We’re already into the second month of 2016… Can you believe how quickly time flies?

February’s start also means you should be moving headlong into your New Year’s Resolutions. What’s that, you haven’t quite sorted out your 2016 resolutions yet?

Well for most business owners and investors, New Year’s Resolutions revolve around improving their business and bettering their investments.

And if you’re like most shopping center landlords, your goals for the New Year revolve around improving your property – thereby bettering your investment.

Here are three of the most common goals for shopping center improvement…

Reducing Vacancy

Are you struggling with lingering vacancies that you just can’t seem to fill? Despite the economy’s improvement, many landlords are in exactly the same boat.

If you’re facing this problem, here are the three most likely culprits:

Unrealistic Expectations

End-cap spaces in prime locations command high dollar rents. Inline and elbow spaces in sub-prime locations do not. It’s really that simple.

So if you’re dealing with a lingering vacancy, it may be time to consider lowering your asking rate or being more flexible with the offers you receive.

Also, if you’re trying to fill a larger space, it may be worthwhile to market small space availability, and offer tenant improvement dollars to subdivide the larger space.

For Lease By Owner

It’s certainly fair to say you know your property, likely better than anyone else. And having owned the property in its current location for some time, you’re probably knowledgeable about the surrounding area.

Leasing agents, however, are zeroed in on the tenants best suited to your property-type, the tenants active in the marketplace, and the real PULSE of the area. If you’re like most landlords, it’s doubtful you have the time to acquire and maintain this board of a knowledge-base.

And a leasing agent’s value doesn’t end with property-type and market knowledge. Typically agents have a list of tenants actively seeking space. And they’re connected to a city, state and even nationwide network of brokers and corporate tenant real estate agents all representing active tenants.

Hiring a leasing agent, who doesn’t get paid until your vacancy is leased, puts all of these resources to work in the effort to find you a higher quality tenant, faster.

Time For Some New Blood

Perhaps your property is already listed with a broker. Maybe it’s been listed with that broker for a long time. A REALLY long time. But with little or no results to show for the time and effort.

This doesn’t mean your current broker isn’t competent or qualified. And it doesn’t mean they’re not doing a good job.

Sometimes listings just get tired. There may have been a rush of activity when your property first came on the market. But that time has long passed, and now your empty unit is just one more in vast sea of vacancies.

In this scenario, the best thing to do is to bring in some new blood. A new broker with a fresh perspective, different connections and another approach to leasing your vacancy.

Lowering Property Expenses

Your shopping center is an investment, right? It’s supposed to generate money. Not rack up costs.

Yet each month as look down your list of property expenses, you scratch your head and wonder “what are all of these charges!?”

Unfortunately, it does cost money to maintain a shopping center. But there is a strong possibility that you’re paying for more than you have to.

Here are three potential property cost-reducing strategies:

Lower Your Vendor Expenses

Of course vendors are necessary to maintain your property. But are their services REALLY worth what you’re paying? In other words, is the quality of the service your current vendors provide really worth the fees they charge?

Could it be other vendors provide comparable or even superior quality services for less money? Seek bids from alternative vendors, and you’re likely to find higher quality, lower cost providers begging for your business.

Reassess Your Property Taxes

The economy has certainly improved since the depths of the Great Recession. But that doesn’t mean your property’s value has rebounded to its pre-recession level. And that means in all probability, your property’s current assessed value exceeds its actual market value.

Fortunately, there are companies that specialize in reducing commercial property assessments. They don’t charge a dime unless they’re successful in lowering your assessment. And their fee is merely a percentage of you assessment reduction.

Convert to Triple Net (NNN) Lease

We probably don’t need to reiterate the details of how a Triple Net lease works, but here’s a quick crash course… Your tenants pay for your property taxes, building insurance, and common area maintenance (with a charge added to their monthly rent).

If your tenants aren’t on Triple Net Leases, your property expenses are SIGNIFANCLY higher than they could be.

But this is an easy fix. As existing tenants come up for lease renewals, and as new tenants enter your shopping center, sign them to Triple Net Leases. It’s the single largest property expense reducing tool at your disposal.

Maintenance

As we’ve already discussed, your property is supposed to generate money, not vacuum it out of your bank account. That’s what makes maintenance, especially big, expensive projects such a bitter pill.

But the reality is, the condition of your property is directly proportional to its value and income generating potential.

