The historic Heisler building in downtown Laguna Beach sold last month for $16.5 million, in a rare trade for the beach city whose commercial real estate is dominated by legacy, family ownership.
The retail property, at 400 and 424 S. Coast Highway, spans 14,186 square feet at the intersection of Coast Highway and Laguna Avenue.
It’s across the street from the iconic Hotel Laguna, whose ownership is currently the focus of a dispute between businessman Mo Honarkar and Newport Beach-based investment firm Continuum Analytics.
The deal for the Heisler building works out to about $1,163 per square foot. It’s one of four retail buildings in Orange County larger than 10,000 square feet that have traded for over $1,000 per square foot since 2020, according to data from real estate market tracker CoStar Group Inc.
The seller, longtime Laguna Beach resident Sam Goldstein, bought the building for $11.1 million 17 years ago. He formerly leased a portion of the property to Tommy Bahama, which closed its restaurant in 2019 at the end of its 10-year lease after struggling to reach profitability.
The Heisler building’s current tenants are Mexican restaurant and cantina Bodega Laguna and rooftop bar Skyloft, which are operated by local restaurateur Ivan Spiers, who owns steakhouse Mozambique, located about a mile away along Coast Highway.
The undisclosed buyer inheriting those tenants is a Los Angeles-based family investment firm, who has selected commercial real estate investor Pegasus Investments Real Estate Advisory Inc. to manage the property.
“The location of this property is irreplaceable,” Pegasus Investments CEO and President David Chasin told the Business Journal. “The building is in incredible condition and there’s only two tenants, so it’s not very management intensive.”
Father-son duo Jack and Jake Hopkins of Marcus & Millichap brokered the deal. It was partly financed through a loan, though Chasin did not name the lender.
92-Year History
The Heisler building dates back to 1931, when it was built under the ownership of early, prominent Laguna Beach developer Howard Heisler.
Heisler, along with L.C. McKnight, bought most of the land in north Laguna Beach from Irvine Co. in 1905. The following year, they subdivided that land, named it Laguna Cliffs and added infrastructure, making the area the city’s first tract to have water directly piped into each lot.
‘Phenomenal’ Renovation
The Heisler building has been the home of several destinations beloved by locals, including the Jolly Roger restaurant, whose 50-year tenure at the property ended shortly after it came into Goldstein’s hands.
Goldstein gave the property a facelift despite facing pushback from fellow Laguna Beach residents. He also added its rooftop, which today is used for Skyloft’s restaurant, bar and live music events.
Popular Spots
The Heisler building marks an addition to Pegasus’ $2 billion real estate portfolio that spans across the U.S.
According to Chasin, the buyer aims to keep the property’s current tenants, which have both seen high foot traffic.
Bodega Laguna opened in September, replacing Laguna Fish Co., which was also run by Spiers.
Desirable Market
The high price fetched by the Heisler building reflects the desirability of affluent coastal areas in Southern California, such as Santa Barbara, Manhattan Beach and Newport Beach, according to Chasin.
“Those are all very highly sought after markets for investors to own property because there’s very limited supply and no additional land to build competing product in,” Chasin said.
In Laguna Beach especially, buyers face several barriers to entry since much of the property there is held by generational investors reluctant to part with such precious real estate.
