The dining scene in Hermosa Beach continues to evolve and, perhaps surprisingly, the pace of change appears to be accelerating. A record number of restaurants closed this past year and they are being replaced by new concepts that embrace chef-driven menus, professional management and provocative design. As a result, Hermosa may see the reversal of a long term trend of declining total eating and drinking revenues and, at the same time, the continued improvement in the quality of dining options.

There may not be a completely objective way to measure the quality of restaurants, but one positive sign of this comes from Yelp. An impressive 55 of the 89 restaurants in Hermosa now have a rating of four stars or higher, up from only 40 just five years ago.

While eating and drinking revenues in Hermosa are tracked by the city, they are not split out so it is hard to tell what is happening within each category. Nonetheless, a number of owners have confirmed that alcohol revenues have been dropping for years while dining revenues in general have actually been climbing. Last year the combined total revenues dropped by 2 percent from the prior year and remain below their peak back in 2000 just a few years after the opening of Pier Plaza.

In short, food revenues are increasing as the perceived quality of food improves and overall alcohol sales continue their descent.

Four relatively recent forces appear to be triggering the sudden ramp up in restaurant turnover: i) the upper Pier redevelopment project, which manifested in the repurposing of dozens of businesses and buildings; ii) six consecutive years of 9 percent annual home appreciation, which put Hermosa home values in the top 2 percent of the country and continues shifting the demographics of the city; iii) the doubling of commercial lease rates in the past four years, which has significantly impacted cash flow for restaurants negotiating new or extended leases; and iv) the maturing of a secondary market for the challenged restaurants, which has given operators a chance to recoup losses while moving on and, at the same time, limiting the newcomers to those prepared to take on the substantial investment required for success.

Over 30 of Hermosa’s 89 restaurant locations have changed hands and concepts in the past five years. Of these transitions, 10 occurred in the past year alone. Though increasing expenses and declining revenues prompted the vast majority of the recent closings, they were all precipitated in some way by one or all of the forces described in this article.

Upper Pier redevelopment project – The ribbon cutting ceremony for the redevelopment of upper Pier Avenue occurred many years ago in late 2010, but the impact has been far-reaching. First and foremost, the project triggered significant investment in both businesses and properties. A remarkable 60 to 70 businesses in downtown Hermosa had changed hands or rebranded in just the first 18 months that followed the ribbon cutting. This increased the demand for space there resulting in commercial lease rates on upper Pier now being commensurate with Hermosa Avenue after several years of significant gaps.

Strong annual home appreciation rates – Home appreciation rates in all of the beach cities are sizzling, which has helped make the area an even more attractive place to live. Since the beginning of 2011, there have been just under 1,500 homes sold in Hermosa alone, which is a significant percentage of the approximately 4,300 owner-occupied homes in the city. Rental rates typically rise when house prices rise and so there has likely been a similar turnover rate in rentals as well. The net of this is that the demographics of the city have been shifting quite a bit over the last several years with the growth in the city’s median income being just one example. It is not much of a stretch to conceive how dining preferences would have shifted as well.

Restaurants provide more than just food and drink and have, historically, helped shaped social relations. In essence, they fulfill a need for human connection. They also play an important role in helping shape local economies and the nature and makeup of cities. As home prices continue to rise at blistering rates in Hermosa and the city’s demographics change, the success of restaurants increasingly depends on the ability of operators to track shifts in what brings people out to eat in the first place. The inability of some owners to do this in a rapidly changing environment may be the primary reason why there has been such a significant jump in the number of restaurant closings over the past 12 months.

Higher commercial lease rates – The cost of restaurant space has doubled in the past four or so years and, if residential housing prices are a leading indicator of changes to come in the commercial real estate market, long term lease rates will continue to rise. As leases expire, landlords generally have the opportunity to adjust rent upward to fair market value and often do so.

One extreme example of this was a byproduct of the sale of the Mermaid property in 2013. The lease rates at the site were substantially below market value prior to the sale. All of the restaurants on the property had month-to-month leases so after the close of escrow, some restaurant groups on the property saw their rents triple almost overnight. For one of the groups, this resulted in an increase of over $100,000 in annual rent making it far more problematic to remain open at that location.

