CBM’s Retail Shopping Center Management & Leasing Blog

Retail Real Estate News & Trends in Southern California
 

Redondo Beach, CA – March 2019, Centers Business Management (CBM) completes a new leasing transaction with Chick-A-Fila in a former Burger King Drive-Thru location on busy Artesia Boulevard in prime Redondo Beach.

CBM leasing agent, Kelly Harrison, recently completed a ground lease transaction, representing the landlord in a deal Chick-Fil-A fast food restaurant. Situated on a seven-acre parcel, the site is currently occupied by a Burger King drive-thru location. The well-located property is on the major signalized intersection of Artesia Boulevard and Aviation Way in prime Redondo Beach, a thriving South Bay area retail hub. In addition to the physical restaurant, the sizable lot will also host a large parking area. Stationed along a bustling retail corridor, adjacent businesses sharing the intersection include a pre-school, School of Rock (children’s music school) franchise location, and a Pep Boys automotive supply store.

Chick-Fil-A was founded in 1946 in College Park, George, when the company is still headquartered. The thriving restaurant chain operates 2,200 locations nationwide, which includes over 100 stores throughout greater California. With plans to open additional locations across the US and Canada, Chick-Fil-A is currently in heavy expansion mode. In fact, the fast-food giant has publicly stated its aim to become the 3rd largest restaurant chain by 2020.

“The deal involved buying out [the lease on] an existing Burger King [drive-thru location],” says CBM leasing agent, Kelly Harrison. With heavy restaurant saturation and land for suitable sites scarce in Southern California “repurposing existing restaurant sites” is often the best, if not only option, Harrison adds. Harrison also notes the “lengthy and costly entitlement process, paired with the high construction costs” present further barriers to restaurant development deals. As such, there is no start date for principle construction or stated plans for the new location’s grand opening date.

“Restaurants continue to be the most active retail segment. But this deal demonstrates two of the biggest challenges food-users, even well-capitalized, creditworthy organizations face: Land scarcity and high development costs,” says CBM President, Rick Rivera. “A+ sites are few and far between, which is why investors swarm every new opportunity like blood-thirsty sharks,” Rivera remarks on the circumstances that continue to inflate land prices. Rivera also points out, “Chick-Fil-A is making an enormous investment in this project,” adding “they’re on the hook for the Burger King lease-buyout, entitlement fees, architectural and construction expenditures, and carrying costs. And that’s all before they earn a single dime on the deal.” The reason you only see “top-tier credit tenants on Main + Main intersections” is that, as Rivera states, such enterprises require “deep pockets.”

For more information about CBM and their retail leasing and property management services, please contact: Rick Rivera 310.575.1517 x201 | rickr@cbm1.com.

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We’re pleased + proud to announce CBM retail specialists Dave O’Connell, Jason Ehrenpreis + David Levcovitch are 2018 CoStar Power Broker Award winners!

Additionally, CBM also earned a 2018 CoStar Power Broker award for the firm-wide efforts of our industry-leading retail leasing team. This makes our 10th consecutive win! And we owe it all to our top-tier leasing agents.

For additional details, please visit CoStar’s Power Broker awards site.


20943 Roscoe Boulevard, Canoga Park, CA

Centers Business Management (CBM) leasing agent, Jason Ehrenpreis, recently completed a lease transaction representing the landlord in a deal with People Ready Staffing Agency on a 1,900 SQFT retail space. The unit is in a mid-block corner strip center, just north of a major signalized intersection at Roscoe + De Soto in prime Canoga Park. Situated adjacent to a bustling retail intersection, the site neighbors a multitude of A+ national and regional tenants, including Dollar Tree (discount store), Carl’s Jr, Jack-In-The-Box, Jiffy Lube, Popeye’s Chicken, 67 Gas Station, CVS and more.


14929 Hawthorne Boulevard, Lawndale, CA

Centers Business Management (CBM) leasing agent, Matt Saker, recently completed a lease transaction representing the landlord in a deal with local boxing gym on a 4,050 SQFT retail space. The unit is in 7-Eleven anchored corner strip center at the signalized intersection of Hawthorne Boulevard and Rosecrans Avenue in prime Lawndale. Situated along a bustling retail corridor, the property is positioned across Hawthorne Boulevard from a sprawling Big Saver Food grocery store-anchored community shopping center.


