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DOWNTOWN : California Mart Tenants May Move

October 25, 1992|IRIS YOKOI

Unhappy with yearly rent hikes, deteriorating Downtown conditions and what they describe as the landlord's refusal to work with them, several hundred tenants of the California Mart will vote next month on whether to move out of the 27-year-old wholesale apparel building.

Four hundred of the building's tenants organized into the 110 E. 9th Street Tenants' Assn. in July and hired lawyers and real-estate brokers to find them an alternate site in the Santa Monica or South Bay areas.

The hired consultants have found at least three potential sites--600,000 square feet of space at the Water Garden commercial complex in Santa Monica; the former Mattel Toys building near Los Angeles International Airport, and Wilshire Place in the Miracle Mile area. The developers will make presentations to the association Nov. 16, and members will vote Nov. 30 on whether to leave the mart.

Association members say there are now 600 to 700 tenants in the mart and that their membership includes independent and larger garment companies representing thousands of garment manufacturers. But Sidney Morse, California Mart general partner, said there are 1,455 total tenants occupying 85% of the 1.5 million square feet of rentable space.

In an interview, six unhappy tenants said the Morse family has failed to help them through tough economic times that have severely cut business and created vacancies throughout the building, which less than a decade ago had a two-year waiting list.

The tenants say the owners hindered business by increasing rents as much as 20% in recent years, mixing apparel types on different floors and allowing competing cash-and-carry wholesalers, who provide inventory on the spot and sell retail to the public, into the building. Traditional wholesalers sell only to buyers, on an order basis, and usually don't have mass quantities of merchandise on hand for buyers to take with them.

Tenants also say that Downtown, with its crime and image problems, is losing its appeal in the high-fashion industry. Buyers who come from across the country and stay in the Downtown area complain of high hotel and transportation costs and fear walking the streets at night, association members said.

Morse disputed those arguments. He said California Mart continues to draw a healthy number of buyers, thanks to marketing efforts such as air-fare rebates and hotel discounts to buyers. A recent swimwear market at the Mart enjoyed a 60% increase in attendance over last year's event, Morse said.

But he acknowledged that the recession has seriously hurt the garment industry and said he is doing his best to help his tenants. He said that last month he dropped rents by 23%--to $2 to $2.40 per square foot--and parking fees by 20%, and helped in getting nine bicycle police officers to patrol the area.

He said he also is studying whether to separate the traditional wholesalers' showrooms from cash-and-carry operators.

"We're doing a lot to retain our tenants," Morse said. "They are having a real tough time. My heart breaks when I hear some of their stories. . . . If they move, this industry will be so fragmented. It could result in higher rental rates."

City officials are also working on street, sidewalk and lighting improvements in the garment district in hopes of preventing a mass exodus of merchants, said Don Spivack, director of operations for the Community Redevelopment Agency.

But tenants said the rents remain higher than other cities' marts, which charge an average of $1.50 per square foot, and they said the city's efforts aren't enough to solve the Downtown area's image problems.

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