A maturing secondary market for restaurants – Demand for restaurant space in the beach cities is astounding. Listings for available locations garner dozens of calls. This manifests in interesting ways for both restaurant operators and landlords. New tenants are often more willing to pay higher rents to secure a location in the beach cities, an obvious benefit to landlords. At the same time, this high demand for space has afforded restaurant owners the chance to not only move on from their leases, but also to sell their assets for amounts well above the market value of the those assets. This helps take the sting out of the decision to transition out and move on. It also creates somewhat of a barrier to entry for underfinanced or inexperienced operators.

All but a couple of the restaurant transitions this year involved a buy-in by the new restaurant operator. The transitions that didn’t include money for the owners moving on had unusual circumstances such as highly unfavorable short lease terms of three years or less.
All of these changes have a plus side. As restaurants close, they make way for new concepts with big potential. We are seeing a number of unqualified success stories with many of the new restaurants that have been opened in the past few years.

Relative newcomers like Tower 12, Rabano, and Radici are joining the ranks of successful concepts like Baran’s 2239, Laurel Tavern, Greenbelt and Hook & Plow that are helping pave the way. Look for the opening of Slater’s 50/50, Decadence and Serve on 2nd this year to continue this favorable trend.

The convergence of changing social demographics with rising expenses has put an increasing number of Hermosa Beach restaurants at risk. On the other hand, this has created huge opportunities for well financed and experienced restaurant operators with a knack for addressing the elements of great food and social relevance. Change can be good and Hermosa will continue to see a positive transformation in dining in the months and years to come.

Several years ago, Manhattan Beach resident Linda Murad and her business partner Liz Murad Waters created The2ndDate, a matchmaking company.

The dating services industry has annual revenues in excess of $2.5 billion. This may not come as much of a surprise, given that there are an estimated 122 million unmarried adults in the U.S. and the number continues to grow. In 1960, the share of adults married peaked at 72 percent and has been steadily declining since. Today, roughly half of all adults are unmarried.

The three primary segments of the dating services industry are online dating websites, dating apps and traditional matchmakers and dating coaches. New evidence suggests that these efforts have been effective in bringing people together. Two independent university studies concluded that more than one-third of marriages now begin with online dating. This bodes well for the industry. However, some business analysts believe the existence of over 1,500 dating sites has resulted in saturation of the market and may lead to slower revenue growth.

Impediments to growth may be the fact that over half of online daters state that someone else seriously misrepresented themselves in their online profile. Additionally, a Pew Research Center study found that 28 percent of online daters have been contacted by someone who has harassed them or otherwise made them feel uncomfortable. Challenges facing the industry include the presence of fake online profiles, fraudulent traffic, database breaches, and privacy safeguards.

While the online sites and apps have grown with millions of users, so too have the number of traditional matchmakers and dating coaches. Manhattan Beach resident Linda Murad, along with her business partner Liz Murad Waters created a traditional matchmaking company, The2ndDate, a couple of years ago. I had a chance to speak to both of them about their unwavering passion of “helping people find love.”

Murad and Waters They both related rewarding experiences “helping people find love.” Murad worked in advertising and Waters is an attorney. They have known each other for over 20 years but were never able to pursue forming a business together until their children were in school.

They do not take on everyone. Their clients must be genuinely interested in getting into a relationship and must undergo background checks. They conduct all interviews in person and coordinate first dates. These are true blind dates. photos and last names are not shared. The woman receives the man’s number the day of the date so she can contact him at the venue where they are meeting.

Murad and waters provide coaching on everything from their client’s wardrobe to real-time texting to turn a date around that may not be going well. They solicit feedback on the date from both parties the next day and help facilitate second dates.

A nominal fee is charged for everyone in their database. However, there is a success fee charged to the man if he completes a three-month relationship. With their business model now proven, they are taking steps to grow their business through social media. For more information visit the2nddate.com.

As seen in Easy Reader

Local start-up company Travel-Light has set out to become a global innovator in the travel and mobility industry with their G-RO luggage system.

Israeli industrial designer Netta Shalgi created a prototype design for an axle-less, oversized wheels carry-on bag for travel, with smartphone and tablet charging capability. Los Angeles entertainment attorney Ken Hertz met Shalgi in London and it led to the formation of a company to develop and market their first luggage system. They were able to sell 13,000 units in 70 different countries in a short time and raised $4.7 million using the crowdfunding platform Kickstarter.  The concept was thus proven, but they did not have an infrastructure in place to sustain their business.