11201-11223 National Boulevard, Los Angeles, CA

Centers Business Management (CBM) leasing agents, Geoff Grossman and Jason Ehrenpreis, recently completed a lease transaction representing the landlord in a deal with Wells Fargo on 1,000 SQFT retail space for an ATM banking center. The unit is in a corner strip center at the intersection of National and Sepulveda in prime West LA. Situated at an off ramp from the 10 freeway, just south of the 405 + 10 freeway interchange, the well-located site is adjacent to a high-volume sales Ross Dress For Less (discount store) and a Vons + CVS anchored community shopping center.


450 W. Arrow Hwy, Covina, CA

Centers Business Management (CBM) Valley Division Director, Dave O’Connell, and leasing agent, Zac Ryburn, recently completed a leasing transaction representing the landlord in a deal with Window World, on a 3,850 SQFT showroom space. The unit is a sprawling office and retail park at the intersection of Arrow Hwy and Hollenbeck in prime Covina. Exceptionally well-located, the property is positioned between a series of sizable office parks and a dense residential neighborhood.


12737 Glenoaks Boulevard, Sylmar, CA

Centers Business Management (CBM) leasing agent, David Levcovitch, recently completed a leasing transaction presenting the landlord and tenant, Fast Auto, on a 1,700 SQFT retail space. The property is located in a corner strip center at the intersection of Glenoaks and Sayer in prime Sylmar. Situated amid a dense residential neighborhood, the center features a diverse mix of thriving restaurant and service co-tenants, including Pizza Hut.


There are several reasons you might find yourself considering whether to hire a property management firm to manage your shopping center.

Perhaps you’re a new investor with little, if any, time to oversee a property?

Maybe you inherited property or portfolio of properties and need real estate experience to support your efforts?

Or it could be that you’ve self-managed your properties and grown tired of the relentless responsibilities.

Whatever the case, the decision to hire a property management company to handle your retail property should be weighed carefully. You’re contemplating placing a third party in charge of an extremely valuable asset. And the management company’s administration of this asset could have potentially enormous financial and legal ramifications for you personally.

That’s why it’s best to outline the pros and cons of such a decision.

Now, as a professional retail property management company, we’re certainly aware of the benefits our services provide. But we’ve also seen the situation from the other side of the coin. With nearly 300 properties under management, we’ve spoken with more than our fair share of landlords. And we’ve discussed at length the concerns landlords struggle with the decision to turn over their properties to an outsider.

This experience, however, has granted us the advantage of perspective. So, if you’re thinking about hiring a property management firm to care for your property, here are the pros and cons you should consider:

THE PROS OF HIRING A PROPERTY MANAGEMENT COMPANY

Saves You Time

If you’re like many retail strip center owners, your plate is already overflowing. You have a fulltime job. You own your own business. You’re overwhelmed caring for your family. Or perhaps you’re engaged with all of the above. Bottom line, there isn’t much time left over.

Meanwhile, servicing a retail shopping center is a HUGE time commitment. Overseeing tenants and vendors. Staying on top of maintenance. Collecting rent and paying invoices, mortgages, property taxes and the like. The responsibilities literally NEVER end.

But a property management company handles all of these responsibilities for you. Your property manager interfaces with tenants and supervises vendors. They monitor maintenance and ensure your property remains in peak physical condition. And the management company handles all property financials. The accounting department collects and records rent and CAM payments. And pays and tracks all invoices, mortgages, tax bills, and other payables.

Saves You Money

What’s a fair price for trash removal, sweeping or power washing? What if your parking lot needs a new slurry coat or complete replacement? Or your roof springs a leak? Or your HVAC system gives up the ghost? What’s a reasonable price for those projects?

As a landlord, you probably have no idea. And it would take TONS of leg work just to gather bids and establish a fair market price, let alone negotiate the services. And in the meantime, the issue is lingering. Which is either consternating your tenants, creating a hazard the could spell an enormous legal liability for you or both.

A property management firm, however, deals with these sorts of issues on a daily basis. A property manager can quickly secure bids, recommend your best option, and initiate the work in short order.