Deferred Maintenance

A property in poor physical condition, with lingering issues – leaky roof, cracked and deteriorating parking lot and sidewalks, dying or dead landscaping, ADA non-compliance – isn’t well-patronized. And it winds up filled with frustrated, underperforming tenants that grow more and more eager to vacate the property every day.

One by one, your tenants depart. And you’re left with an empty shopping center no one wants to lease, because no one wants to shop there.

Liability Issues & ADA Non-Compliance

Cracked and broken parking lots and sidewalks are trip and fall lawsuits waiting to happen.

And ADA non-compliance is a huge legal can of worms that no landlord wants opened.

In short, deferring maintenance may improve cash flow in the short term. But it seriously hurts your property’s value in long term. The potential lawsuits can be financially devastating.

How CBM’s Professional Leasing & Property Management Services Can Enhance the Value of Your Shopping Center

Whether you’re facing long term vacancy, rising property expenses or mounting maintenance issues, CBM can help.

Our team of industry leading shopping center leasing and management pros will solve your problems.

And the end result? You’ll achieve your 2016 goal of improving your shopping center’s investment value!

Find Out More About CBM’s Leasing & Property Management Services

Click here for more info on how CBM can help enhance your property’s investment value.


By Globe St, Friday, February 12, 2016

Is Now the Time for Retail Owners to Sell?

CORONA DEL MAR, CA—The supply of retail investment opportunities will increase this year as owners who waited to put their properties on the market rush to take advantage of what feels like a market at its peak, Hanley Investment Group Real Estate Advisors’ president Ed Hanley tells GlobeSt.com exclusively. He says those who have been holding back putting their retail properties up for sale are now beginning to see the window of opportunity close and will be enticed to sell in 2016.

“With the added supply of product and projected rise in interest rates, there will be downward pressure on pricing that will have an impact on transactions in 2016,” says Hanley. He feels that multiple offers on properties will likely no longer be the norm, and those sellers who do not appropriately price their assets or react quickly to what the market is offering may find themselves having to adjust pricing according to macroeconomic factors throughout the year. “Managing expectations will be the key to successfully closing transactions in 2016.”

Demonstrating this trend of increasing sales transactions, HIG has completed the sale of $73 million in retail properties in 30 days. The retail transactions include both single-tenant and multi-tenant retail properties in California as well as an out-of-state neighborhood grocery-anchored shopping center. The bevy of transactions included the sale of a prominent multi-tenant retail investment located within the ground floor of an oceanfront mixed-use development in Southern California, along with record cap-rate sales for a number of single-tenant properties.

In addition, HIG has another 15 retail properties valued at $105 million in escrow, plus a multitude of buyer requirements to fill, according to Hanley. “If January’s volume of activity is any indication to how the rest of the year will go, we believe it is going to be another record year in the retail investment sector.”

The firm has recently been active in retail sales transactions in various areas of California. In Los Angeles County, HIG SVP Carlos Lopez represented the seller in the sale of a 19,717-square-foot multi-tenant retail property situated at the base of an oceanfront luxury residential development at Ocean Avenue South in Santa Monica. Built in 2014, the retail property at 1705 and 1755 Ocean Avenue was sold in an off-market transaction for an undisclosed amount. Babak Ziai, founder of BrandView Capital Partners, represented the buyer, JPMorgan.
Also in L.A., HIG SVP Jeremy McChesney, along with Lopez and Hanley, represented the seller in the sale of a 100%-occupied 21,890-square-foot multi-tenant shopping center near Santa Monica Blvd. and Vermont Ave., adjacent to the Los Angeles City College campus. The two-story retail center was built in 1986 on .72 acres and features a rare parking lot, both in the front and back of the building. The purchase price was $10,965,000. Marc Pollock of Westside Retail represented the buyer, a private investor based in Los Angeles.

In addition, HIG SVP Patrick Kent and EVP Bill Asher represented the seller in the sale of a 15,525-square-foot single-tenant absolute NNN Walgreens in Huntington Park, CA. Located at 6100 Pacific Blvd., the property was built in 2007 on a 47,916-square-foot lot at Pacific Blvd. and Randolph St. The purchase price was $11,850,000, which represented one of the lowest cap rates for a fee-simple Walgreens nationwide at 4.22%. Nigel Keep and Bill Kurfess of Kidder Mathews represented the buyer, a private investor based in Northern California.
In San Diego County, HIG EVP Eric Wohl represented the seller in the sale of a single-tenant absolute NNN Wendy’s sale-leaseback at 8749 Campo Rd. in La Mesa, CA. Built in 1984 on .84 acres, the 2,806-square-foot Wendy’s sold for $4,125,000, representing one of the lowest cap rates in the nation for a Wendy’s sale leaseback, according to Wohl. The sale featured a brand-new 20-year lease with increases every five years. Thomas Ahn of Integrity Capital represented the seller.