While the administrative, advertising and marketing efforts are handled domestically, the G-RO product line is designed in Israel and manufactured in Dongguan, China.  Pulling all of this together would require a team with a broad range of skills and a strong leader with a global mindset and experience base. They launched a global search for a CEO and ended up tapping 30-year beach cities resident Jerry Gross to head the company.

Gross grew up in Spring Valley, New York and demonstrated a knack for building businesses, including a tennis racquet stringing service as a teenager. He attended Johns Hopkins University as an undergraduate and later Harvard Business School. After a few years in investment banking, he became an integral part of the Vans management team and the development of their skateboard shoes. He helped Vans build their administrative infrastructure, marketing, and manufacturing capabilities before they went public.

His subsequent work in product development and process engineering for start-up companies afforded him an opportunity to live and work overseas. His extensive travel in Asia culminated in bringing his family to Xiamen, China to live for a few years.

Gross considers himself a “generalist” with respect to management because of his hands-on experience in all areas of an organization, which, when coupled with his overseas experience makes him an apt CEO for startup companies.

He selected El Segundo for G-RO’s offices because the city “encourages business development” and has a “lot of companies doing unique and interesting things.”  He adds that it has a “variety of old properties that have been renovated into modern tech/creative/office space.”

Gross and his team are currently working on designing new products, with a goal of contracting with regional manufacturers around the globe. This potentially includes repatriating some production back in the U.S.  Regional manufacturing has the benefit of reducing manufacturing cycle times, transportation costs, and facilitates production of specific products for local markets.

For more about G-Ro luggage visit g-ro.com

As seen in Easy Reader / Photos by Photos by Brad Jacobson (CivicCouch.com)

Real estate prices in the beach cities have been appreciating at astounding rates for several years now. This holds true for both residential and commercial properties. It all starts with the growing popularity of living here. Our schools, beaches, and business districts have been attracting an increasing number of people to the area, which in turn increases the appeal to retailers and other businesses to be in our communities as well.

The theory of supply and demand postulates that in a competitive and open market, the unit price for any good will eventually settle at a point where the quantity demanded equals the quantity supplied at current prices. Stated another way, the price of something tends to reflect the demand for it and how much of it is available to satisfy the amount of demand for it. Our limited supply of housing doesn’t match the increasing demand for it and so prices keep rising.

Since 1970, the number of housing units available locally has remained relatively flat based on the stabilization of the population since then. The current Manhattan Beach population has hardly changed in the past 50 years. Also, our housing turnover rates are way below the national average of 7.5 percent. In Hermosa Beach there were 199 reported sales of all housing types last year, which represents maybe 2 percent of all households there. The bottom line is that the supply of housing is very limited whereas the demand for space here continues to grow, which subsequently drives up prices. This is evident in the impressive appreciation rates in all of the local areas that have been sustained for the past six years.

Given that in 2015 there were 16,507 Los Angeles County tax filers with incomes of over $1 million, it may be some time before affordability of exclusive homes becomes an issue. These fortunate earners had an average income of $3.38 million each and thus could easily qualify to buy the 13 reported homes sold on the strand in Hermosa Beach and Manhattan Beach in 2017 at an average price of $11.8 million if so inclined.

As housing prices rise so too do the qualifying incomes required to purchase the homes here. More retailers and other businesses want to be here to cash in on this. As a result, the demand for limited commercial space parallels what has been happening with residential home prices. Buyers of commercial properties here, if they can find them, have been willing to accept lower capitalization rates. In other words, they will take on an investment with a return on their investment now at about half the national average. Similarly, lease rates have blown through their record highs. In downtown Manhattan, we are seeing $10 per square foot lease rates, which is double the average in downtown Hermosa.

This manifests in an interesting way for restaurants in particular. We have one of the few markets in the country where restaurant space can command what might be loosely referred to as “key money” regardless of the success of the departing tenant. Most new tenants have to pay substantial upfront fees to get in. We are seeing these fees exceed $400,000 in the Riviera Village and $1 million in downtown Manhattan for space that includes access to a full liquor license. This coupled with high rent puts tremendous pressure on restaurant operators to hit their revenue targets if they want to recoup their investments within a short timeframe. This unrelenting pressure is likely to limit commercial lease rate increases, at least in Manhattan Beach, moving forward.

