Sunset Beer Closure a Symptom of Predatory Landlord Infection
The popular Echo Park bottle shop was told it would have its rent raised fourfold by its commercial realtor landlord.
On March 31, 2022, Sunset Beer shared grim news on their Instagram account.
“Well folks,” the post began, “this is a tough string of words to write. Sunset Beer will be closing its doors after nearly 11 years.”
The post went on to explain the reason Sunset Beer — which has an 11-year history in Echo Park — was shuttering its doors was not for lack of profit or public enthusiasm.
“We’re closing because of one reason — Red Car Ltd./Industry Partners,” the post explained.
Redcar Properties is a Los Angeles commercial real estate investment company that bought out 1498 Sunset Plaza in 2019. Redcar executives decided to renovate the Sunset Beer building and told the owners they could resume operations in 12 to 18 months.
The catch? According to Sunset Beer’s owner, rent would be four times higher when they returned, an amount that would put them out of business.
A Different Type of LA Bar
As a business owner, moving into a new community is always dicey. There’s potential that new businesses — especially bars — will disrupt an existing neighborhood’s daily life. This is something Sunset Beer owner John Nugent understands.
“I get the skepticism,” he said. “Some people come in and do a Trojan horse thing. They come in and say, ‘We’re going to be X, Y, and Z, we’re going to be really quiet’ and then they have the license and they can be as loud as they want.”
Before Sunset Beer, Nugent was running a wine store in Eagle Rock called Colorado Wine Company. Beer sales began to pick up, attracting the attention of an Echo Park landlord seeking new tenants. A few businesses had previously occupied the Sunset Beer location, most of which fizzled out after a year or so.
“He offered me a really good deal,” Nugent said, “so we took this beer idea and ran with it.”
However, opening an establishment that sells alcohol is an arduous task riddled with bureaucratic red tape — although, this is not necessarily a bad thing. Securing an alcohol license is the easy part — “That’s a few hundred bucks,” Nugent said — but a conditional use permit (CUP) is a tremendous investment. A CUP is required for certain land uses, including the sale of alcohol, and ensures a new real estate project is compatible with the surrounding land. Between paying various application fees and seeking legal counsel, obtaining a CUP can cost upwards of six figures.
“The amount of entities involved that have to come together to agree is a lot,” he said. “You have to get representatives of the local police department to agree you’re not gonna be adding to crime, right? You have to work with the councilman’s office to make sure that they think you’re going to be a responsible business person.”
Meeting with the community, while strongly recommended, is not technically required by the city, but Nugent wasn’t flippant about the matter.
“You have to repeatedly meet with the community for good reasons so they understand what kind of business is going to pop up on their corner,” he said. “Which we proudly did. We weren’t hiding anything with the business model.”
Nugent wanted to make sure that — true to a CUP’s purpose — Sunset Beer would be compatible with the surrounding land. He took the needs of his neighbors into consideration when making decisions about how Sunset Beer would operate.
“We intentionally did very early hours because we didn’t want to piss off the neighbors by adding to public drunkenness late at night,” he said, “and also because we wanted our employees to stay safe. We wanted to focus on craft beer and trading things like that instead of serving late night drunks.”
Redcar/Industry now stands to inherit the fruit of Nugent’s labor. A CUP is bound to the property, not the owner. If they choose to open up their own establishment in Sunset Beer’s place, they’re already able to serve alcohol without needing the city’s greenlight. What Redcar envisions for the Sunset Beer lot is starkly different from the business Nugent ran for 11 years.
“Redcar suggested they may want to add a roof bar and asked if we would be willing to add full liquor to our license and extend our hours,” Nugent said. “This tells me they are clearly not looking for what we currently do, which is focus on craft beer and wine and close our doors at a relatively early hour compared to other neighborhood bars.”
These types of bars — loud, late-night, and serving cocktails that cost more than their servers make an hour — are ubiquitous in Los Angeles, what most people think of when they picture an LA bar.
According to Kevin Greenwood, a Sunset Beer regular who’s lived in Echo Park for over a decade, Sunset always set itself apart in comparison to other bars in the area.
“I was actually there the day [Sunset Beer] opened,” he said. “It’s well-known for people meeting longtime friends. It has an atmosphere where people can chat with strangers, which other bars don’t really have in the neighborhood. … I really would say like 50% or more of the people I know in Echo Park I met through Sunset Beer in one way or another.”
Greenwood can see Sunset Beer’s patio from his apartment window, and he says he’s never had any issues with noise from the business.
“Sunset always closed by midnight, even like 10 on weeknights” he said. “People would go there for work at like six or seven and then be gone. It wasn’t like you were out partying at Sunset Beer. It had a different vibe to it.”
Sunset Beer seems to check all the boxes of a responsible business — Nugent respected the community and avoided creating any noise issues that would disrupt residents’ sleep.
However, there’s more to the Sunset Beer story than massive development companies swallowing up small businesses. Even relatively small, ethically run establishments can be a catalyst for change, not all of which is positive.
The Domino Effect of Small Businesses
The modern Echo Park is a far stretch from the neighborhood Greenwood first moved to 10 years ago. He distinctly remembers the opening of a Lassens Natural Food and Vitamins, an upscale health food store that seemed to propel changes that were already unfolding.
“I remember the Lassens was a big deal,” Greenwood said. “Most things that were in the neighborhood a long time are kind of gone at this point. Or have moved. … We had a little Asian market. There [were] as all these neighborhoody markets that definitely went out and stuff when Lassens came in.”
