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Meet Shaheen Sadeghi, the LAB Man

Meet Shaheen Sadeghi, the LAB Man

*This article was altered on Dec. 20, 2011.

 

Shaheen Sadeghi is a retail developer, though a more accurate job title might be Curator of Cool.

He sits on a plush, lime chair in his glass-encased office at Costa Mesa's LAB Holding headquarters, an incubator of urban-mod eye candy that would have Jonathan Adler taking notes. In the front lobby, a glossy bubble swing hangs from the ceiling, hovering over an AstroTurf rug, upon which sprouts a pair of cheery, floral-patterned pouf cubes. The stylishly dressed woman answering the phones is not the receptionist, but, as her nameplate indicates, the "sociologist." Above her, a red-and-fuschsia Pop Art portrait of John Lennon reminds you to imagine.

Wearing a catalog-crisp navy sweater, dark cuffed jeans and a bright-orange watch, Sadeghi leans over a coffee table that brims with art and photography books and flips though images of vintage storefronts. Exposed red brick. Hand-painted window promotions. Straightforward signage. "Look at this," he says, grinning. "It's called 'Good Stores.' I love the simplicity."

All of it sets the vibe for his latest extreme building makeover: the overhaul of Center Street in downtown Anaheim. In the coming months, the palm-tree-lined, marble-and-teal shopping plaza recently vacated by a jewelry-repair shop, discount-clothing boutique and travel agency promoting cruise vacations will be transformed into a 1940s-themed destination hub, packed with meticulously conceptualized shops that nod to the city's past.

"I call it 'hip blue-collar,'" says the round-faced, gray-haired chief executive, his voice serene, his manner mild. "We want to recapture some of the essence that made downtown Anaheim what it was. Bring back the old-fashioned coffee shop. Put in a bakery, a florist. We want to get a men's barbershop in there. If we can't find one, we'll build one."

The facelift accompanies another project just a few blocks down. Sadeghi's team is turning the city's long-downtrodden, 92-year-old, 42,000-square-foot Sunkist Packing House at Anaheim Boulevard and Santa Ana Street into a gourmet food hall. When doors open sometime next summer, the cavernous, sunlit space will house 25 stations serving everything from wood-fired pizza to gelato. There'll be communal tables, patio seating in the form of railroad cars, movie screenings and live music, as well as an adjacent farmers' market featuring food trucks, locally grown produce, and artisanal breads and cheeses. "Everybody is absolutely out of their minds," says Kevin Kidney, vice president of the Anaheim Historical Society. "The other night, we were drinking beers over at the Anaheim Brewery across the way, and the lights turned on. It looked like a big cruise ship out in the ocean."

While he may lack the notoriety of Segerstrom, Harrah or Bren, 57-year-old Sadeghi is often described as a "visionary" in developers' circles, a maverick who is making Orange County less Orange County with ideas that snarl in the face of the ubiquitous beige-stucco shopping center. His original "anti-malls," the Lab and the Camp in Costa Mesa, reign as hipster meccas, drawing flocks of young urbanites who recycle and eat vegan and refuse to buy sweaters in bulk at the Gap. He's an evangelist for retail localization, dubbing his projects "love centers" and giving public talks titled "Culture Is the New Currency."

"It's no longer about taking the shopping cart and throwing stuff in it," he declared from a stage as a speaker at TEDxFullerton last year. "People are looking for content in their lives." His mantra for today's consumer: "I'm not a demographic. I'm not a number. I'm not a statistic. I'm not a bar code. I am a human being."

But in the business of consumer connection, Sadeghi has built a legion of foes, including current, former and prospective tenants and even city leaders—some of whom he has battled in court. "Shaheen is not out to enhance the community—he's out for Shaheen, period," says Joe Liburdi, whose Liburdi's Scuba Center occupied a space in the Camp from its grand opening in 2002 to 2008. "He's the most terrible landlord I've ever encountered."

Sadeghi has been accused of luring inexperienced entrepreneurs into his retail centers, then pushing them out with outlandish fees and climbing rent. "People want to believe in his mission, but it's all a façade," says one anonymous tenant. "He'll make your business cool, but at what expense?"

One woman claims Sadeghi modeled the concept for a new store after her own when she decided to not sign a lease.