Redondo Beach has an odd shape on the map for a city that has been around since 1892. A pinch point exists along the summit of Anita Street and 190th Street that creates a natural division between the north and south. By the time the zip code system was introduced in the U.S. in 1963, which formally split Redondo into two codes, the characteristics of these two distinct areas were already taking hold.

The South Bay Center (now the South Bay Galleria) opened in 1959 and Space Park followed suit two years later, cementing the North Redondo as a commercial and industrial stronghold. In 1964, State Route 1 became Pacific Coast Highway and a gateway to Hollywood Riviera and the Riviera Village. The coast has had several iterations of a pier over the past century and King Harbor was dedicated in 1966.  As might be expected, the housing market in each area tended to reflect the needs of residents based on the commercial and recreational attributes of the two areas.

Perhaps by happenstance, the two sections have close to the same number of housing units with the south having a slight edge. However, the number of sales transactions in 90278 to the north, has consistently been greater over the years.  In 2006, before the national financial crisis took hold, close to 1,000 homes were sold in Redondo with more than 560 being in the north. As it turns out, the same ratio applies this year as well. This may be an artifact of North Redondo having a higher percentage of owner-occupied homes and households with children.

In 2006 and again in 2011, as housing prices started to gain ground on pre-crisis levels, median home prices in the north were approximately 85 percent of the median prices in the south. However, in the six years since, the south has experienced average annual appreciation rates of just over 10 percent while the north has been holding at under 8 percent.

The South Redondo median home price for all housing types was $860,000 before the financial crisis hit in 2006 and only $715,000 five years later. This year the median price has topped $1.2 million. In the north, the median price hit $750,000 in 2006 before falling to $610,000 in 2011. This year the number is approaching $1 million.

Back in 2006, both areas had roughly the same percentage of single-family homes sell with respect to overall sales, but this has been gradually shifting since. While the south has held steady at close to half of all housing sales coming from single-family homes, the north has seen a decline as a result of an increase in townhome sales. Over 14 percent of home sales in the north this year were for new build-outs with a median price of over $1.2 million and the vast majority of them were new townhomes.

There have been far fewer new build-outs in 90277 this year, but their median price was just under $1.6 million. Nonetheless, this alone is not enough to explain the widening gap between home prices in the south compared to the north of Redondo.  Turnover rates may also contribute to this as there are fewer homes as a percentage of the total on the market in the south, but with higher demand.  Finally, it’s possible that an increase in the number of high-performing new restaurants and Shade Hotel in the south have had an impact on interest levels there as well.

As seen in Easy Reader

I can’t recall how it all started though it may have been just a passing suggestion by our then eight-year old daughter, Isabella. It sounded daunting at the time, but for whatever reason, we relented and embarked on a journey that would take us to all 50 states. Had we thought through just what this would have entailed, we probably would have backed off, but it turned out to be an absolutely incredible and unforgettable experience. Breaking from our pattern of over-planning created enough of a shift in our behavior to enable the great gift of thoroughly engaging in all of the magical moments we would encounter along the way.

In an 18 month period, we made it to all of the states we hadn’t been to before. It took seven separate trips and by the time we finished, we would log over 13,000 miles by car and close to 30,000 in the air. We would see over 30 major colleges or universities, 25 state capitols, and several National Forests, Parks or Monuments. Our only rule was that we needed to either spend the night or have a full meal for the visit to count. In all, we spent a total of two months away from home. We never anticipated how remarkable the journey would be or the impact it would have on our lives.

It began in Hermosa Beach with a road trip to several southwestern states in December 2014. We spent substantial time planning every hour of the first trip. We knew where we wanted to be and when we wanted to be there. We even mapped out our food and researched restaurants in advance. As we would soon learn, this amount of structure inhibited us from really being present and embracing the adventures as they unfolded. The southwest provided a fortuitous first trip for this as there are countless ways to interrupt the comfortable familiarity of living by the ocean.

Our first epiphany on the benefits of unscripted travel hit us in Saguaro National Park. We arrived in a valley completely surrounded by thousands of tall saguaro cacti standing sentry to the majesty of the desert. We realized that trying to adhere to our tight travel plans would rob us of rare moments like this. We were struck by the stillness and serenity of the air, something we don’t experience often at the beach. It would be a recurring experience in the southwest in places like White Sands National Monument and the Arches and Canyonlands National Parks.

