The Pythian Market on Loyola Street in the central business district will be able to stay open until at least the end of the year after the food hall operator and landlord reached a settlement.
The deal between Pythian Market LLC and building owner ERG Enterprises was struck during an eviction court hearing on Friday. It represents a small victory for Pythian Market, which owes ERG approximately $2.5 million in rent arrears. The landlord could have evicted the group immediately, which would have forced the food hall’s 10 vendors — all small businesses, some new to the food service industry — to close by the holidays.
Now, those suppliers have a few weeks to try and figure out their next steps. But it’s unclear what their options are. ERG expressed its hope to keep the food hall open under new management. Some suppliers say they want to stay.
However, to do this, ERG will have to take over the management and administrative duties of the food hall and hire new staff during the busy holiday season.
What’s more, they must negotiate individual leases with each supplier, a process the suppliers say has not yet begun.
“There are question marks everywhere,” said Domonic “Dinero” Meyers, who owns Ascent Blends, a smoothie and juice bar. “I want to stay, but the suppliers don’t know what’s going on.”
work through transition
Vendors were caught off guard when ERG issued an eviction notice to Pythian Market in late November. So did Pythian Market co-owner Jackie Dadakis, who acknowledged the food hall operating entity has struggled to pay its $89,000-a-month rent since the pandemic hit.
Pythian Market did not contest the eviction, nor the $2.5 million it owed. Dadakis said it just wanted more time to help its suppliers.
Barrett Cooper, who manages ERG’s real estate portfolio, declined to discuss the case at Friday’s eviction hearing, but said he stood by comments made in November about his firm’s construction plans.
“We want to work with our suppliers with the goal of a seamless transition to continued operations under new leadership,” Cooper said at the time. “We are now completing the transition process.”
Dadakis blames the pandemic for food court troubles. The facility, which opened in 2018, was just hitting its stride when COVID mandates forced it to close in the spring of 2020. After restaurants reopen, customers are slow to come back.
But the problem isn’t the food suppliers, they’ve been paying the rent. Instead, the financial model of the building depends on attracting activity to the venue space on the second and third floors.
Dadakis said the food vendor’s sublease costs accounted for only about 40 per cent of the monthly rent that Pythian Market paid to the building. The other 60% of the budget comes from activities that have not resumed after the pandemic.
Complicating the situation for Pythian Market is a complex series of relationships between the individuals involved in the food hall operating entity and the ownership of the building, which also houses 69 apartments and office space on the upper floors.
The 114-year-old Pythian Building was acquired in 2015 and subsequently redeveloped by a partnership of ERG Enterprises, Crescent City Community Land Trust and property development firm Green Coast Enterprises.
Green Coast executives, including Dadakis, also own Pythian Market, meaning the food hall operator has an ownership stake in the building.
In October, ERG Enterprises bought stakes in the Green Coast and Crescent City buildings for an undisclosed sum.
It is unclear whether ERG intended to evict its former partner in the construction project at the time of the purchase. Cooper said only, “a building transaction unrelated to the food hall operator’s lease issues.”
Nicole McKee, owner of Ma Momma’s House, which sells fried chicken and waffles, said Friday she hopes to make progress in negotiations for a new lease with the supplier. Like Meyers, she wants to keep operating in the food court.
She’s optimistic, but has yet to enter into any concrete lease negotiations with the landlord.
“We’ve talked to the owners and told them we want to stay,” McKee said. “They told us they wanted us to stay, so that’s fine. But that’s all we know so far.”