site.

In a 1994 interview with The Jewish Journal, Yellin summarized his motivation to help others and the city he loved as, "an obligation to give back and begin the endless process of healing the world. I believe that more than I believe in anything."

He is survived by his wife, Adele; daughter, Jessica; son, Seth; mother, Dorothy; and brothers, Dr. Albert and Dr. Marc.

The Yellin family asks that donations be made in his name to the American Jewish Committee: Western Region, 9911 W. Pico Blvd., Suite 1602 Los Angeles, CA 90035, (310) 282-8080.