Centers Business Management (CBM) leasing agents, Geoff Grossman and Jason Ehrenpreis, recently completed a lease transaction representing the landlord and tenant in a deal with a boutique nail salon on a 2,000 SQFT retail space. The unit is in a corner strip center at the intersection of National and Sepulveda in prime West LA. The property is positioned at the 10 freeway offramp, adjacent to the 405 + 10 freeway interchange. The site is across the street from a high volume sales Ross Dress For Less (discount store), and across the intersection from a Vons + CVS anchored community center.
2018 is upon us… Can you believe it!? Where or where does the time go?
Anyway, if you’re like a lot of people out there, in the run up to the end of the year, you’re consumed with…
NEW YEAR’S RESOLUTIONS!
And what are New Year’s Resolutions, really? In a word, Goals.
Now, for most business owners and investors, annual goals involve improving your business and bettering your investments.
As a shopping center landlord, your property IS your business AND your investment. Thus, your goals for the New Year center on improving your property – thereby bettering your investment.
Here are three of the most common goals for shopping center improvement…
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:
Endcap 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.
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.
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 2018 goal of improving your shopping center’s investment value!
Find Out More About CBM’s Leasing & Property Management Services
For more info on how CBM can help enhance your property’s investment value, visit our services page.
Centers Business Management (CBM) leasing agent, David Levcovitch, recently completed a lease transaction representing the landlord and tenant, the City of Santa Clarita, on a 3,932 SQFT community center. The unit is in newer community shopping center at the intersection of Flying Tiger and Sierra Hwy in prime Santa Clarita. The property is situated amid a productive and growing retail and residential sector.
Centers Business Management (CBM) leasing agents, Geoff Grossman + Jason Ehrenpreis, recently completed a lease transaction representing the landlord on a deal with Jackson Hewitt (tax prep) on a 984 SQFT retail space. The unit is in a busy Food4Less anchored community center at the intersection of Santa Fe and Florence in prime Huntington Park. In addition to Food4Less, the center’s A+ co-tenants include VIVA 99 cents store and Carl’s Jr.
Centers Business Management (CBM) leasing agent, Geoff Grossman, recently completed a lease transaction representing the landlord and tenant, Cha Spa, a boutique day spa, on a 1,520 SQFT retail space. The street retail unit is situated next to Sketchers (shoe store) at the intersection of Manhattan Avenue and Manhattan Beach Boulevard, just steps from the ocean in the heart of Manhattan Beach. The property is situated amid high-end retail boutiques, trendy eaters, and fashionable cafes, less than a block from the Manhattan Beach pier.
Centers Business Management (CBM) Valley Division Director, Dave O’Connell, and leasing agent, Brett Mero, recently completed a lease transaction representing landlord and tenant, Western Dental, on a 3,500 SQFT dental clinic. The unit is in an El Super (grocery store) anchored community center at the intersection of Azusa Avenue and Arrow Hwy in prime Covina. The busy center’s co-tenants include Ross Dress for Less (discount store), Fashion Q (clothing retailer), WaBa Grill and El Pollo Loco. The property is situated across from an AMC Theater anchored center whose co-tenants include Shakey’s Pizza, Outback Steakhouse, Staples, JoAnn Fabrics and more.
The ramp up to the legalized sale of marijuana is on in California, and local municipalities are under pressure to fashion workable rules and regulations.
In November of 2016, California voters passed Proposition 64, which legalized the recreational use of Marijuana. And the state is poised to begin issuing sales licenses as soon as January 2, 2018 – which is literally days away.
But regardless of state legislation and licensing, local municipalities still have a big say in the cultivation and distribution of recreational marijuana. Local ordinances will largely determine how pot manufacturing and sales are conducted
In this regard, all eyes are on the City of Los Angeles as California’s biggest and most powerful municipality is likely to set the tone for guidelines governing legal marijuana businesses throughout Southern California.
And Los Angeles city government has been hard at work on this task. In a unanimous, 12-0 vote, the LA City Council recently approved regulations for recreational marijuana manufacturing and sales within the borders of the City of Angels.
Here are 6 of the key highlights of this coming legislation…
1. Zoning Restrictions – Marijuana retailers are only allowed in specifically defined commercial and industrial zones.
2. Location Restrictions – Marijuana shops must be at least 700 feet from schools, public parks and libraries, child care facilities, alcohol and drug treatment centers, and the same distance from other pot retailers.