McChesney also represented the seller in the sale of a single-tenant corporate-leased O’Reilly Auto Parts store in Contra Costa County, CA. Built in 1981 on .78 acres, the 8,037-square-foot store is located at the corner of 100 E. Cypress Rd. in Oakley. The purchase price was $2,822,500. The buyer, a local private investor, was represented by Dan Diehl of Keller Williams.

View original article…


“LA’s Retail Market is Bifurcated, But Thriving”

CBM President, Rick Rivera, contributed the article referenced above to Western Real Estate Business, a leading Commercial Real Estate Industry publication. In the piece, Mr. Rivera offers his predictions for 2016, based on insights drawn from his 25+ year career in Los Angeles area retail real estate.

The article is posted below in its entirety.

Originally Published in Western Real Estate Business

The trends of redevelopment and mixed-use are here to stay in Los Angeles as there is simply little to no more raw land in the county. Of the commercial/retail properties being redeveloped, the vast majority are mixed-use projects. Developers and investors are intent on achieving two goals. First, they’re diversifying their position by betting on both residential and retail investments, rather than depending solely on one or the other. Second, they’re hoping to capitalize on the current demand, from mostly young professionals, for versatile urban-living situations, which most mixed-use developments represent.

The residential side of the mixed-use equation appears to be thriving. But on the retail side, the current situation, as well as the future outlook, is less definitive. Mixed-use retail has greater use limitations and faces more regulations and oversight given the proximity to residential units. In addition, customer parking, which is often non-existent in mixed-use developments, is a difficult challenge.

Other issues affecting Los Angeles’ retail market is the bankruptcy and closure of Fresh and Easy grocery stores, as well as the closure of Haggen grocery stores.
These actions are significant because they represent a much-needed correction in the grocery tenant market. These chains had stores in locations that were both too down market and too upscale for their price-point, quality of goods and merchandise.
This has allowed other grocery tenants, both larger chains and specialty outlets, to acquire turn-key grocery operations and offer a product appropriate to those marketplaces.
Gelson’s has purchased at least four Fresh and Easy locations in more affluent neighborhoods, while Hispanic-oriented Northgate Market and discount grocer Aldi have bid on Haggen stores in lower-income areas.

In general, the whole of Los Angeles County is largely booming. The more affluent neighborhoods, however, are experiencing the highest activity, particularly in West LA. These communities extend from Hollywood to the coast. They include West Hollywood, Beverly Hills, Playa Vista, Culver City and Santa Monica. They’re all flourishing retail trade areas, as is Downtown LA. These areas have mostly been successful due to purchasing power. It’s really that simple. Residents in these neighborhoods have money – and they’re spending it.
The older, more established development companies and investors groups are the ones most active in the Los Angeles County retail market. These organizations have the relationships necessary to source and acquire property. They have deep pockets to finance expensive land purchases and costly construction. Additionally, they have seasoned staff able to manage projects from acquisition to construction to tenanting – a process that take years to complete.

Offering-wise, fast-causal and quick-serve restaurants are dominating the Southern California retail market. This includes major national and regional fast food chains, locally based chains, and even one-off mom-and-pop-owned restaurants.

In second position are service-oriented businesses. Everything from fitness centers and health spas to medical facilities, tutoring and children’s activities.
Even among the newer retail tenants, the most active players continue to be restaurants and service businesses. These include Jim Boy’s Tacos, Dollar General, Smoke’s Poutinerie, TitleMax and Dunkin Donuts.

Other active retailers in the Los Angeles market include cell phone carriers Sprint, Metro PCS and Cricket Wireless, auto title loan companies Fast Auto and TitleMax, 7-Eleven, Dunkin Donuts, Gelateria, WaBa Grill, Salvation Army and Wienerschnitzel. There are also several community health clinics and medical facilities looking for retail space within Los Angeles County. These deals fetch very high dollar rents, and are mostly driven by experienced operators seeking space in desirable locations.

