Quake-Damaged Retailers Struggle to Stay Afloat
Exodus of locals has cut customer base as businesses try to rebuild
SHERMAN OAKS, CALIF.
`BANANA Republic is out, the GAP is not coming back, Laser Sport is having a going-out-of-business sale,'' says Michael J. Ourieff, looking out the front window of his pizzeria on Ventura Boulevard here. ``How do you think my business is going?''
The owner of Michael J.'s Restaurant can rattle off the number of office buildings and the names of side streets where 20,000 tenants or residents have exited since the Northridge Quake leveled freeways, homes, and buildings across the nation's largest suburb, the San Fernando Valley, on Jan. 17.
That exodus has left a giant question mark hanging over this two-and-a-half mile commercial stretch of Sherman Oaks - by all accounts the hardest hit retail community. The epicenter of the 6.8 magnitude trembler on the Richter scale was just four miles north of here. Dozens of buildings are tagged either red (Do Not Occupy) or yellow (Limited Entry) by the city building department, which means such buildings either need fixing up or require demolition.
``Rebuilding is going slow,'' says Mr. Ourieff, mentioning only one building as far as the eye can see that has started repair work. He estimates that one-half of the local trade to his 11-year-old eatery is gone. ``We have to think about relocating,'' he says.
According to most estimates, retail and restaurant business across the 10-square-mile community of Sherman Oaks will not return to normal for 18 months to three years. Because the alluvial soil beneath this edge of the valley is not as stable as the bedrock or clay in the valley center, more buildings were lost here.
One million to 1.5 million square feet of office and retail space was damaged, according to Bruce Frasco, senior vice president of Beitler Commercial Realty Services. Along Ventura Boulevard, the estimated damage to 167 buildings is $27.8 million. Across all of Sherman Oaks, the figure reaches $211.7 million, according to the city chamber of commerce.
``Those figures could go far higher,'' says Mr. Frasco, noting that earlier estimates included the cost of repairing some buildings whose owners have since decided to demolish the structures.
Jim Giorgio, chamber president, says that 3,000 red-tagged apartments and 2,000 with yellow ones have added 10,000 residents to the list of customers no longer giving their business to restaurants and retailers on Ventura Boulevard.
``Retailers and food outlets are the ones suffering the brunt of this because so much local business traffic is no longer showing up,'' Mr. Giorgio says. ``When you lose a lot of residents like this, investors and potential lessees tend to lose a little confidence in the area. But we think we'll make it back, though it will take time.''
A recent walk along this stretch reveals more optimism than pessimism. ``Business is pretty good because people are replacing all their CDs [compact discs],'' says David Varela, an employee at Tower Records. His branch store in Northridge was demolished by the Jan. 17 quake. The Ventura Boulevard outlet also lost power and had to evacuate in a 5.3 aftershock on March 20.
Business is also good for Peter Laird, director of Tower Art Gallery, which is already making money on new picture frames. Mr. Laird says he expects a boon in replacement art sales ``as soon as our customers receive their insurance checks.''
But others report that business is down between 15 and 35 percent. ``That is more than retailers on this strip can afford for long,'' says one store owner who asked not to be identified.
Part of the unknown for the moment, he and others say, is the long wait for insurance money, Federal Emergency Management Association assistance, or relief from Small Business Administration loans.
Other inconveniences abound. Mr. Frasco, for instance, is one of 40 people in his brokerage firm who were temporarily moved from a 32,000 square foot office to one 10,000 square feet.
There are also some more positive factors. Jeff Brain, chairman of the Ventura Boulevard Specific Plan Committee, says his group's 20-year master plan to improve the strip has been accelerated with new pushes for street lights, park benches, brickwork, and landscaping.
Other pluses: opportunities for newer buildings that meet present codes; larger commercial spaces that can accommodate larger tenant needs; and a clean slate for neighborhood groups to coordinate and plan amenities.
Not long after the quake, Housing and Urban Development Secretary Henry Cisneros traveled the strip, promising an additional $200 million in aid to Los Angeles, of which Sherman Oaks will get a major share.