3. Additional Location Restrictions – Marijuana growers and manufacturers are strictly confined to industrial zones and banned within 600 feet of schools. Also, marijuana manufacturers that use volatile solvents are prohibited within 200 feet of residential neighborhoods.
4. Marijuana-Related Business Caps – The City of Los Angeles will issue licenses for no more than 390 retail shops, 336 growers, and 520 marijuana manufacturers.
5. Social Equity Program – In an effort to empower communities hardest hit by the so-called “war on drugs,” the city will give priority to applicants who live (or have lived) in areas heavily impacted by cannabis arrests. Or persons that were previously convicted of certain marijuana-related crimes.
6. Converting From Medical to Recreational Marijuana – Licensed medical marijuana businesses currently operating in accordance with Proposition D (in other words, the operation was granted a business license by the city of LA prior to November 2007) will be first in line to receive new recreational sales licenses.
What Does This Mean For Shopping Center Landlords?
Here are 3 key points retail landlords should consider when entertaining a “pot tenant.”
1. Federal law still prohibits marijuana sales – Despite state level approval, marijuana remains a schedule 1 drug, according to federal statutes. As such, the DEA could, at any time, decided to raid your center, shut down your tenants’ businesses, and seize and sell your property (under federal drug-related property forfeiture laws). And though the current Presidential administration has given no indication they plan to crack down on “legalized marijuana sales,” this regime if anything, is unpredictable.
2. Tenant qualification is more critical than ever – The City is only issuing 390 retail shop licenses. And 140 officially licensed medical marijuana businesses currently in operation already have preference to receive recreational sales licenses. That means the number of legitimately licensed operators seeking to open new locations is likely to be small. So, it’s EXTREMELY important you confirm prospective tenants have the proper licensing documentation.
3. Confirming your property meets location criteria is a KEY consideration – Strident zoning restrictions confine pot businesses to specific areas and limit their proximity to schools, childcare facilities, and other sensitive public sites. Therefore, it’s imperative you’re aware of your property’s positioning amid your local landscape if you’re considering leasing to a pot tenant.
Need Help Vetting Pot Tenants?
One of the primary services professional leasing agents provide is tenant qualification.
With years of experience in dealing with tenants of all stripes, including ample expertise with pot tenants, a leasing agent can help you differentiate legitimate potential operates from pretenders hoping to cash on the current legalization gambit.
Additionally, a leasing agent can help you sort out city rules and regulations. Not to mention confirm whether or not your property meets zoning and location criteria for a pot shop.
For more info on CBM’s professional retail leasing services… visit cbm1.com/services.
Well, in the protected waters of Marina Del Ray’s harbor anyway ;—)
Gorgeous Marina (Del Rey) Views Aboard Dream On
But the harbor scene was no less exciting or enjoyable than open waters. And the setting couldn’t have been more perfect if we’d scripted it… Bright and sunny cloudless blue skies and ideal temps (not too hot, not too cold), trimmed by a gentle, airy breeze that trailed our vessel, Dream On, as we cruised the gorgeous Marina inlet.
A Grand Time Was Had By One-And-All!
Meanwhile, the entire team was on-hand partaking in a delectable lunch, luscious libations, and engaging conversation as we sailed through the vivaciously glowing midday rays.
All set to the dulcet tones of a solo guitarist, expertly strumming a bevy of classic tunes on his nylon string Spanish guitar.
The Perfect Ending to Another Productive Year
All-in-all, our boat bash provided a perfect crescendo to another successful year!
Check out more pix from our dreamy cruise aboard Dream On at CBM’s Facebook page…
P.S. Many thanks to Hornblower Cruises for making our party such a monumental hit!
In a prior post, we covered the heaven forbid topic of “What if Disaster Strikes Your Shopping Center.” In that post, we emphasized the need for emergency preparation and planning.
And as wildfires rage across Southern California, this question is even more pertinent than ever!
But there’s another side to the “disaster” story… Property Insurance.
If, God forbid, the recent fires burned down your shopping center, you have insurance to cover damages and loss. Or at least you assume you do anyway…
But have your REALLY read your insurance policy?