Statements from business owners who've worked with him, when interviewed for this story, were cautiously peppered with "off the record" in fear of retaliation or were purposely vague. "He is a savvy and a tough businessman if he wants to be," says Joe Ongie, one of the original owners of the Gypsy Den, a café and reading room that has been a Lab staple since 1994. Ongie breaks into laughter. "How diplomatic am I?"

 

For LAB Holding, the two Anaheim centers are the first projects to break ground since the Camp was unveiled. The past decade has been fraught with legal drama and disappointment for the development company, which has had a string of proposals and ventures squashed in Orange County and beyond. Sadeghi is currently suing San Clemente and Oregon's Portland Development Commission after his plans for revitalizing parts of those cities fell apart.

LAB stands for Little American Businesses, the fuel of Sadeghi's developments, and what he believes will get the country out of its financial crisis. So why do owners of some little American businesses feel he has left them in the dust?

* * *

The son of Persian academics, Sadeghi grew up in Lansing, Michigan, at the peak of America's optimistic postwar expansion. Always having had a passion for the arts, he studied fashion design and merchandising at New York City's Pratt Institute. There, he worked as an apprentice for legendary couturier Charles James, making $10,000 dresses until 2 a.m. at the famed Chelsea Hotel. "He really looked at fashion as architecture," Sadeghi says of his mentor as he pages through a black portfolio filled with snippets from his past—a gown he designed in Vogue Chile, his 1977 New York Designers Award, newspaper clippings from the garment-industry trade paper Women's Wear Daily. "He had a phenomenal influence on me."

In 1979, Sadeghi left the world of haute couture, moving west to Pasadena to revamp the line at the women's wear company Catalina. He then worked for Portland-based swimwear brand Jantzen, where he helped to launch the Hawaii-inspired Zuma Beach line.(1)

Orange County beckoned in 1988, when Laguna Beach surfwear company Gotcha was looking for a new head of merchandising. Then-CEO Joel Cooper says executives were trying to think outside the box in creating a list of candidates when they came across Sadeghi. "When he walked into our office in Orange County, he was wearing a suit and bow tie," Cooper recalls. "Those formal clothes normally would have scared off a company like Gotcha, but then he did his pitch and just dazzled us. Shaheen basically brought in a whole new, more sophisticated approach, educating us from the level of true garment manufacturing. He was a very strategic thinker and a great, charismatic leader."

Four years later, Sadeghi became president of Huntington Beach-based giant Quiksilver, working alongside founder and CEO Bob McKnight.(2) During his reign, he oversaw the launch of the brand's first retail stores, an uncharted frontier in the surf-apparel industry.

While doing business with big-box retailers, he noticed what he describes as a "massive cultural shift." Department stores—Buffums, Broadway, Bullock's—were going bankrupt. Shopping malls, which once served as daycare centers for the teenage set, were "missing the mark of the next generation," Sadeghi says.

"Younger customers weren't interested in going to an air-conditioned vanilla box," he explains. "They didn't want to walk into a department store, get sprayed with perfume, take the escalator to the fourth floor, walk through lingerie, all just to find a pair of jeans. You have to ask people, 'Do you love Westminster Mall? If it were replaced by a park, would people care?' The answer is no."

Instead, these twentysomethings were raging against the machine with tattoos, grungy tees, skateboards and attitude. "They were into clean oceans, the government, technology," Sadeghi says of '90s scenesters, who made six bucks an hour and bought $5 lattes. "This was a very sophisticated youth culture that was trying to emerge at the same time we had Nirvana and Pearl Jam. So the music scene was kicking in, the coffee scene was kicking in. These new customers were coming through very powerfully." Shopping was no longer a passive activity, but a statement.

The observation sparked the idea for a walkable shopping village that was anti-chain, anti-homogenization and all about culture. Sadeghi left Quiksilver in 1992, telling media outlets he needed to pursue "some projects important to me."

He found an abandoned, military night-vision goggle factory on a 40,000-square-foot complex in Costa Mesa. He worked with the city on a development plan, commissioning New York architecture firm Pompei A.D. to help design the open-air center, a gritty jungle of scrap-metal sculptures that look as if they were assembled by explosives; a water fountain made of rusted steel drums; moss-covered walls; fluffy desert grass; and a living-room-like lounge area decked with exposed beams, dangling chandeliers and furniture upholstered in granny tapestries. When the Lab opened in 1994, The New York Times called it the "frontier of shopping." Crowds invaded the space for art exhibits, charity events and alt-rock shows. A stage showcased music acts such as Sugar Ray, Sublime and No Doubt and was a breeding ground for up-and-coming local bands.