Development and rent hikes go hand in hand in Los Angeles. In 2019, the LA Times reported LA rent prices had grown by 65% in 10 years. In 2021, USC released a study forecasting an average rent increase of $252 per month by the end of 2023. While Greenwood is lucky enough to be in a rent-controlled unit, he’ll be in trouble if he ever needs to move. Echo Park’s price range is no longer tenable for him.
“I’m pretty much priced out of my own neighborhood if I had to leave my rent control,” he said.
This is why perspective is important when evaluating the legacy of Sunset Beer. As a business owner, what Nugent saw with Sunset Beer was a mutually beneficial arrangement that would enrich Echo Park; he happily jumped through the required hoops to open shop, as he believed in the fundamental merit of the vetting process.
“You know, local business creates local jobs,” he said, “and the right businesses should be vetted through the neighborhood and should be vetted through the neighborhood council. Then they should be really supported by the city. They are just left to flail with buildings being taken over by development companies.”
Despite good intentions, Nugent may have inadvertently opened a Pandora’s box by helping Echo Park obtain the “up-and-coming” label that is often a death knell for locals. Mando Medina — who runs an anti-gentrification Facebook page and Instagram account — understands the aftershock even small businesses can cause to local communities. A resident of Highland Park, Medina remembers when gentrification first began in his neighborhood.
“Back then in 2008, there was the York Bar and Casa de Leche had opened up in Highland Park,” he said. “They opened up and the whole value started going up. It was right after the crash. I was at my friend’s house and some guy bought a house for $420,000. At the time, the average home prices in Highland Park were around $300,000. So, that house actually brought up the value of my mom’s house. I was happy … but I didn’t know the consequences.”
When asked whether there’s ever an ethical way for new businesses to move into a low-income neighborhood, Medino acknowledges it’s a complicated issue. He was initially excited when new businesses began to sprout up in Highland Park, giving him more entertainment nearby, but a growing nightlife scene is never without consequence for those living in neighborhoods seeing an influx in clubs, bars, and restaurants.
“It’s a hard question to answer,” he said. “Everybody wants to start a business, but the problem is we’re a low-income community, and these people were literally just buying everybody out. It’s literally just wiping out a whole Latino community.”
Medino did have some suggestions about how business owners can navigate this complex moral terrain, recommending much of what Nugent — in his defense — did when he moved into Echo Park.
“If I were to start a business in a different state and a different community,” Medina said, “I would try to reach out to the community and talk to them. I think outreach is key. The community likes that. They want that respect.”
Even when taking necessary precautions, Sunset Beer and similar establishments had a non-negligible ripple effect. Echo Park has been a victim of gentrification for over 50 years, with the process speeding up considerably over the last two decades. While Sunset Beer was beloved by many Echo Park residents, it’s not exactly emblematic of what the neighborhood used to be. By Medino’s assessment, new businesses — especially of the trendier variety — are catnip for big developers.
“As a real estate agent, when you market your million-dollar house [in Highland Park], you don’t point out, ‘Oh we’re next to the beach, you have a view,’” he said. “They market it as, ‘Oh, it’s a cool up-and-coming place with up-and-coming restaurants with up-and-coming bars.’ We’re nowhere near a beach, but we’re near all these bars and restaurants and coffee shops. A lot of these people come in, they kick out the businesses that were there, they kick out the whole clientele. They don’t care. There’s a whole roller coaster and domino effect.”
Some would argue Sunset Beer is being hoisted by their own petard, that — as Medina says — it’s a case of “the rich eating the rich.” However, even Medina acknowledges new business isn’t always bad.
“There’s no problem with new businesses coming in,” he said,” but when there’s a master plan by the city and these investors about how they’re going to go about it, that’s a problem.”
Nugent, by all accounts, isn’t part of any master plan, and his business did create something of value in Echo Park. Sunset Beer built a community and — by occupying the building for as long as it did — prevented a more sinister, disruptive bar from encroaching on the neighborhood. At the same time, it’s impossible to detangle Sunset Beer from the larger force of gentrification. As Joan Didion wrote in Slouching Toward Bethlehem, we all have the capacity to become unconscious instruments of values we would reject on a conscious level.
However, Sunset Beer is certainly the preferable option when one considers what may come next. It takes considerable wealth to start your own business. Size is relative — small businesses are not really small in the grand scheme of things — but Nugent’s status is not comparable to an institution like Redcar/Industry. While he’s not David to their Goliath, it’s not an even playing field either.
The Future of 1498 Sunset Plaza
Both Greenwood and Nugent note that Sunset Plaza is currently filled with nothing but empty storefronts. Redcar/Industry pushed out the majority of Sunset Plaza tenants, and have been lying in wait ever since to do what they want with the properties and the accompanying CUD permit.
“The new landlords just let those places sit empty,” Nugent said. “So, what the community ends up having is just empty storefronts. They have enough money to just sit on things until they can squish everybody out of there to do what they want. Which is a bummer, because no one wants a bunch of empty storefronts when we’re dealing with a pandemic.”
With the closing of Sunset Beer, there won’t be much left at Sunset Plaza — Redcar Properties is securing the upper hand they’ve long been vying for. That Redcar Properties inherited their CUP is worrying, as they won’t have to participate in any vetting process. There will be no meetings with neighborhood councilmembers, no public hearings, no steps whatsoever to ensure whatever they build is compatible with Echo Park. Instead, Redcar Properties is free to open a business with the intent of maximizing profit rather than serving the community.