To interrupt Isabella’s increasing dependency on her iPad during our drives, we began to make random stops to get her active. These respites paid off and provided us with fantastic memories. In White Sands National Monument she would roll down the glistening hills while laughing hysterically the whole way down. The same thing happened on the slopes of Vail and sledding down Y Mountain in Provo. Spontaneous activity and fun can definitely transform the travel experience.

While on this trip we committed to eating local food and witnessing the culture as much as possible. We couldn’t get enough of Southwestern cuisine, especially in New Mexico. Santa Fe had fantastic food and offered opportunities to visit enchanting places like the pueblos of Nambe and Taos and to shop the Native American vendors at the Palace of the Governors. The uniqueness of El Paso, Denver and Las Vegas would add to the mix.

In the spring of 2015, we set out to visit family and friends in the Gulf States before venturing off to several adjacent states. Experiencing unfamiliar places with people we enjoy who happen to know the area well greatly enhanced our travel and would become a mainstay for our trips moving forward.

There were a couple of stops that we made that stand out above many other amazing places on this trip. Ruby Falls, outside Chattanooga, has an underground 145-foot high waterfall every bit worth the effort getting to it. Likewise, we will never forget digging for diamonds in the world’s only diamond-producing site where the public can do this at Crater of Diamonds State Park outside Murfreesboro, Arkansas. We spent a couple of hours, mostly in mud, not even caring if we made a discovery.

We were also able to enjoy some excellent Southern-style cuisine in Alabama and Florida in addition to old school ribs in Memphis. Of course, we had to try gumbo, jambalaya and even beignets in New Orleans. We also lucked out with some great food close to the Grand Ole Opry, the Gateway Arch, and in Mississippi.

We thought it would be fun to go to the District of Columbia and Philadelphia over Memorial Day weekend that year and it turned out to be a great decision. We didn’t need an iPad for Isabella much at all on this trip. Because of timing issues, we had to consolidate the D.C. trip and opted to use a bus tour for this, which worked out perfectly. We covered many monuments and had the opportunity to walk around most of them. It was fun for her to see the White House and I had a chance to meet up with a former college classmate after the tour.

We had great food in Reading Terminal Market in Philadelphia, but missed out on seeing Liberty Bell Center because the line had at least 300 people in it. We grabbed Philly cheesesteaks to go instead before meeting up with friends for dinner in Cape May, New Jersey. Our shortest stay in a state would be in Delaware with a stop for cheesecake and we would only end up spending a couple of hours in Harper’s Ferry in West Virginia. Baltimore offered fantastic soft-shell crab, cannoli in Little Italy, and a chance to burn it off paddle-boating in the Inner Harbor.

Later in the summer after Isabella turned nine, we would visit the Pacific Northwest and bring our travel to another level. We had an exceptional trip to Idaho, Wyoming, Montana, Washington and Alaska. Everything about these states made it easier and more enjoyable to be spontaneous. From swimming in a sink hole off the Snake River by Shoeshone Falls to watching the Jackson Hole Rodeo in Wyoming to swimming in the West Thumb of Yellowstone Lake, we had a blast. It helped that we had warm weather and got to see bison roaming up close, eruptions from Old Faithful Geyser, and the beauty of Big Sky while hiking.

Stops in Coeur D’Alene, Spokane and Seattle all added to the adventure. We got our Idaho potato fix in, a chance for Isabella to get on rides, and a fantastic ferry ride at night to view Seattle.

I could write volumes about our time in Alaska with friends. We were able to go dog-sledding with Iditarod competitors, raft in a Glacier river, tour Denali National Park, eat incredible salmon, and stay on military bases. I can’t overstate how special our time in Alaska was every day we were there. The signature moment occurred on the way back from a dinner cruise to Fox Island in the Kenai Fjords. We stopped in Emerald Cove and were blown away by the sight of countless moon jellyfish, sea lions trying to scramble up a tiny island to escape four approaching orcas, eagles on the side of a bluff not far from common murres, cormorants, puffins, and a random mountain goat. Definitely not something we see every day.

Over Labor Day, we flew round trip to Boston to capture the pageantry of the change of seasons and see all of New England. An hour drive can change everything there. We went to Pemaquid Point Light to scramble on the cliffs and tour the lighthouse before eating lobster rolls in Boothbay Harbor. Having Italian food was a must in Boston before spending the night in Cape Cod. Whether swimming at the beaches of Nantucket Island or just walking around the island, it left an indelible impression.