From the start, Sadeghi saw himself as a talent scout, carefully selecting tenants to fill the center. "It's really about curating," he explains of the process. "We make a cultural decision as to what we want to do, and then we put products and people together."

 

The 16 businesses that made the final cut included Tower Alternative, an experimental branch of the Tower Records chain; NaNa, the go-to supplier of Dr. Martens; edgy comic-book shop Collectors Library; and the Lab's anchor, anti-mall poster child Urban Outfitters.

Ongie, who had never run a coffeehouse before opening the antique-chic Gypsy Den, believes Sadeghi "took a real chance on us," adding, "He appreciated that we were doing something different."

The Lab was a success for Sadeghi, as well as for Costa Mesa. "The end of Bristol was kind of languishing," says Willa Bouwens-Killeen, the city's chief of code enforcement. "There was this big ol' industrial building that no one knew what to do with. Shaheen started a renaissance on Bristol Street and brought out the eclecticism that is Costa Mesa. I've heard stories of tourists going to South Coast Plaza and their kids going to the Lab."

* * *

Nearly 10 years later, in 2002, Sadeghi introduced a second development across the street. Today, the Camp, nestled on Bristol and Baker streets, is a woodsy, eco-hipster retreat where boys in fedoras and girls in feather earrings can crank out "seed bombs" from quarter-operated candy machines, buy succulents out of an Airstream trailer, lounge on hammocks while taking advantage of free Wi-Fi and eat Vietnamese spring rolls on a picnic bench set against a backdrop of a forest. Stenciled onto each parking space is a message: "Listen." "Sit By the Fire." "Follow New Trails." "Wear Clothing That Fits." Eco-consciousness is integrated throughout, from the grass roofs to the percolation system to the bicycle-sharing program.

The Camp's original focus, however, was "human-powered sports," including hiking, biking, snowboarding and surfing. Enthusiasts could test out kayaks in a pool, fishing reels in a pond and climbing equipment in a bouldering park.

Legendary diver Joe Liburdi and his son, Matt, were set to open Liburdi's Scuba Center, a scuba shop and training facility featuring a heated saltwater reef pool. He was about to sign a lease with the Irvine Co., but, Joe says, Sadeghi "sold my son a song and dance." The Liburdis agreed to be one of the Camp's first tenants. Rent would be about $11,000 per month.

That's when a barrage of problems followed, Joe claims. He says the location had faulty electrical wiring, which they had to pull out and reinstall at their expense. After building the pool to city code, Joe says, Sadeghi insisted on altering the configurations and switching out the wrought-iron fence for a glass one for aesthetic purposes, changes that forced the father-son team to shell out approximately $20,000 more. After that, the opening of the Camp was delayed due to city permit issues. When the Liburdis refused to pay rent for that time, Sadeghi took them to court, but lost. "He didn't have a leg to stand on," Joe says.

In 2004, Joe turned over the business to Matt, and "that's when it really hit the fan." Each year, Sadeghi raised the rent dramatically until it reached more than $19,800 per month, on top of common-area and advertising fees. The shop went bankrupt. "As a small business, there's no way you could afford that," Joe says. "It was a no-win situation."

He and other tenants formed a "merchants' association" to fight him over fees but were unsuccessful, he says. Matt finally left the Camp in 2008. Joe says of Sadeghi, "He's out to make a buck and doesn't care about anyone else. I avoid that place like the plague."

Other tenants left, too. In early 2009, A16 Outdoor and Travel Outfitters, an expedition-supply store, left the center. Said founder John Mead in a hazy statement, "Participating in the Camp project was a disappointment for us, but an interesting journey."

Paul Deem, owner of Cycle Werks, says he was excited to be part of a project that specialized in outdoor sporting goods. "Everyone felt it was a cool, fun idea."

Slowly, though, a shift took place. Liburdi's was out, and so were A16 and Billabong. In came restaurants—Old Vine Cafe, Ecco, Taco Asylum and East Borough. Sadeghi, Deem says, "changed the mix of the center, which did not necessarily work for a bike store."

