Chhabria makes commercial play in downtown Hermosa Beach

chhabia-Iler-web — South Bay CRE CEO Dave Iler and Raju Chhabria at their newly opened office and retail building at 205 Pier Avenue in Hermosa Beach.

“Hermosa’s been good to me. It’s become my second home,” Raju Chhabria said by way of explaining why, just months after completing a three-story office/retail complex at 205 Pier Ave., he is planning a 30 room, $8 million hotel, to be called Clash, on the site of the old Classic Burger restaurant on Hermosa Avenue. At the same time, across the street, he is remodeling four retail stores and contemplating a $10 million downtown Hermosa commercial project at a location he declined to identify.

A public hearing on the proposed hotel is scheduled for Thursday, Jan. 10 at 10 a.m. at city hall. Chhabria described the hotel as “a high end boutique hotel, like a Four Seasons.” He said rooms will range from $250 a night in the off-season to $350 during the summer. The austere, modernistic design by Enviro Techno Architecture of Palos Verdes includes a gym, massage spa and a swimming pool on the third floor.

Chhabria Hermosa Beach hotel — The Clash Hotel on the site of the former Classic Burger and Duncan Donuts in downtown Hermmosa Beach will have
30 rooms, a gym, a spa and possibly a rooftop pool.
Rendering courtesy of South Bay CRE.

Chhabria made his name as a residential Realtor and developer with Shorewood Realtors. With annual residential sales in the $200 million range, he is ranked among the top producers in the country. Initially, he focused on Manhattan Beach and Palos Verdes, where he lives. Then in 2000 he and two partners paid $4 million for a Hermosa Beach tear down at 6th Street and The Strand.“People thought we were crazy to pay that much for a south-end Hermosa Strand lot,” Chhabria recalled during an interview in his ocean view office on the third floor of his 205 Pier Ave. building.

The lavishly appointed, Mediterranean design by Louie Tomaro sold for approximately $8 million before it was completed.

“That sale changed marketing on The Strand,” Chhabria said. “Before, south Hermosa had a stigma. Now people recognized that Hermosa Strand lots are bigger than Manhattan Strand lots, and are at eye level with the beach, not elevated like they are in Manhattan.”

Chhabria is currently listing a home he recently completed in the 2600 block of The Strand for $13.9 million. If the asking price is met, it will be the highest price ever paid for a Strand home in the beach cities. The current record is $12.7 million for a Manhattan Strand home.

He is presently building four more homes in Manhattan Beach, two in Redondo and two in Palos Verdes. But he foresees his commercial development one day dwarfing his residential development.

“By the end of 2013, my partners and I will own $50 million in commercial real estate. We want to take it to $100 million, and then to a billion dollars,” he said.

Chhabria Hermosa Hotel — Rendering of Raju Chhabria’s planned remodel of four storefronts in the 1200 block of Hermosa Avenue.
Courtesy of South Bay CRE

To manage his commercial division, Chhabria has opened South Bay CRE on the ground floor of his 205 Pier Avenue building. Former Hawthorne Savings and Loan banker Dave Iler is South Bay CRE’s chief executive officer.

“We’ll offer sales, leasing, construction management and financing, all in house,” Chhabria said.

Chhabria’s commercial ventures in Hermosa haven’t gone entirely smoothly. Days after closing escrow on the former Alta Dena Dairy on Pier Avenue in May 2008, the bank that was to fund the construction on the site went under. It took four years, using his and his partners’ money, to finish the building.

Title to the four retails stores he purchased in the 1200 block of Hermosa Avenue last year was split among 20 family members, each of whom had to sign off on the sale. The buildings fell out of escrow twice last year with other buyers.

A yoga studio and another health-related business will occupy two of the four stores (the former Fermando’s Clothing and a former hair salon, Bo Bridges Studio and Levy Art Studio) after they are remodeled in the next few months, Chhabria said.

Classic Burger, the site of his future hotel, was leveled in 2006 by a developer who hoped to build office condos on the site. After office condos fell out of favor with the collapse of the real estate market, one of Chhabria’s clients bought the property out of foreclosure. But his plan to operate it as a parking lot while waiting for the real estate market to turnaround was thwarted by neighbors. So he offered it to Chhabria with terms Chhabria said he couldn’t say no to.

He hopes to break ground on the hotel in July and have it open in July 2014.