Isabella had a chance to scope out both Harvard and Brown on this trip and to see my childhood home in upstate New York. We swam in Lake George and would enjoy the company of one set of friends in Burlington and another set in Montreal.

It wouldn’t be until spring break in 2016 before our next trip to Michigan, three of the Great Lakes, the Rock and Roll Museum, and Notre Dame. This trip would mark another turning point in that Isabella became far more proactive in planning our activities. Her level of engagement ramped up and it hasn’t changed as we plan new trips.

She had us at the incredible Henry Ford Museum in Dearborn, an indoor water park in Sandusky, the play Matilda in Chicago, the Wizard of Oz Museum in Wamego, Kansas and later the Little House on the Prairie site in Independence. She even managed to get a horse ride in when we were in Lincoln, Nebraska. We were encouraged to visit Woolaroc and it turned out to captivate all of us between the free-roaming wildlife and the extensive museum.

Food was a big part of this trip as well and we had brats with friends in Milwaukee, baked goods in the Czech Village outside Cedar Rapids, and steaks in Omaha. We even enjoyed a diner in Tulsa and great Thai food in Dallas.

On our last night, we pampered ourselves at the Westin Galleria which gave Isabella an opportunity to swim in the morning and ice skate later in the mall.

This left us with just three states to visit. We flew into Minneapolis just before Isabella’s 10th birthday and enjoyed the city before checking out the expansive Mall of America. Not surprisingly, Isabella loved Nickelodeon Universe and we would make it back a couple more times. We ventured off to Fargo and then spent the night in Bismarck. The next day we achieved our goal of hitting our 50th and final state when we made it to Ludlow, South Dakota without any signs of civilization in sight.

South Dakota proved to be another big surprise for us with Mt. Rushmore, Jewel Cave National Monument, Crazy Horse Monument and later Badlands and Sioux Falls. We would punctuate our last night of our last trip on this journey with a spontaneous stop at Bingham Lake in Minnesota for a swim.

Our quest had come to an end and it would prove to be nothing short of life-changing. We have been on a number of trips since and Isabella now actively participates in the planning process as little as there might be of it. We can’t help but smile when we recount the hundreds of stops we made for food or other activities to accomplish this incredibly gratifying goal.

When invariably asked what her favorite places are, Isabella offers New York City and the big island of Hawaii. We have been to Manhattan a number of times and to Hawaii before our quest to visit all 50 states began in earnest. She has vivid memories from both areas. Our travel has been an incredible blessing thanks to making the shift from a heavily-scripted approach to a mindset of just embracing the opportunities as they come.

The Beach Cities have become a hotbed for business creativity and execution, especially in the food industry. Over the past few years, we have seen an increasing number of new and exciting concepts begin here before expanding to multiple locations in other states. However, very few of these concepts truly break new ground or innovate the way Veggie Grill has with its 28 locations. I spoke with co-founder T.K. Pillan to discuss the genesis of the brand, the role the Beach Cities has had in their success, and on expanding nationwide with their Chicago and Boston units opening up soon.

A menu based on vegetables and plant-based food may have sounded risky when the first Veggie Grill opened in Irvine 11 years ago. In 2008, Vegetarian Times published a study suggesting that just 3.2 percent of Americans or 7.3 million people considered themselves to be vegetarians. These numbers were not particularly compelling, but Pillan and his partners were ahead of a related trend. According to a recent study, over 40 percent of people surveyed are trying to eat healthier and reduce meat and other animal-based food consumption. This is particularly true in “progressive metropolitan areas,” which became the target for Veggie Grill’s expansion in the near term.

While they may have started with the intention to expand nationally over time, Pillan recognized that the “first one had to work.” They had a lot of kinks to work out. Along the way, Pillan, an 18 year resident of Manhattan Beach, discovered that the beach cities are home to “many successful business people” with a penchant for sharing ideas.

There is no doubt “this was definitely helpful,” not just with idea-sharing, but also testing early versions of the menu and brand, and even bringing on board members. He has made great connections in unexpected ways, including going downtown for coffee, talking to other parents of children in the local schools, and even walking his dogs through the neighborhood.