These desirable locations can be hard to come by, however. Vacancy in these areas is lower than pre-Great Recession levels. On the other hand, in less desirable areas, spaces are lingering – and lingering longer due to more cautious and discerning tenants colliding with landlords who are demanding unrealistic rents in a vain effort to recoup losses.
Rental rates run a similar gamut. In tertiary Los Angeles County fringe markets, spaces are failing to achieve $1 per square foot. Meanwhile, spaces in primer locations, such as the Third Street Promenade, command as much as $20 per foot.

One of the stellar new ground-up developments in Metro Los Angeles is The Runway in Playa Vista. It boasts 24 tenants, including 10 restaurants and a movie theater, and it’s an exceptional retail complex!

The Whole Food, in particular, is a sight to behold. The enormous store offers everything expected from a traditional Whole Foods, plus a gastro pub with an extensive collection of craft beers, signature cocktails and long waits for seating.

Click here to download the article in PDF format.


Long Beach, CA – February 9, 2016 – ACRE Hosts Panel of Top Southern California Commercial Real Estate Professionals Their 2016 Real Estate Industry Forecast

The Association of Corporate Real Estate Executives (ACRE) launched their calendar of events with the 2016 Real Estate Forecast. Over 200 attendees assembled at The Grand Events Center in Long Beach, this Tuesday, February 9th, to hear a panel of leading CRE brokers and financing specialists offer their insights for the year ahead.
For the second year consecutive year, event moderator, Ryan Garcia of Strategic Development Advisors, hosted the expert panel, which included John Chun of HFF, Matt Hammond of Coreland Companies, Kostas Kavayiotidis of PSRS, Carlos Lopez of Hanley Investment Group and Dave O’Connell of CBM.

A positive outlook, tempered with cautious optimism was the consensus forecast among panelists. After four solid years of post-Great Recessions recovery, the commercial real estate industry’s future continues to look bright. But the lessons of the recession loom large in the industry’s collective memory, which reflects the sustained caution.

None of the panelists offered any even remotely dire predictions in response to moderator Ryan Garcia’s opening question, “What do you see as the biggest disruption in commercial real estate in 2016?” Echoing several panelists mild apprehensions, Hanley Investment’s Carlos Lopez pointed to stock market volatility as an ongoing concern. “Our clients are watching the stock market, and approaching investment opportunities cautiously,” Lopez shared in his opening statement.

“The biggest challenge now is supply. I’ve got 4 LOIs (letter of intent) on one space right now,” said Coreland’s Matt Hammond in answer to Garcia’s question about whether or not retail growth will remain strong. Clearly activity is strong, but “Tenants are unwilling to accept ‘option B.’ It’s prime space, or nothing,” Hammond adds. “Rents (on prime spaces) have returned to 2006-07 rates. But elbow vacancies just don’t lease. And it’s up to brokers to find solutions for both landlords and tenants.” CBM’s Dave O’Connell said of the keys to sustaining the health of the retail leasing market.

“Strength of location and strength of tenant are key consideration,” Lopez responded to Garcia’s query about strategies common among investors. Indicating investors are still in hot pursuit of well-located, credit-tenant occupied retail properties. “Though not the case across the country, multi-tenant strip centers in Los Angeles and Orange County are hot commodities among our clients,” Lopez said in reference to the multiple offers some of his recent sales listings have generated.

PSRS’s Kostas Kavayiotidis and HFF’s John Chun agreed the availability and relative affordability of funding is ideal for active investors. There’s ample opportunity to refinance and reinvest, either in capital improvements or new purchases. Or borrow funds to acquire new assets.

Of course no industry forecast would be complete with asking: “Where is the market headed?”

O’Connell considers evolution critical in retail leasing, “Panera Bread’s considering a drive-thru location I’m listing, a space they wouldn’t have thought twice about just a couple of years ago.”

Hammond sees emerging Quick Serve Restaurants (QSRs) with unique concepts as the next big player in retail marketplace, “A lot of people getting into Pokey!”

“To avoid the volatility in their markets, the Chinese are investing heavily in the US,” says Chun. But while Lopez agrees Chinese investors are driving the current market, he’s worried about “What happens if those funds go away.”

To find out more about ACRE SoCal, visit them online at: www.acresocal.com. To find out more about CBM’s retail leasing and property management services, please contact Rick Rivera at 310.575.1517 Ext. 201 or rickr@cbm1.com.

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