He explains,"When you're going out for lunch, you're not going to buy $3,000 worth of scuba gear. You might buy a $500 beach cruiser because it's pretty."

Rent became too high, and this past September, Deem left the Camp and moved the shop about a mile away to a more industrial-type space on Airway Avenue, where he has 1,000 more square feet and pays less in rent. He doesn't blame Sadeghi for rearranging the tenant mix, believing he has to do what makes money. "He's no different from me," Deem says of Sadeghi. "He's an entrepreneur."

 

While he doesn't try to push tenants out, Sadeghi says, turnover "comes with the territory" and is part of the nature of the business model. In order to stay relevant, the centers must "keep moving" and "follow what the consumer wants." He only does short-term leases, typically two years at a time, except for with established retailers such as Urban Outfitters (which just signed on for another 12-year lease). Decisions are made in order to "keep the integrity of the centers," he says.

Those who can't ride the challenges of the economy—or "weak tenants," as he put it in an email—will not survive. "To show up and deliver a product—that takes some effort," Sadeghi says. "Mediocrity is just a dangerous space to be in."

He adds, "It's all about keeping the product fresh. With a lot of the little guys, we test them for a couple of years and revisit them when their lease is up. We may choose to put in a different tenant if another one is more current so that every corner and every inch of the center is great. When you walk into a mall and see the same tenants for 15 years, it gets really boring. We're not your typical strip center where we can sit back and collect rent. Quite honestly, that's why we've lasted for 20 years."

The Lab and the Camp charge common-area fees for general maintenance and promotion fees for communal events and marketing. While Sadeghi didn't give hard numbers, the fees, he claims, are comparable to those at any popular Orange County retail center, including South Coast Plaza, Irvine Spectrum and Fashion Island.

Still, some say Sadeghi will do whatever it takes to succeed. Delilah Snell, owner of Road Less Traveled, a shop in Santa Ana that sells environmentally friendly gifts and home goods, met with him in 2008 to discuss an opportunity to move to the Camp. (Full disclosure: Snell is the girlfriend of OC Weekly editor Gustavo Arellano.) She says the rent rate he gave was way too high, at least triple what she was paying, and she declined the offer. Then, she claims, he made a threat.

"He basically said to me, 'If you don't move into my center, I will copy your business,'" she says.

Snell, co-founder of the Patchwork Indie Arts & Crafts Festival and a pioneer in Orange County's eco-movement, believes her store is the model for the Camp's SEED People's Market, an airy, 12,000-square-foot gallery-type outlet that sells sustainable products and handmade crafts. Sadeghi owns the store with his wife, Linda. Snell claims that SEED has approached many of the vendors featured at Road Less Traveled and even used a photo of her shop in a promotional email sent out to customers. (The Weekly has a copy of the email.)

When Sadeghi warned her he would copy her, Snell was stunned—and then furious. "I just thought, 'Go ahead and try,'" she says. "Because I will tell you, having a green store isn't about going out and buying a whole bunch of products. Homesteading, the whole craft food, handmade movement, it's not about bling and money. It's about care. It's about knowledge; it's about education. It's about being passionate about what you're doing. . . . You can get cool displays and all that shit, but if it's not in your soul, then it's not gonna be special."

Of Snell's accusations, Sadeghi responds, "I think she's full of it." He says his business plan for SEED was dated "five years before she developed a business plan."

"It's a whole different store, whole different vibe," he says, "and it has nothing to do with Road Less Traveled."

Several current tenants at the Lab and the Camp praise Sadeghi for giving them the opportunity to build a following, a brand. John Cao, who owns Vietnamese eatery East Borough with his girlfriend, Chloe Tran, says they looked at locations on Huntington Beach's Main Street and other parts of Orange County, but no one would give them a shot.

"Landlords wanted something established, like your typical pizza joint," Cao explains. But when they gave Sadeghi their pitch, showing him their mood board and logo design, he "saw something in us." The couple brainstormed with Sadeghi on the look and feel of the restaurant, which celebrated its first year at the Camp this summer.

"I can't complain," Cao says. "Our success has exceeded our expectations."