He also lives within a few blocks and has developed friendships with industry leaders like Chris Simms of Lazy Dog Café, Adam Goldberg of Fresh Brothers and Michael Zislis of Shade Hotel and Rock & Brews. Each of them has established successful brands with multiple units across several cities and have been open to sharing their perspectives.

In 2015, Pillan formed an investment fund, Powerplant Ventures, to support “visionary food companies leveraging the power of plants.” They recognized that there is an increasing number of pioneering companies developing innovative proteins. In fact, revenues for the plant-based food industry topped $4.9 billion last year and continue to grow.

The community again was a valuable source of contacts in the fund management and investment world. And of course, one company they have invested in was Beyond Meat, co-founded by Manhattan Beach resident Brent Taylor. Business leaders in the beach cities are increasingly proving to be an important resource for local entrepreneurs hoping to create dynamic new companies or to expand on early successes.

As seen in the Easy Reader / Photo by Photo by Ciley Carrington
Photo: Veggie Grill co-founder T.K. Pillan at his restaurant in Rolling Hills Plaza.

Through the many Manhattan Beach businesses Manhattan Beach resident Michael Zislis has founded over the past 26 years, he has both contributed to and benefited from Manhattan’s growing popularity. During a recent interview, he talked about what he thinks accounts for Manhattan Beach’s dramatic rise in status.

Zislis grew up in Palos Verdes and studied economics at USC. He was grounded at a young age in business principles by mentor and neighbor Arthur Laffer, the Reagan economic adviser whose Laffer Curve became the foundation for Republican tax policy. In the early 1990s, he coupled his education with his passion for brewing when he and his brother David bought a “pies and burgers place at the beach” and opened Brewco, down by the Manhattan Beach Pier. In 2000, the brothers took over the former Hibachi restaurant next door and opened the immensely popular Rock’N Fish.

At the time, there were a number of locally popular restaurants in downtown Manhattan, however, few of them drew from outside the area. Zislis set out to change this. Today highly-acclaimed restaurants fill downtown. Zislis believes these restaurants have played an important role in the burgeoning popularity of the city.

Other factors that have contributed to the downtown’s momentum, Zislis said, include the opening of Skechers’ flagship store and the arrival of high profile residents such as the King’s Marty McSorley, soccer gold medalist Mia Hamm and her husband and Dodger Nomar Garciaparra. In addition, he credited “strong pro-business city managers” with contributing to the downtown momentum.

Another significant contributor was the opening of Metlox Plaza 12 years ago. The addition of Zislis’ Shade Hotel and 400 new parking spaces would contribute to a 25 percent increase in downtown sales tax revenue. Ironically, the original Metlox plans had a restaurant where Shade Hotel now stands. Zislis became involved when the group selected to replace the restaurant with a hotel backed out.

Finally, Zislis said, “Manhattan, as a town, is the king of giving back.”

He and fellow business owners, including Mike Simms of Simmzy’s and The Arthur J, often collaborate on community events for the downtown and on policies to improve downtown business. These relationships have indirectly created a platform for launching franchises such as Rock & Brews and other, successful, multi-unit restaurant brands.

Jon Mesko, owner of Manhattan Denim and five Rock and Brews restaurants, described Zislis as someone who “genuinely wants to help others.” He said the mentoring he offers fellow business leaders ensure that Manhattan’s stature will continue to grow.

As seen in Easy Reader / Photo © Easy Reader

Shake Shack in El Segundo opened up to very long lines a couple of weeks ago.  This auspicious start for the new Apollo Landing development is yet another example of the increasing diversification of the business base in El Segundo.There have been substantial investments made in development projects over the past few years that have solidly propelled the city into a new era that some businessmen and even professional writers are classifying as “trendy” and “cool.” Both The Point and the new Lakers executive offices with a world-class training facility were $80 million investments. Elevon, which is adjacent to the Lakers compound, came in closer to $100 million. Many investors and residents may be wondering what, if any, impact all of this growth might have on the residential real estate prices here.

The housing market has been turbo-charged for a while now, with average annual appreciation rates of over 7 percent for the past six years. The 2016 Forbes annual study of the most expensive zip codes in the country places El Segundo in the top 1.6 percent of all zip codes nationwide. In El Segundo, what makes this growth particularly interesting is that median sales prices are not skewed by newly-built homes. Only a couple of homes that have been sold this year were new buildouts.  In parts of Manhattan Beach, we are seeing as many as 20 percent of home sales coming from recently built homes, which can skew the median sales prices up.

