The Manhattan Project

Over the past two decades Manhattan Beach has become one of the premiere neighborhoods of Southern California, an excellent and highly desirable place to live.

 

"Either we live in the world we shape, or we live in the world others shape for us," says lifelong Manhattan Beach resident Don Spencer when asked about the transformations underway in his cherished hometown. Don, like so many other Manhattan Beach residents, has deep affection and strong viewpoints about the course that lies ahead for this truly exceptional city.

Unlike some other longtime residents, Don sees the changes and especially the proactive efforts the city has undertaken to address its challenges as a positive. Having lived in El Porto for seven decades, he’s seen spectacular changes. But he also knows that change is inevitable and can be good thing … as long as you welcome it and prepare for it.

In recent years, perhaps due to the advent or proliferation of social media, people are becoming more passionate, engaged and active in civic matters and local government. In Manhattan Beach the community has become increasingly aware and concerned about changes in the varying facets of their city. Some changes were slow and subtle;
others have happened more rapidly.

"We don’t want to wake in five years and say, ‘What happened?’"

The community voiced these concerns at city council meetings, and the council members, having noted some of the same issues, decided to act. This winter the city council—at the urging of active and concerned community members—undertook a process to evaluate the current state of Manhattan Beach and develop a plan to proactively address current and future downtown civic issues, from dealing with traffic and parking to preserving and enhancing MB’s small-town character.

The city council decided to bring in an independent consultant to evaluate the strengths, needs and challenges of the city and help develop a new Downtown Strategic Plan and create a 20-year vision for MB. The city selected the Urban Land Institute (ULI) to lead the complex and potentially sensitive project.

ULI is a premier think tank and global nonprofit with nearly 35,000 members representing the full spectrum of real estate development and land use disciplines. It works with private enterprise and the public sector. ULI members serve on advisory panels in a voluntary capacity and see it as honor to guide clients in strategic urban planning and the promotion of responsible land use.

To address MB’s needs, ULI assembled a team of eight experts from across the country with backgrounds in development, land economics, city planning, design and commercial real estate.

In January the ULI team spent a week in Manhattan Beach immersing themselves in the community and getting familiar with all facets of daily life and the culture of Downtown Manhattan Beach (DTMB).

 

 

 

 

Their mission was to gain a comprehensive and objective understanding of the community: what attributes make it special and need to be preserved and protected; what challenges does it face and what options should it consider to address those challenges; and what are the differing priorities of the distinct groups within the community … are these priorities opposed or aligned? Can common ground be found? And how can all members of the community work together to ensure a vibrant future for Manhattan Beach?

The crucial element in creating the ULI Downtown Plan was interviewing “stakeholders” representative of the various groups within DTMB. First the ULI and city leaders held a public reception at the Joslyn Auditorium welcoming more than 80 guests to mingle with the panel members and share their opinions, concerns and comments. Then the panel, working in pairs, conducted 127 individual stakeholder interviews, ensuring that all segments of the community had input and that their desires and needs could be voiced and considered in the city’s future plans.

The stakeholder groups proved dynamic and diverse. Present were Downtown business owners, commercial property owners, residents, community groups—including faith, nonprofit and social clubs—city-elected officials, the MBUSD, investors, brokers, agents and architects. The level of MB community interaction with the ULI was unprecedented. It set a record for total stakeholder interviews with a ULI Advisory Panel … a testament to the passion, dedication and civic pride of the MB community.

“We don’t want to wake in five years and say, ‘What happened?’” says Kelly Stroman, executive director of Downtown Manhattan Beach Business & Professional Association and a participant in the study.

"Though homes can be made larger and taller than the original diminutive structures, the number of homes and number of people living in them hasn’t changed. For more than 50 years Manhattan Beach has been a town of 35,000 people with 14,000 households.”

Yet some members of the community were hesitant, questioning whether the city evaluation and outreach would be open and fair. Would their opinions be considered and valued?

Others were skeptical of the overall development plan process, wondering whether an outside entity could truly “get” Manhattan Beach and accurately determine what plans are best for the city, or whether hiring an outside consultancy to create a Downtown plan was an optimal use of city funds.

And because the impetus for the Downtown Specific Plan grew out of differences between opposing sectors of the community, some entered the discussion with a defensive posture, especially as the preliminary community meetings regarding the issues of downtown had been slightly contentious.

Auspiciously, the city council’s choice of ULI proved to be an exceptionally sound decision. As stakeholders participated in the interviews and engaged with the panel, they quickly discovered that the panel members were not only experts in their respective fields bringing a fresh perspective and sound ideas to the table, but they are just great people as well.

They built an almost instant rapport with participating community members, quickly gaining both their trust and their respect. The initial hesitation and skepticism fell away, and with the guidance of the ULI, common ground was uncovered and embraced.

Unsurprisingly, one of the core strengths of Manhattan Beach is that members of its community are exceptionally close-knit and share common values. Unlike so many other cities, in MB many business and property owners are also residents and have a personal vested interest in the city’s future prosperity.  

