WeHo’s First Non-Profit Business Incubator, Opened in December, Will Close in August

Members of For the Social Good gather for a breakfast in November.
Members of For the Social Good gather for a breakfast in November.

Tenants of For the Social Good (FTSG), a non-profit incubator for socially conscious businesses that officially opened its doors at WeHo’s French Market in December, will be evicted from the space by the end of August.

Tai Sunnanon, founder of For the Social Good, has told its tenants that the building’s owner, Faring Capital, plans to speed up its plans to demolish the building, originally scheduled for a year and a half from now.  Faring, however, said it has made no change in its schedule for redeveloping the site. Faring plans to build a four-story building with 50,000 square feet of office space, 8,600 square feet of restaurant space, 4,400 square feet devoted to shops and a 3,200 square foot space for a bar or nightclub on the lot now occupied by French Market at 7985 Santa Monica Blvd. and its parking lot and the nightclub space to the east.

Tai Sunnanon
Tai Sunnanon

Sunnanon, a consultant, said he organized For the Social Good to “provide residents of the Greater West Hollywood area with affordable work-space, resources and collaboration to launch and grow their business with support from the government, public and private sector.” He chose the French Market as an initial location, knowing that he had roughly 18 months to find a permanent one.

Tenants included the Lavender Effect, an organization formed to chronicle LGBT history; the Dance Resource Center; the Southeast European Film Festival; the Los Angeles Volleyball Association, and Mercy for Animals. Other for-profit tenants include GTM, a visa and passport agency; EKLaw, a legal firm; Glam Production Consulting, and West Hollywood Media Company, publisher of WEHOville and West Hollywood Magazine.

Rents vary according to tenant and size of space but are dramatically lower than the market rate, estimated at $3.50 per square foot. Most tenants have short-term leases that they can renew on a month-to-month basis.

Tenants generally expressed happiness with the space and the camaraderie of their fellow tenants. But that happiness turned to anger several weeks ago when Sunnanon told them that he was turning management of the space over to Faring Capital.

For the Social Good, Sunnanon said, wasn’t equipped to manage a building and would focus on providing other services such as workshops, education programs and training events, for which it has been billing the tenants $150 a month. To date none of those have taken place, however FTSG does provide Internet access, access to conference rooms and a copier.

Sunnanon introduced the tenants to representatives of Faring, who said it intended to raise the low rents to a market level to cover its costs, which Sunnanon said were more than $14,000 a month for taxes, maintenance, utilities and security. Sunnanon originally had hoped to get large grants from the City of West Hollywood and other donors to cover part of the operating costs. Faring also hoped to rent out shops on the first floor of French Market.

Suddenly faced with paying market rates, the tenants, none of whom had been in place for more than four months, rebelled. In response, Jason Illoulian, CEO of Faring, has agreed to leave the current tenants in place at their current rents until August. “We are going to continue the subsidized rents that FTSG had already been charging and cover the operating losses ourselves,” Alex Smith, an employee of Faring, said in an email message

“The reality is that most of us can’t afford to work here anymore,” said the executive director of one of the non-profits, who agreed to be quoted only if not identified by name. “… It’s been a huge, huge disappointment, and has put us, an organization, at great risk. So, bless Jason’s heart, he’s giving us six months. And I do think that his decision to extend our lease six months was a fair move. The whole situation is quite sad.”

“We’re still in negotiation with Tai Sunnanon about some of the benefits of being in his organization that aren’t really clear,” the executive director said. “If the whole point of For the Social Good is to make affordable rent for non-profits and small businesses to co-exist and cross-pollinate and all that, which is a vision that all of us bought into … if that is not there, if Tai Sunnanon takes away that part of the offering, which is the main part, then what is left is the big question.”

Sunnanon said he had been surprised at the extent of the building’s maintenance and repair needs. “For instance, the heating system didn’t work,” he said. “We had a lot of incidents with homeless patrons defecating in the back that I was cleaning up on a weekly basis. We had passersby leaving trash. We had glass.

“We had a lot of building issues, with pipes and toilets being clogged. What we didn’t anticipate, for instance, was twice, when it was raining, we had cracks in the ceiling and that impacted our workplace environment. A lot of structural issues. What no one anticipated were the building costs, which were outrageous.”

Sunnanon said he is stepping up his search for a permanent location for FTSG. “My goal all along has been to find an office space within the city within ten months to a year. We’re looking at different places right now, and I attend a lot of commission meetings and public hearings, I realize the challenge it is for non-profits to find affordable space within the city.

