One of the biggest property owners in the core of downtown Santa Ana intends to parlay the popularity of its East End district and 4th Street Market food hall into a residential play to attract more millennials, especially entrepreneurs.
The father-son team of Irving and Ryan Chase, second and third generations of Costa Mesa-based S&A Management LLP, plans to build 24 apartments above their culinary hub. They will be among the first new apartments in the downtown core on Fourth Street in at least 25 years, according to Ryan Chase.
The food hall, which opened in 2015, has already attracted a young, hip following due to “unique offerings … in a cool urban setting … (for) a diverse audience,” Ryan Chase said.
And the downtown area as a whole has become a mecca for millennial entrepreneurs.
Take Sarah Armstrong, 30, founder of the Batch co-working space at the intersection of Fourth and Bush streets.
She looked online for office space, and all she could find were “big, empty, industrial office boxes” in Tustin or Irvine with “zero personality.”
Armstrong met Ryan Chase, and he walked her through the properties S&A owns downtown.
“I was beside myself with excitement at being a part of this area,” she said. “All of Orange County is so master-planned and feels so soulless in comparison. I was stoked to plant myself deep into an area that I could really take part in (and) be a part of making things happen.”
Homes Complement Commercial
S&A is going through the planning process to get the city’s approval for its unnamed project. It wants to start construction in early to mid-2018, Chase said.
The project is slated to contain modern-style units ranging from 450 to 750 square feet. The entire space occupies 18,000 square feet. Rents haven’t been determined yet; it depends on final buildout costs, demand and comparable rents, Chase said.
The target demographic is young professionals who want to live, work and socialize in downtown Santa Ana.
“There’s a lot of young professionals looking for more urban housing (and) high walkability scores,” he said, adding that their location has a walkability score of 97, “one of the best, if not the best in OC.” The highest score on the index, 90 to100, reflects locations where daily errands don’t require a car.
And a light rail system that’s been planned for decades may finally come to fruition. If so, it would run along Fourth and Fifth streets through downtown. That would bring significant investment along the route, with a good chunk in and around downtown Santa Ana, Chase contends.
Millennial Draw
Meanwhile, The Batch co-working space—opened in 2013—caters best to freelancers and partner teams. It can fit about 16 people altogether. Armstrong requires month-to-month leases instead of long-term lease agreements. There are typically about 10 members on average using the space. Since opening, it’s doubled to 1,400.
Other notable DTSA businesses include Leverage Distribution, a wholesale distribution center for urban and street fashion, founded by Chris Ngo, 35; the restaurant Playground, founded by chef-owner Jason Quinn, 31; and a 15,000-square-foot esports arena developed by middle-school friends Paul Ward and Tyler Endres.
Leverage Distribution opened in 2012. It carries brands, including EPTM, as well as its own in-house brands, such as Karter Collection and Embellish. At first it used a third-party fulfillment center at 210 E. Fourth St. and opened a store, Fourth DTSA, downstairs at 204 E. Fourth St.
Ngo chose Santa Ana because he grew up there and thought it would be a good fit for his business. The store occupies 1,600 square feet. He said the first year brought growing pains and that it wasn’t until 4th Street Market opened that it really started to gain traction.
“The market brought a lot of new faces to DTSA and really started it all,” Ngo said. “Being an area that has transformed so much, it does attract a younger crowd, especially the millennials.”
When business started booming, Ngo moved the headquarters to Irvine and kept the store in Santa Ana. In August he signed a deal with Big Baller Brand to manufacture and distribute its apparel. Big Baller Brand is the brainchild of LaVar Ball, the Los Angeles entrepreneur who calls himself the Big Baller because of his three basketball-playing sons. The deal is specifically with son Lonzo Ball, point guard for the Los Angeles Lakers, to launch his ZO2 collection. Ngo estimates he’ll reach $25 million in sales this year.
Quinn opened Playground in 2011 after winning “The Great Food Truck Race” on The Food Network. He chose Santa Ana for his transition to bricks-and-mortar because “the price was right, and (I) believed in Ryan Chase’s vision,” he said.
The restaurant serves small-plate meals, started at 2,850 square feet, and has expanded to almost 8,000 square feet. In a foreshadowing of their apartments above 4th Street Market, the Chases built Quinn an approximately 2,000-square-foot apartment above the restaurant that he moved into in 2015. It allows Quinn to work 80 hours a week and still have a family life, he said.
“Santa Ana is a place where people who own their businesses actually work there,” Quinn said. “There’s a sense of responsibility from all the owners to make it something very special. There aren’t any chain restaurants (or) stores (in downtown Santa Ana), which allow for each place to have its own unique qualities. As a young entrepreneur, that’s exactly what I was looking for.”
Esports Arena opened in 2015 at 120 W. Fifth St. Ward, chief executive, and Endres, chief operating officer, both 30, opened the venue with Sam Ward, 32, and John Todd Christensen, 30. It was the first of three locations, followed by Oakland and Las Vegas. The team also has a mobile arena, a semitruck that folds out into a stage. Endres declined to disclose the total investment the founders made in the Santa Ana location.
The arena hosts esports and entertainment events, as well as daily video game competitions. It also produces digital content and rents space and equipment to the esports and interactive entertainment industries. The cost varies, depending on the event and clients’ needs. It covers a wide spectrum, from $500 to $30,000, Endres said.
The executive team chose Santa Ana because it “loved the direction the downtown area was going,” he said. “The other companies moving in, the unique building opportunities, and relatively low costs made it a natural fit.”
Social Impact
The Chases say they’re not making such a large-scale investment in downtown Santa Ana because they expect hefty returns. They’re doing it for the social investment. They can take that risk because of their longtime commitment to the city and diversified portfolio. Santa Ana is just one sliver of their retail-industrial, 17-state national portfolio, including over 600,000 square feet of commercial property here, according to CoStar Group Inc. records. They can’t disclose the value of the portfolio, Chase said. They’re loyal to Santa Ana because of their family roots. Irving Chase’s wife’s grandparents settled in downtown Santa Ana in 1919 when they opened Eureka Shoes on Fourth Street.
The Chases have loaned money, expertise and tenant improvement assistance to DTSA tenants without taking equity, to enable “unique” businesses and entrepreneurs to open their business, grow and thrive, Ryan Chase said. That’s illustrated at 4th Street Market, where the Chases streamlined operations and paid for all of the kitchen infrastructure upfront to eliminate any entry barriers for up-and-coming restaurants. They also opened East End Kitchens, an incubator in the food hall’s space with a commercial kitchen for food startups.
“I’m the millennials’ banker,” Irving Chase joked.
“We could take equity,” Ryan Chase said. “But our goal is not to maximize our investment. Our goal is to have a social impact, bolster the continued revitalization and put this area on the right trajectory for years to come.”
Batch’s Armstrong said the sense of community for millennials that the Chases have cultivated is unparalleled in OC.
“Folks who fall under the millennial umbrella desperately long for community,” she said. “And I genuinely feel in Orange County, you’ve got the best shot of building something like that in downtown Santa Ana. You can sit in a coffee shop for an hour and end up running into 10 people you know from the community around you and hear about what they’re up to, offer support and connection, make plans, share ideas. It’s fing brilliant.”
