Unless you have been in a coma for the past two years, you will know that Gemaizeh has become arguably the most in-demand commercial location in Lebanon. Ten years ago, it was a lower-middle class Christian quarter, patronised by Bohemians and edgy foreigners who liked its authenticity. They could eat for next to nothing at Le Chef, hang out with the backgammon-playing old-timers at the equally distressed Glass Coffee Shop (or qahaweh il a’zez) and listen to stories about how the residents had to walk on the west side of the street to avoid the Murr Tower sniper.
But that all changed in 2000, when the BCD became a cohesive urban whole, rather than the world’s biggest building site and Gemaizeh began to stir. Things became even more exciting when restaurant tsar, Bechara Nammour located his company headquarters at the entrance to Rue Gouraud, Gemaizeh’s main thoroughfare across the road from Saifi Village. The logic was compelling to that those who spend their days predicting the next boom: if the BCD was to flourish as expected and if Saifi was to be a residential jewel, then surely Gemaizeh would feed on the commercial scraps and grow to be big and strong.
Outside candidate
Paul, the Nammour-owned, upmarket bakery opened on the corner under the offices, and not long after, the Glass Coffee Shop lost most of its glass and acquired more wood and a lick of paint, in a bid to woo clients who would actually come in and spend money rather than wait to die.
Still, doubts lingered as to whether there would be a genuine gold rush. Property experts agreed that, while Gemaizeh was indeed close to the BCD, it was just too “off-pitch” to feed off the fortunes of its more glitzy neighbour. Others pointed to Gemaizeh’s infrastructure, or lack thereof, and predicted that as long as there was inadequate parking and decrepit utilities the serious restaurateurs wouldn’t go there. Elsewhere, the boffins reminded us that supply does not create demand and that Rue Monot and the BCD had more than enough restaurants and bars to cater to what they saw as Lebanon’s two distinct wining and dining catchments: the student/hipster party animals, who could let their hair down on Monot and the tourists, family, business element who favoured the BCD’s pristine streets and cafe ambience. Yes indeed, the conventional wisdom was that Gemaizeh was quaint and sure there was room for a few more bars, but it would never really fly.
If only we had all taken options on leases in Gemaizeh. It may have been slow to get going but the smart money is today cashing in. Since 2004, rents for commercial space have doubled, if not tripled and there are some 40 bars and restaurants in the area, as well as a sprinkling of galleries and boutiques. The number is set to rise as investors begin to eye up the lower Rue Pasteur, while others even talk of an expansion potential that will stretch past the EDL building all the way to the Bourj Hammoud Bridge. The area has practically killed Monot and, while, the hill still has its devotees, particularly students and younger revellers, Gouraud, even with its lack of parking has become the area of choice for those with the real spending power and who eschew the pristine atmosphere of the downtown.
The popularity of Gemaizeh has of course turned all commercial property owners into millionaires … or so they would like to believe. Rents have shot up and, while early pioneers, such as Bar Louis, Bread and Torino Express, got in paying an annual rent of around $200 m2/year, today’s prices have soared up to $500 and in some cases $700 m2.
It is difficult to give a standard range of figures for commercial rents in Gemaizeh. Two adjacent bars of roughly the same size can pay a 50% difference in rent, just because one bar is on the corner and is perceived to have greater visibility. But even this is not a hard and fast rule. While a cafe needs lights and windows, as people want “to see and be seen,” certain bars or clubs actually thrive on intimacy.
Too pricy?
“Gemazieh has reached the absolute top in terms of rent,” said Najib Rayess, owner of Bar Louis and Molly Malone’s. “It cannot go higher than this. I don’t think Monot (in its heyday) was ever as high as this. We’re now on the level of downtown Beirut. I think, instead of opening on Rue Gouraud, people will soon try their luck elsewhere.”
The problem for new investors is not just the higher rent; they also have to deal with the thorny issue old rent. Gemaizeh is full of properties in which tenants are paying next to nothing, often the equivalent of what others are paying for one or two meters per year.
To get them out, many investors are having to pay a ghlou or financial compensation to sitting tenants, effectively doing the landlord a favor. Rayess had to pay some $20,000 in ghlou to be able to free up and establish a tiny 5m2 snack bar. But he thinks it’s worth it.