By the end of the week when ULI was preparing to present their findings and recommendations, the divisions that had initially spurred the creation of a Downtown plan had evaporated, and all sectors of the community recognized that their concerns and goals are aligned. Essentially everyone in Manhattan Beach—whether a small business owner, a long-time resident or a property owner—ultimately wants the same thing: to preserve, maintain and enhance the quaint, friendly, small-town feel of MB.

And there is virtual unanimity in recognizing the challenges as well. The entire community is concerned about the same main issues: parking, traffic, the aesthetics of the streetscape and the potential loss of character. In fact, every single “stakeholder” mentioned parking as a top issue during their ULI interview.

What became clear as the stakeholder interviews were completed is that the differences within the MB community are negligible, but the commonalities are universal. The primary goal for Manhattan Beach is to find the needed balance to protect their beautiful town and ensure its vibrant future.

Some may be wondering why a city council in a town like Manhattan Beach would need or want to hire an outside consultancy to address its “challenges.” By most rational people’s standards, things are pretty fantastic in Manhattan Beach.

The city is one of the safest in Southern California and offers a fantastic quality of life, top-ranked schools, award-winning restaurants, exquisite beaches with expansive coastal views, lovely year-round weather, an affluent, well-educated and engaged population, strong residential and commercial property values and, best of all, the perfect balance of quaint small-town charm juxtaposed with access to all the world-class amenities of living adjacent to a major metropolitan area. MB certainly doesn’t sound like the type of city that needs outside consultation.

To understand why the city council with the encouragement of the community decided it was time to develop a Downtown Specific Plan, we have to take a deeper look at Manhattan Beach and consider its origins and evolution. How did Manhattan Beach become Manhattan Beach?

 

 

 

 

 

In the early 1900s the Pacific Railway was built, connecting the pier in Redondo to Downtown LA. The famous “red cars” would ferry passengers down the coastline with stops at substations along the way. Each substation had its own wooden pier, and one of those substations was located at the street we now know as Manhattan Beach Boulevard.

Over the next several decades the town grew, and with the popularization of the automobile it became a year-round bedroom community. After WWII, many aerospace companies and other industries set up shop from neighboring El Segundo down to Torrance and beyond, and Manhattan Beach became an affordable, charming, ideal place to live.
Its population from 1950 through 1960 more than doubled in size. Ironically, after that post-war surge, MB’s population leveled off and has remained virtually flat for more than a half-century.

Manhattan Beach has a finite amount of residential space because of the turn-of-the-century compact lot layout. So though homes can be made larger and taller than the original diminutive structures, the number of homes and number of people living in them hasn’t changed. For more than 50 years Manhattan Beach has been a town of 35,000 people with 14,000 households.

It is this underlying and unique urban design that gives MB its charming village character. In fact, in today’s modern society the city could never be developed. It would be illegal.
City plans now require larger lots and greater space between dwellings; more accessible streets with cul-de-sacs; and enhanced, sustainable traffic circulation. And as Michael Lander, vice chair of the ULI panel, adds, “It’s about parking, parking, parking.”

Though Manhattan Beach has a finite amount of available real estate, its numerous attributes have made it an increasingly more desirable place to live. In other cities, this would translate into increased development.

But in Manhattan Beach there is limited supply and increased demand, which has driven property values and rents to astronomical levels. Since 2009 real estate prices have appreciated 46% in Manhattan Beach. In comparison, the appreciation in neighboring Hermosa is 18%, and Redondo is 14%.

The exponential increases in property values have caused shifts in the city’s demographics and put pressure on its small-town character. For decades Manhattan Beach was a middle-income, blue- and white-collar, family neighborhood with relatively affordable housing.

With the soaring property and home values of the last 15 to 20 years, residents of MB are now primarily high-income. Of all MB residents, 60% earn more than $100k, and 31% earn more than $200k, with a median household income of $134,000—2.3 times the median household income of metro Los Angeles.

Many in Manhattan Beach say they feel as though the community is changing. And they’re right: 60% of the households have only been in Manhattan Beach since 2000, and 25% have moved here in the last five years. Keep in mind that the total population has stayed the same.

That is a considerable amount of turnover. The ULI panel quipped that in the week they were here conducting their research, MB residents have seven new neighbors.

Limited inventory has caused commercial property values to increase dramatically as well and has substantially altered the face commercial real estate in DTMB. When commercial property owners invest in a community, they want to get an appropriate return on their investment, so they raise tenant rents. Many small businesses find the increasing rent levels untenable.

Currently DTMB rents average $4 to $6 per square foot, but that pertains to existing rents. When new commercial space becomes available, the rents can often jump to two to three times that price per square foot, and the ripple effects can be felt throughout the Downtown district.

If a business pays an average of $5 per square foot rent, that translates into required annual revenues of $600 per square foot. If a similar business moves in at the new rent levels, say $10 per square foot, they must generate $1,200 per square foot in annual sales/revenue.

