Lease dispute puts market in crosshairs for Nov. 27 closure
by Mariko Lamb
Oct 31, 2012 | 8175 views | 0 0 comments | 8 8 recommendations | email to a friend | print
The impending closure of Apple Tree Market on Nov. 27 because of a lease dispute with the Los Angeles property owner could mean hardship for elderly and handicapped neighbors who would no longer have walking access to a neighborhood grocery store nearby.        Photo by Mariko Lamb I The Beacon
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Apple Tree Market — a fixture in Ocean Beach and the neighborhood’s only full-service grocery store — will soon be closing its doors after serving the community’s grocery needs for

25 years at its location on Santa Monica Avenue.

The Hirmez brothers assumed the store lease from Safeway on Aug. 28, 1988. Owner Saad Hirmez said since he and his brothers first assumed the lease, the property’s landowner, Elliot Megdal of Megdal & Associates in Los Angeles, has persistently attempted to buy the community grocers out. After years of struggle, the time has finally come to pack up their wares and move on, said Hirmez.

“He [Megdal] was doing everything in his power to get rid of us so he could capture a much greater rent, but we were on a long-term lease, so he wasn’t able to,” Hirmez said.

In 1989, just a few months after the Hirmez brothers took over the store site from Safeway, Megdal & Associates offered to buy the grocers out for the value of the lease, less the inventory.

“He offered to pay us less than what we pay each month,” said Hirmez. “We didn’t buy this place so we can sell it to you for less, my friend. We bought it so we can operate and make a living here.”

More than a decade later, in 2002, Megdal & Associates tried to purchase the lease again, this time making Hirmez a much more generous offer.

“He offered me $1 million to leave, and we still didn’t leave because we wanted to operate a business,” he said.

Hirmez produced documentation to The Peninsula Beacon to verify his claims. Both Megdal & Associates and Megdal’s real-estate broker, Retail Insite, declined to comment for this story.

In a separate move in 2001, the Hirmez brothers purchased the former Bank of America building on Newport Avenue, which now houses Ocean Beach Surf & Skate, in anticipation of another attempted buyout by Megdal.

“One reason that I didn’t take the million dollars and go into a building I had purchased for that reason is because I did not want to go and compete with other merchants at that time,” he said. “I wanted them to survive and have their livelihood. But now I’m handcuffed. I have no choice.”

Hirmez said he offered to spend

$1 million of his own funds to rehabilitate the existing facility owned by Megdal and replace outdated equipment in exchange for more favorable rent.

“The main reason that we have not rehabbed this place and given the community what they deserve — with hot foods and fresh bakeries and delis and the state-of-the-art market they deserve — is because we haven’t had a lease,” he said. “We’ve always known that he’s going to get rid of us, so we could not reinvest back into this because we were a lame duck. It breaks our hearts not to have been able to run a premium operation here.”

When Apple Tree Market’s lease ended in February 2011, Hirmez began paying on a month-to-month basis at a rate equaling $200,000 per year. According to Hirmez, the landowner is seeking nearly double what Hirmez is currently paying month-to-month.

On Sept. 27, Hirmez was served a 60-day notice to vacate the premises — not because he was not paying his rent, but because he refused to sign a month-to-month rental agreement that he said would have bound him to the every whim of his landowner.

“I never signed it because I didn’t want to encumber myself with the 40-page month-to-month lease from him, where he would have handcuffed me to all these requirements and hung me out to dry,” he said. “There are just many, many things he would have forced on me.”

The 60-day notice to vacate would require that Apple Tree leave the premises by Nov. 27, just before the holiday rush.

On Oct. 1, Denny Knox, executive director of the Ocean Beach MainStreet Association, wrote a letter to Megdal urging him to reconsider Apple Tree’s closure date for the benefit of the nearby elderly and handicapped neighbors who don’t drive and would face hardship without a supermarket nearby.

“The timing of their notice to vacate is extremely onerous for our walking community,” Knox wrote in her letter. “In order to comply with your notice, Apple Tree would most likely have to close their doors well before the heavy shopping period immediately preceding the Thanksgiving holiday, leaving a local population of approximately 18,000 without a local supermarket in downtown Ocean Beach during this critical time.”

Knox also stressed concern about the “cascading negative effects” Ocean Beach would suffer as a result of a vacancy at the site. A long-term vacancy and a community without a local supermarket would likely drive people out of the community for their grocery needs and subsequently away from other local merchants, add to the unemployment affecting more than 20 families and contribute to the overall economic uncertainty of the small community, Knox said in the letter.

“If all efforts are exhausted with the present tenant, please consider allowing Apple Tree to operate until another suitable grocer is located to fill that important spot in our community,” she wrote.

Hirmez, too, pleaded with his landowner to have another month.

“After 25 years, I don’t deserve 90 lousy days?” queried Hirmez. “If he cared about the community, he would have granted us one lousy [more] month to serve during Christmas.”

Although Hirmez intends to rebuild another full-service grocery store — possibly at the brothers’ location on Newport Avenue — it will most likely operate on a smaller scale, he said.

“We will put together a nice new store, but it’s going to take time,” he said.
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