Today the company is run by his son, Dan Blatteis, with partners Robert Schnur and Marc Guth. Blatteis and Schnur formed the current iteration of the company in 1999, and Guth joined in 2001.
As the business has grown, it has grown from a brokerage firm to a developer. And although it still offers some brokerage services, the business is now 80% growing.
It has developed approximately 600,000 square feet of commercial properties since its founding, primarily high street retail. She owns 500,000 square feet of property and has purchased over 50 properties nationwide.
“We want to buy jewelry in a gem city,” Schnur said of the group’s decision to buy and develop projects in Los Angeles.
The company follows the same principle in each of its projects: “You buy the best corners of the city that you can. We think long term and leverage conservatively or have no leverage, ”said Blatteis.
Some of Blatteis & Schnur’s biggest projects to date include At Mateo in the downtown arts district as well as a $ 500 million project underway in San Francisco’s iconic Union Square.
He also owns a number of properties in areas such as Santa Monica and Venice, betting big on high-end shopping areas.
No buyer’s remorse
Investing in high-end trade corridors is paying off.
“Since the start of 2021 and the change in the presidential election and the rollout of the vaccine, everything has been fantastic in the high street retail markets,” said Greg Briest, vice president of Jones Lang LaSalle Inc.
Briest said vacancies in upscale shopping districts such as the Golden Triangle, Abbot Kinney and Melrose Place have filled and “opportunities have become limited.”
Mainstreet retailing – stores located on mainstreets – is doing better than some other sectors, particularly professional services and fitness, which are taking longer to recover from the impact of pandemic on pedestrian traffic in businesses and retail stores.
Blatteis said the company had to sell some of its properties to fund projects early on, but now sees itself as a long-term holder.
“We regretted everything we sold,” he confessed.
For example, the building that houses the Apple Store on Santa Monica’s Third Street Promenade.
Blatteis & Schnur bought the property for $ 26 million before investing $ 250,000 to demolish the existing building. Apple Inc. then leased the site to be built. A year later and just four months before the Apple Store opened, Blatteis & Schnur sold the site for $ 58 million. But a year later it sold out again, this time for $ 100 million.
“If you own great real estate, try to hold onto it forever,” Blatteis said.
Although Blatteis & Schnur is known today for its developments, the company and its managers got their start in leasing.
Blatteis described his father, Samuel, as a “pioneer of percentage leasing during the Great Depression”. The concept of percentage rental involves a retailer paying a certain percentage of their sales as rent rather than a fixed amount. It is a rental method still used by many retailers.
After his father’s death, Dan Blatteis went to work for Phillip Lyon, Gordon & Co., renting the Beverly Center. He then joined Citicorp, managing its retail portfolio in the Western region and its dedicated research and development space.
Among his notable hits, he brought Barneys New York to Beverly Hills.
Schnur’s claim to fame, meanwhile, is his work with Cheesecake Factory Inc. Since 1991, he has guided the international growth of the restaurant chain.
He continues to work with the company, but has said development is his passion.
Guth is involved in the Cheesecake Factory rental efforts and previously worked in what was then Westfield, now Unibail-Rodamco-Westfield on its rental contracts.
Blatteis said the company has decided to focus on owning properties rather than being able to lead development work at the sites.
“I realized that it’s better to be a principal than a middleman,” he said.
For the most part, the company’s employees take care of the rental, while the top three work on the larger projects.
Blatteis & Schnur has focused much of its retail efforts in the downtown arts district.
His most ambitious project there is At Mateo, a mixed-use retail and office space.
The site was purchased in 2014, opened in 2015, and was completed in 2019, Guth said. The 200,000 square foot center is 98% occupied and counts Spotify Technology as its largest tenant at 165,000 square feet. The USC Roski School of Art and Design also rents space at the center.
For Schnur, the project was also a realization of his urban sensibility.
“Being New Yorker means I’m a city planner. I’m always looking for something walkable, something urban, ”which helped move the project forward, he said. “We wanted to build something that seems to have been born in the neighborhood. “
Blatteis said the company was “ahead of the market” with the project.
Nick Griffin, executive director of the Downtown Center Business Improvement District, agreed.
“It’s one of those types of catalytic projects in that when they first developed and opened it, it really looked like a multi-level spin-off type project in terms of the quality of the output. design and ambition of use – really spoke of the strong potential of the neighborhood, ”Griffin said.
“The fact that a company like Blatteis & Schnur – who are very high-end retail developers – were confident in this neighborhood spoke of the opportunity there,” he said, “and in some ways a number of projects that followed, in some ways that paved the way for those.
Blatteis called the arts district a “top priority” for the business going forward.
“Coming out of the pandemic, there is a huge opportunity here to do more,” he said.
Beyond the Arts District, the company’s local holdings include real estate on Beverly Drive, Abbot Kinney Boulevard, and Third Street Promenade.
The retail developer sees more mixed-use projects on the horizon.
Take, for example, a property the company is developing on the boardwalk. Blatteis & Schnur bought the site initially considering two retail floors and one office floor, but has since reconfigured it into two office floors and one retail store.
“We saw the need for creative office space on the promenade,” said Schnur.
Guth expects construction on the project to begin early next year and take about a year.
Outside of Los Angeles, cities of interest to the company include Boston and Charleston, SC, as well as San Francisco, where they are working on this $ 500 million Union Square project.
And it is not only offices, but also residential projects, which have recently caught the attention of the company.
“Residential is probably the safest (type of asset) right now,” Schnur said. “Retail is the riskiest. The creative office is somewhere in between.
In the long term, the company has two other, as yet unspecified, goals: working on a billion dollar development and building a high rise building.
“I won’t rest until we build a skyscraper,” Schnur said.
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