Increases Your Property’s Profitability

A well-maintained center is certain to attract customers. A well-patronize center is far more likely to host productive tenants that remain in place for an extended period of time, thanks to their consistent consumer draw. And a center fully leased to successful tenants is the key to maximizing your property’s profit potential.

A property management firm diligently monitors your center’s physical condition, oversees maintenance, and holds vendors accountable. The results of which ensures your property is appealing to your tenant’s customers, and in turn, keeps your tenants happy. And that means you can rest assured your property is achieving its peak profit potential.

Avoids Legal + Financial Non-Compliance Issues

There are no shortage of laws governing your property. And failure to comply with any of these myriad legally binding rules and regulations could spell fines, lawsuits, and other financially disastrous outcomes.

Additionally, federal, state, and local governments are working hard to ferreting out revenue. Any miscues in handling financial documentation, income reporting, or tax filings could result in massive fines, penalties, and worse.

With a property management company handling your property, you don’t have to worry about any of these issues. Your property manager will keep you appraised for legal statues and other legislative changes that impact your property. And help you navigate the process should such laws require modifications to your shopping center. This includes ADA compliance, which has been an enormous financial thorn in the side of scores of retail property owners.

Additionally, a property management firm’s accounting departments logs, tracks, and fully documents every aspect of your property’s financials. These efforts yield the most complete financial record you could hope for. And at year-end, you can simply turn over your general ledger to your CPA!

Minimizes Your Tenant-Related Headaches

Tenants are demanding and relentless. And their constant barrage can be irritating and emotionally draining. Additionally, it can be awkward and uncomfortable to play the role of the “bad guy” in turning down a tenant’s request or enforcing the terms of their lease.

A property manager, however, acts as a buffer. All tenant communications funnel through your manager. And your manager will exercise a “firm but fair hand” in imposing your will.

Enhances Your Property’s Investment Value

A fully leased, well-maintained, financially stable shopping center populated with successful tenants represents an incredibly valuable asset.

And the services a professional property management firm provides is your best opportunity to achieve this status with your retail property.

THE CONS OF HIRING A PROPERTY MANAGEMENT COMPANY

Property Management (Might) Cost Your Money

If your property is not leased on NNN leases agreements, you must pay a monthly management fee.

**As a brief aside… CBM’s leasing expertise can also assist with converting current tenants to NNN leases. For more info on CBM leasing, visit our website leasing services page: cbm1.com/services

Additionally, if your property is on NNN lease agreements, but there’s a vacancy, you may have to make up the portion of the management fee not covered by the missing tenant.

If your property is fully leased on NNN leases, however, your management fee is bill back to your tenants as part of your NNN charges.

You Must Give Up a Measure of Control

Some landlords like to collect monthly rent. They like to pay all the bills. They like to see, personally, all the monies coming in, and all the monies going out. Some landlords like to communicate directly with tenants, to the negotiated agreement and cut their own deals. This level of direct oversight and active involvement provides these landlords the assurance that the buck stops with them.

In working with a management company, however, you must relinquish some control. You don’t see the rent checks coming in or the bills going out. Instead, you see a monthly financial statement that charts these collections and payments. And you must have a measure of faith in the management company diligently executing their duties.

Are you’re the sort of landlord that insists upon personally monitoring every aspect of your property? Are you only comfortable relying only on yourself? Is so, then professional property management is probably not for you.

How Can CBM’s Property Management Services Benefit Your Retail Property?

If the PROS outline above outweighed the CONS in your mind, you should consider hiring CBM to manage your shopping center.

For more information, visit: cbm1.com/services


Is the City of Los Angeles finally relenting to loud and persistent protests against the massive waste hauling and recycling collection fee increases instituted in 2017?

LA City’s recent announcement of fee eliminations seems to indicate a move in the right direction on a very troubling issue for commercial property owners and income property investors.

The increases, instituted midyear 2017, got a great many retail shopping center landlords hopping mad, and with good reason.

In some cases, rate increases were as high 400%. And in addition to price hikes, many property owners reported missed collections, which left their dumpsters overflowing with rancid trash.  Owners also reported being billed for waste collections that never occurred.

To quickly review, LA city government introduced the “Department of Sanitation Franchise” in 2017. This department gave exclusive domain for trash collection to seven waste hauling companies. And those companies, in turn, were assigned specific districts.