* * *

Meanwhile, LAB Holding has been working to build more love centers. In 2006, Sadeghi and his team unanimously won a bid to revitalize North Beach in San Clemente, a city-owned coastal stretch consisting of a coffee shop, an abandoned movie house, a tiny Metrolink station and a sea of asphalt parking spots. The Playa del Norte project, as it was known, called for a 50,000-square-foot "Spanish village by the sea," a reimagining of city founder Ole Hanson's original development pitch that would include restaurants, shops, a parking garage and a Joie de Vivre boutique hotel. "It was a phenomenal project we put a lot of funds and energy into," Sadeghi says. "We put together a world-class team."

 

But in the months that followed, a fervent campaign to stop the project emerged, and the city became embroiled in a bitter battle widely covered by local media.

Those who wanted the center said it would bring life to an underutilized area and revenue to the city. Those opposed complained of obstructed ocean views, overcrowding and financial risk.

Wayne Eggleston, a former councilman and mayor of the city, voted to select LAB Holding for the project in 2006, but pulled his support soon after, telling San Clemente Patch that the company "did a bait-and-switch."

"A few weeks after the vote, they pulled the parking garage and boutique hotel from consideration," Eggleston told the Weekly via email. "Both of these items were critical in my initial decision to support them as the developer." The decision went to voters as Measure A on March 8 of this year. A majority—57 percent—voted against the project.

"San Clemente, unfortunately, is a very political town," says Sadeghi, who is suing the city over the failed development, claiming the ballot measure was misleading and that there was a "conscious effort by the city to derail the project." The complaint estimates the damages to be more than $3 million.

"Honestly, I think it comes down to four or five people who have manipulated much of the opportunity for San Clemente, and that's why it looks the way it does. . . . If you look at the history, there hasn't been a single development in the past 20 years. Nothing gets done," he says. "And this inner, dirty political structure is robbing the community of the potential of what it can be. It's just not a user-friendly place, and that's why it has suffered."

Sadeghi is also suing the Portland Development Commission for more than $1.7 million after a LAB Holding proposal to renovate a 100-year-old abandoned flour mill in the city fell apart. They were set to create a culinary hub with a cooking school, farmers' market, brewery and community garden, but Sadeghi claims the city suddenly stripped away the foodie-centric focus and redirected the development as an office project. "We were not excited about housing, so we walked away," he says. Portland officials have argued, according to press accounts, that LAB Holding never lined up tenants or financing.

LAB Holding has had other proposals and plans crushed or stalled for various reasons—a kid-friendly retail plaza in Irvine; a retail center in Santa Ana; an arts district in Tempe, Arizona. Still, Sadeghi believes the ball remains in his proverbial court.

"We're very selective with projects," he says. "That's why we don't run around and do projects in the Inland Empire, you know? We have the financial means and ability to, but it's all about quality and authenticity."

* * *

For now, Sadeghi's main focus is on Anaheim. On a Thursday afternoon, he rolls up to the Packing House construction site in a boxy, white Range Rover adorned with a bumper sticker that says "EARTH," the letters A-R-T highlighted in red.

"I can't even believe it," says Sadeghi, walking through the construction site, the sound of jackhammers in the distance. "The downstairs was such a dungeon. It was dark, wet. We cut this whole thing open. Now we have all this light coming though."

Anaheim's redevelopment agency is footing the bill for the restoration project—so far, it has spent $9.5 million—and LAB Holding will be the property manager. "Shaheen and his team have created a sense of place in Costa Mesa and turned it into a destination spot," says John Woodhead, acting executive director of the agency. "Now, they're doing the same thing here."

Sadeghi steps over wobbly sheets of wood, pointing out where the restaurant stations will go, where the seating will be arranged. "Right now, it's all about casual food, not $300 dinners," he says of today's consumer market. "That's why food trucks are so popular. There are so many creative, talented artisans in the food space."

What Sadeghi may be best at is spotting cultural movements, and then manufacturing breeding grounds for them. As movements change, so will his work.

He is for community, for consciousness, for cool.

It's all part of his little American business plan.

 

This article appeared in print as "The LAB Man: In his his quest to hipsterize OC retail, Shaheen Sadeghi has built quirkily beautiful properties—and a reputation for ruthlessness."

 


CORRECTIONS:
(1) Sadeghi did not live in Portland, as originally implied.
(2) He was not co-president, as originally stated, but rather held the title of president alone. Bob McKnight was the CEO, not co-president with Sadeghi.

Shaheen Sadeghi at the Lab Anti-Mall in Costa Mesa
Brandon Showers

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