For an average 1,500-square-foot store, that means they need to have annual sales of $1.8 million, or $5,800 per day (based on a six-day week). Only a select few small businesses can produce that level of daily per-square-foot revenue—high-end restaurants or luxury brand-name stores like Apple or Tiffany & Co.

The other types of businesses that can handle these higher rents are non-retail, service and financial companies, including banks, insurance companies, real estate brokers, medical offices and investment businesses. Downtown Manhattan Beach is an attractive place for these businesses to locate.

 

 

 

 

 

With the hot MB real estate market, Realtors naturally want offices Downtown. And with exceptionally high incomes, MB residents spent 4.5% more than the national average on investments services, making DTMB a prime location for investment companies.

Non-retail businesses—whether a medical or insurance office or a bank—are an asset to the overall Downtown mix if there is a solid balance of business types. But if higher numbers of those businesses begin moving in and displace the traditional retail and restaurant storefronts, the retail footprint and pedestrian traffic shrinks.

This effect can slowly diminish not only the overall revenue of the business district and its corresponding sales tax, but it can severely and detrimentally alter the charming, small-town feel that makes Manhattan Beach an attractive to place to visit and live. Imagine strolling the streets of Carmel or Laguna if there were no boutiques or cafés. Would you want to spend a day hanging out there if all the storefronts were offices and banks?

Finding the delicate balance of weighing the valid interests of business and property owners to generate a return on their investments versus respecting the entire community’s desire to preserve the city’s inherent character became the critical issue of the day. As the fabric of the Downtown retail mix seemed to be steadily changing, concern throughout the community grew. That was the impetus for the city council to initiate the Downtown Specific Plan and bring on ULI.

On January 16, 2015, after conducting their week-long advisory panel, the ULI presented their final report to a group of 100 stakeholders and members of the public. They outlined their comprehensive findings and offered a wide range of recommendations for the city to consider, along with strategies for the plan’s implementation.

The ULI report is extensive. It included more than 90 slides and took longer than an hour and a half to share just the preliminary findings. But the ideas laid forth are bold and tap into the very essence of Manhattan Beach and how its future can be imagined.

The concerns of whether an outside group could “get” MB proved to be completely unfounded. ULI tapped into the very core of what makes this city great and offered realistic solutions and initiatives to ensure it remains great well into the 21st-century.

Some of the items that were standouts are ideas to preserve the retail mix of Downtown with use permits and limitations on lot size development, along with vigilance in enforcing those standards. There is surely room for all types of businesses to coexist in Downtown MB, but the city will be best served if ground-level storefronts are occupied by a strong mix of retail and restaurant businesses, while offices occupy second floors.

"Currently DTMB rents average $4 to $6 per square foot, but that pertains to existing rents. When new commercial space becomes available, the rents can often jump to two to three times that price per square foot, and the ripple effects can be felt throughout the Downtown district.”

ULI also recommended limiting the size of Downtown businesses so a commercial property owner couldn’t merge two or three stores together and make a giant store. Some in the community were concerned about chains opening in Downtown, but the small size of existing retail makes the area less attractive to a larger chain store.

And MB use permits already in place will take care of much of that. Thus a Gap store will go into the Village Mall, not a boutique on Manhattan Avenue.

Although the Downtown retail mix has shifted in the past few years, it is impressively strong. The average MB resident spends $60k in local retail per year, which equates to $470 million in spending available to the retail categories available to shops. That is twice the spending of similarly sized communities.

The restaurant scene has exploded with top-notch, chef-driven establishments. It has made Manhattan Beach into a dining destination like West Hollywood or Santa Monica. Angelinos will drive to MB just have dinner—a relatively new, exciting phenomenon.

And 75% of local DTMB restaurant business comes from visitors. The ULI report notes that restaurants have replaced grocery stores and department stores as the new anchors in retail zones.

The ULI also recommends a variety of means to address the traffic and parking issues of Downtown. Ideas range from using offsite lots to time-of-day fluctuations in pricing based on peak usage hours, to better signage to prevent drivers from circling blocks in search of available spaces.

Streetscape and beautification of the Downtown district is also a top priority. The tiles on the sidewalks and crosswalks will likely be replaced with safer and more aesthetic materials. Building facades, art installations, creating plazas and other open spaces, and a wide array of other means to enhance the beauty of the Downtown area will be considered and initiated.

So what happens now? The ULI report, after being open to public comment and edits for the city council and city planners, was returned to ULI for final revisions and then returned to the city. Release of the final draft of the DTSP will be made public in late June 2016. The city council and city planner have chosen Pacific Municipal Consultants (PMC), a full-service urban planning firm, to carry out the DTSP in phases. Some of the plans are already being implemented.


For more details about the Manhattan Beach Downtown Specific Plan or to offer your input on matters being considered for the plan, visit citymb.info

 

 

 

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