“There are several spaces that I’m interested in. We’re in different stages of conversations and meetings with those locations. And what’s happening with the French Market is causing us to have to expedite those conversations. If we can secure a space within this calendar year, that would be phenomenal.”

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anonymous
anonymous
4 years ago

This comes as no surprise – and I hope the tenants aren’t surprised by this. When you meet with Tai, he tells you that he’s running an “incubator”, when in fact he’s just a glorified landlord with no rental experience. FTSG is basically a co-working space like WeWork except that there is no transparency about entry requirements, what will be offered or who the organization’s advisory board consists of. FTSG struggled filling the office spaces and much of the space was empty, which explains why the management company would have to take over. I commend Jason Illoulian for giving the… Read more »

Jimc
Jimc
4 years ago
Reply to  anonymous

I don’t think I would be so quick to let Jason off the hook he knew what he was getting into and quite honestly if anybody has that big of a problem with rent for a startup user space then they aren’t the right person to be involved in the project the incubators that work typically either start very small and have a common area or they have a warehouse like environment that is available and not crucial to whoever donates it to the project as far as income is concerned. This kind of enterprise has to be able to… Read more »

Larry Block
Larry Block
4 years ago

Yeah, sounded too good to be true. I personally thought that Faring capital was billing this as something really special for the community. There were lots of Thank You’s at the ground breaking. I was there. One might note the costs of moving, in and out, and costs associated Time Warner type contracts for a year or less that is usually required for business. On a personal note Jason Iloulian is a really good guy so Jason,.. pay these guys moving expenses! These are non profits.. who seem to have gotten screwed in hope for their ‘Social Good’ offices. A… Read more »

J Chud
J Chud
4 years ago
Reply to  Larry Block

I used to share your opinion of Jason, but on further investigation and observation, it has become evident that his apparent interest in the well being of West Hollywood is nothing more than another developer seeking to take advantage of money making opportunities in Weho. The fact that he is the one demanding that everyone be out by August and he is nickel and diming people who have no money so that he can move on with his office building, etc is evidence that he really didn’t and doesn’t have his heart in the incubator project or Weho. I have… Read more »

Rob Bergstein
Rob Bergstein
4 years ago

While having low cost or free incubator space for non-profits or fledgling businesses is a wonderful idea, it’s not realistic to ask a market rate landlord to provide space at no or virtually no cost. Jason has been more than generous in allowing Tai to use old French Market site to date. Perhaps a better idea might be to have space for this purpose included in the discussions for the City’s development (at some point in time, I don’t know where the City is with any plans at this time) of the lot at the SW corner of Santa Monica… Read more »

Christopher
Christopher
4 years ago

Such a shame to see that building demolished. It was part of the history/architecture of West Hollywood. So much for preserving that…. yay for another gigantic building and more traffic on Santa Monica Blvd.

Lety
Lety
4 years ago

I was in a similar situation with a rented space for non profits. Truth is, the founders of these organizations don’t disclose a lot of information to the tenants. The reality is that research must be done before getting in one of these situations. A true professional would be able to estimate the costs of these spaces and plan better, rather than taking in business without knowing all the facts.

Santos
Santos
4 years ago

Tai, what a terrible thing to promote office space to non profit businesses and then evict them a few months in. Seems very Shady! It’s bad/unprofessional business choices.

Manny
Manny
4 years ago

The operating and management costs may be the real reason why this non-profit is closing earlier than expected. It costs money to maintain and operate a working building and it’s surprising that no one seemed to know that those costs would be incurred…..and that someone had to pay for it.

Mike
Mike
4 years ago

Four stories and 50,000 sf? This stretch of SMB is already tighter than a gnats behind during rush-hour.

J Chud
J Chud
4 years ago

I have been involved in similar Non-profit mentoring ventures in the past. They were successful in ways that should have happened with For the Greater Good, but there are three glaring differences which are absolutely crucial for the success of the participants. 1. True ‘mentoring’ – meaning that these entities should have been provided and taught management experience – fund raising, business planning, financial management, and any other services that were needed to give the member organizations a ‘hand-up’, not a hand out. There should always be an optimal goal of moving the companies to self sufficiency in an optimal… Read more »

Dan Morin
Dan Morin
4 years ago

This is outrageous on so many levels !

Craig
Craig
4 years ago

Unfortunately, you all got played. So not surprising.