As an indication of just how much prices have risen, the owner of Chez Asso pays $300 m2/year for his 12m2, two-seater eatery at the “poor” end of Rue Gouraud, near St Anthony’s Church. Compare that to the $500/year old rent Marwan Saade has paid for the past 30 years for his 30m2, minimarket half way down Gouraud. Despite the boom, Saade is in no hurry to leave. “All the time, People ask me how much money I want to leave,” he said. “But I don’t want to leave. Where will I go?”
Not only is the problem of old tenants placing obstacles in front of growth, the lack of a mature commercial market and the absence of professional brokers has made sourcing property a hit and miss affair with landlords, many of whose grasp of economics is short-sighted, asking outrageous prices conjured up on a whim.
In 2005, the two old brothers who own the run-down Kiameh supermarket, situated in the epicenter of Gouraud were asking for a $65,000 from anyone who wanted to turn their shop into a pub. This year, with a ruthless blend of avarice and knee-jerk business sense, the brothers, who apparently own several other buildings in the street, have reportedly upped the asking price to $150,000 a year.
Another phenomenon is the multiple partner syndrome, one that many “serious owners” see as curbing long-term growth. “You get around 15 friends who all club together and they open a bar or a restaurant,” said one owner. “Because the risk is spread over 15 people, they can afford to pay above the odds and will want to get out as soon as they can, cash their takings and move on. This is not good for business.”
Andreas Boulos, the owner of Torino Express and one of the pioneers of the Gemaizeh revival, agrees. “Because of the higher rents, you see bigger places opening up, which are often run by more than one partner,” said. “This way they can attract customers (i.e. their friends) and spread the risk.”
The150 m2, Cactus, a Mexican-style, bar-restaurant embodies this trend. It is owned by a dozen or so partners, who have paid $60,000, or $400 per m/2, a year. In terms of size and style, Cactus is regarded by many as “Neo-Gemaizeh.” It will not be the last. Recently, the 400 m2 Mandaloun Grill opened on Rue Pasteur, while opposite Torino Express a similar sized French restaurant and Steak House, is expected to open.
Rising rents
Between 2000 and 2004, Monot was the absolute party hotspot. In the late 90s, at the start of the boom, rents were at $200/m2/year and peaked at $500/m2/year. While the bigger, high-end places have moved to the BCD end of the Damascus Road, many of the smaller places moved to Gemaizeh. Will Gemaizeh go down the same way as Monot?
“There are still a lot of places available in Gemazieh,” said Boulos. “It would be great if the area attracted more shops and boutiques, so it would come to life during the day as well. Currently however, everyone is asking nightlife prices, which is just not affordable for a small CD or book shop.”
“If I wanted to open a bar today, with the current prices in Gemaizeh, I would go elsewhere,” he said. “I don’t know where though. It is not that easy to find another area in Beirut. Hamra is always an option, but Hamra is not cheap either and there are still many people who have a problem with crossing to Hamra. So, in that sense Gemaizeh still has potential. In theory, there is enough room for development all the way down to the end of Mar Mikhael and the Bourj Hammoud bridge,” he said.
Rayess thinks Rue Gouraud has more or less reached its peak and expects further developments to take place off the main street and at Rue Pasteur, where rents are still more affordable. Pasteur has already seen some interesting commercial developments in recent years with the opening of several boutiques and interior design shops, such as Mowgli and Zee Gallery. Another anchor is travel agency Wild Discovery, while the opening of the hugely popular Mandaloun Grill should not be underestimated.
A new Monot?
While the residential market has not boomed in the same way (parking is a major issue for house buyers) two major developments will surely contribute to future growth. Local developer Karim Bassil’s next residential Convivium building at the heart of Rue Gouraud can only enhance the street as will the new Hôpital des Soeurs des Rosaire.
“There is one difference with Monot,” Boulos concluded. “There is currently more professionalism in Gemaizeh. In Monot there were a lot of people who wanted to give it a shot, see if they could make a buck. It was mostly them who failed, while the good ones survived. Most entrepreneurs in Gemaizeh have been in the business before. They know what they are doing. So, I think, as long as we can stay professional and keep the place clean, Gemaizeh can keep on rising.”
And to those who doubted, a word of encouragement. Everything is easy with hindsight. It’s just a shame they could see that, as long as the economy moved, Gemaizeh was never going to fail. It had the architecture (Deco cool), location (close to the BCD), access (from everywhere) and, and this is key, it was flat, straight and had sidewalks. Supply may not create demand but a good product has helped take the Lebanese hospitality sector to a new evolutionary level.