The S&P Corelogic Case-Shiller national home price index shows a year-over-year gain of close to 6 percent for their 20-city composite annual increase. For the other areas of the beach cities, the increases have been between 5 percent to 10 percent.  El Segundo is consistent with both the national and local numbers, suggesting that the commercial investments in the city have probably not had much impact yet.

While there have been a few noticeable changes to the downtown area, they have been limited. Most of the commercial investment has been on Sepulveda Blvd., Rosecrans Blvd., and what is often loosely referred to as east El Segundo. In the downtown areas of Manhattan Beach and Hermosa Beach, we have seen more activity with respect to new retail and restaurant offerings. Residential appreciation rates in the sand sections of these cities have been much higher than the average for the area and there continues to be substantial new buildout activity.

There are currently 14 homes for sale in El Segundo at a median listing price of over $1.3 million. This is a very low level of inventory for El Segundo and highlights a surprising finding about the housing market here.  It turns out that the turnover rate of homes is exceptionally low, about half the national average rate.

We may or may not see much impact on appreciation rates in El Segundo from the tremendous development success in the city outside the residential areas. Bill Simone, the President of Custom Design & Construction, which has been based in El Segundo for 31 years, “Our South Bay area has enjoyed solid economic growth, ongoing quarterly job gains, and rising household formations, which fuel local housing demand. Tight inventories and the looming threat of mortgage interest rate increases through 2018 will keep home prices on a steady inclining path.”

A leading indicator to watch would be permits pulled for new buildouts of custom homes, something we have been seeing in Manhattan and Hermosa for a while now.

As seen in the Easy Reader

Last week, House Republicans released their proposed Tax Cuts and Jobs Act. The bill is intended to cut taxes for the middle-class, simplify the tax code and create jobs. Release of the Senate version is expected this week.

Of particular interest to Beach City residents is the impact on local home prices, resulting from potential changes to certain deductions. Like the current tax code, the answer to this is complex and depends on a number of factors.

Two proposed modifications that would affect homeowners are the caps on both the mortgage interest and property tax deductions. What is presented here is in no way comprehensive, but rather summarizes how some homeowners might be affected.

Currently, homeowners can deduct interest payments on their first $1 million of home loans. The proposed tax plan drops this cap to $500,000 on new home purchases. (Existing homeowners would not be affected.) This change translates to about $20,000 in interest that will not be deductible. Additionally, the plan calls for a $10,000 limit on the amount of property tax that can be deducted, which would impact homes valued at over $800,000.

The impact on homeowners will depend on the amount of their loans and the purchase price of their homes. The average home sales price in Redondo Beach over the past five years was $1.2 million and so it is possible that the majority of the more than 4,100 homes that changed hands involved loans of $500,000 or more. Given that 56 percent of housing units in Redondo are owner-occupied, this represents an approximate turnover of 25 percent in five years.

If we use a sale price of $1.2 million to illustrate the impact of the new deduction caps, a buyer would lose about $20,000 of interest deductibility, depending on the down payment amount. The buyer would also lose about $4,400 in property tax benefit. This translates to a net income loss of approximately $600 monthly, depending on individual or household tax brackets. As a result, a buyer might lose  $20,000 in home purchasing power under this scenario, an amount that probably isn’t sufficient to impact future home sale prices.

Manhattan Beach sales would feel the impact more. In the past five years, close to 2,000 homes were sold at an average price of $2.4 million. The effective drop in income for a buyer of a $2.4 million home because of the tax changes would be about $950 monthly. This might impact home buyers’ purchasing power by $50,000.

Of course, there are other considerations in the proposed tax bill such as the change in tax rates that could offset some of this net tax increase. John Chuka, the owner of NW Real Estate Brokers in Manhattan Beach, with a total of 80 agents, said that “any cap on mortgage loan deductibility is a negative.” However, he added, “Many of our beach cities clients rely secondarily on the current deduction.”  When coupled with the incredible appreciation rates that we have been experiencing here, Chuka added, “I think most coastal area buyers will consider this loss of deductibility a less than important issue in the grand scheme of buying while others will consider the deduction gap a greater negative when buying in other areas with loans exceeding $500,000.”

As seen in the Easy Reader