Thus, if, for example, your property is situated in District One, your ONLY trash collection option is the waste hauling company assigned to District One.

And with ZERO competition, waste hauling firms were free to jack up their rates and tack on a plethora of “extra service” fees.

But now, according to an LA Times report, a couple of these fees are being eliminated.

Following a 15-month battle between the City, waste hauling firms, and business organizations representing the interests of property owners, a “compromise” has been struck in the recent settlement deal.

The current fee eliminations include…

100 Foot Distance Fee

Under original provisions, waste haulers were allowed to charge an additional $26.68 anytime a driver had to haul a recycling bin more than 100 feet.

200 Foot Distance Fee

Also under original provisions, waste haulers were allowed to charge an additional $37.36 anytime a driver had to haul a recycling bin more than 200 feet.

Under the settlement terms, both of these fees have been eliminated.

Reimbursement

The settlement also dictates that customers who were charged “extra service” fees (on any service bill issued since February 2018) will receive a credit.

Good, But Not Great

Of course, income property owners appreciate these fee eliminations. Every little bit improves their bottom line.

But unfortunately, the settlement does nothing to address the exorbitant waste hauling rate increases. An issue that still has many property owners seething!


Los Angeles, CA – December 2018, Centers Business Management (CBM) completes a new leasing transaction with an expanding Peruvian restaurant in a prime East Los Angeles retail shopping center.

CBM property manager, Roselene White, recently completed a lease transaction, representing the landlord and tenant, Mancora Peruvian Cuisine, an expanding area restaurant, on a 1,800 SQFT unit in a rehabbed shopping center. The property is situated at the major signalized intersection of Atlantic Boulevard and Pomona Boulevard in unincorporated East Los Angeles. Situated and just southwest of the 60 Freeway’s Atlantic Boulevard exit, and immediately across Atlantic Boulevard from the Metro Gold Line Atlantic Station, the site falls into a Metro Transit Ordinance District. A thriving, well-patronized center, the property hosts diverse mix of A+ national and regional tenants, including McDonald’s (in a pad space on the intersection’s hard corner), Subway, Oportun Financial, Boost Mobile, Liberty Tax Service, Adriana’s Insurance and more.

Mancora Peruvian Cuisine presently operates one additional store, the eatery’s original location, in Alhambra, California, just north of Pasadena. Specializing in “authentic” Peruvian fare, Mancora hopes to build on the success of its current locations and expand further in the greater Los Angeles County marketplace.

“The landlord has been seeking to change the complexion of this center by ushering in additional restaurant tenants,” says property manager Roselene White, adding “And we’ve have made great strides in the direction, with McDonald’s anchoring the center, and Subway in place,” to name a few of the property’s notable food-use tenants. But this shift has not come without challenges. Southern California municipalities have a long history of frequently denying food-use tenants operating permits, sighting a failure to meet onerous parking restrictions. “Under typical circumstances, this center wouldn’t meet the parking requirements necessary to accommodate the current number of restaurant tenants,” notes White. “But thanks to the Metro Transit Ordinance District, which eases parking guidelines specifically for restaurant uses in commercial properties adjacent to Metrorail stations, we’re able to host all the food-related-uses currently in place. And we’re seeking fill remaining vacancies with additional food-use tenants,” White adds in reference to her efforts to bring more restaurants to the center.

In addition to grappling with parking, the tenant also struggled to marshal the funds necessary to complete their unit’s interior build-out. “Mancora was having real trouble securing construction financing. But the contractor Mancora hired to handle the project agreed to underwrite the building costs,” says White highlighting the tenant’s out-of-the-box funding solution that ultimately got the deal done.

“Restaurants continue to be the most active retail tenants. But this deal exemplifies two of the biggest challenges food-use tenants encounter: parking restrictions and construction financing,” says CBM President, Rick Rivera. “The Metro Transit Ordinance District loophole has proven a game-changer that’s facilitated a complete transformation of this center,” notes Rivera, adding “And we hope municipalities will continue to recognize the need for flexibility with often over-barring parking regulations.” Rivera also underscores the need for “creative solutions when it comes to funding build-outs and other construction projects” many independent restaurant tenants require when expanding into new locations.

For more information about CBM and their retail leasing and property management services, please contact: Rick Rivera 310.575.1517 x201 | rickr@cbm1.com.

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