Have you pulled out your magnified glass (because that’s about what it takes these days) and scrutinized the “fine print?” And most importantly, do you have a clear picture of what’s covered if disaster should strike your property?
If you’re like many shopping center landlords, you don’t get around to investigating the details underlying your insurance policy until disaster strikes. And by then, it’s too little, too late.
To avoid stumbling into this potentially costly trap, here are several key considerations to keep in mind when purchasing your property insurance…
Don’t be Seduced by Price
Like most property expenses, the category which insurance falls into, you buy on price. And that totally makes sense. Your shopping center’s an investment. It’s supposes to earn income. Not vacuum cash out of your bank account.
But when it comes to an expense like property insurance, frugality only makes sense to a point.
If your agent quotes a price that’s “too good to be true,” investigate policy details and be sure the policy isn’t, in fact, too good to be true. Inadequate coverage may cost less upfront, but in the event of a casualty, it could cost you a fortune.
What Are You Really Buying?
When shopping for property insurance, pay attention to three key issues:
What’s ACTUALLY covered in the event of disaster? What level of restoration does your policy guarantee?
And pay particular attention to Repair Vs. Replacement. How does the policy differentiate between the two? What’s the damage threshold in which Repair give way to Replacement?
Your policy defines a set procedure for making a claim. In other word, the conditions you must adhere to in the event you make a claim. If you fail to meet these “conditions,” the insurer is within their rights to deny your claim.
As such, it’s imperative that you understand the conditions before you buy. And adhere to the letter of those conditions should you ever have to make a claim.
Federal and state laws define boilerplate insurance policy framework. But insurance carriers are free to add Endorsements, which are addendums that either extend or limit policy coverage.
Be sure you have a CLEAR understanding of your policy endorsements, and any potential coverage limitations they might encompass.
A commercial property is a unique animal. As such, you may want to consider some additional coverage.
If considerable damage occurs to your property, an engineer may be required to assess the extent. Specifically, whether repair is a viable option or if full replacement is necessary.
An engineer employed by the insurance company obviously has a vested interest in erring on the conservative side. As such, it’s in your best interest to hire your own engineer and get a “second opinion.”
If your policy includes “professional fees,” the cost of hiring an independent engineer is covered.
Business Interruption Lawsuit
A disaster at a retail property doesn’t just impact the landlord… Tenants are essentially out of business until the property is back up and running. In situations with lengthy restoration periods, whether due to major construction or claim disputes, tenants have often sued landlords for “business interruption.” Such suits claim loss of income due to property inaccessibility, which landlords have a duty to make accessible.
Even if a suit is thrown out, attorney’s fees can be considerable. And if a tenant wins, costs can be astronomical.
Some policies offer additional coverage for business interruption lawsuits, and depending on your circumstances may be worthwhile.
Avoid Non-Admitted Carriers
If you give your agent a budget, and instruct him find a policy in that price range, he’ll comply.
REMEMBER: Your insurance agent’s in business to make money (just like you). Thus it’s in his best interest to fulfill your requests.
But sometimes in order to meet your budget, your agent may be inclined to take shortcuts. One all too common shortcut is using a “Non-Admitted Carries.” These are carries that are not admitted into the state where your property is located.
It’s legal to purchase insurance from a non-admitted carrier. And many offer attractive pricing. Such carries, however, are not subject to your state’s regulation (which is often why they’re able to discount their rates). In the event of a disputed claim, you have less recourse and may struggle to compel a non-admitted carrier to pay up.
Need More Help Managing Your Shopping Center?
Property managers don’t get directly involved with property insurance. But from paying bills to managing tenant relation to monitoring site maintenance, we do handle just about every other aspect of shopping center property management. And our services relieve much of the burden management saddles property owners with.
For more details on how CBM’s property management can benefit your shopping center, visit our Services page.
Maybe they’re just hanging out and panhandling at your center? Or perhaps they’ve taken up fulltime residence at your property? Either way, the homeless are an issue that many retail shopping centers struggle with.
At the very least, the homeless are nuisance that drive customers away and hurts your tenants’ business.
At the worst, the homeless, especially if they’re taken up residence at your property, represent a huge potential liability, not to mention potential public health hazard.
Now, of course these are human beings…
And you want to treat them as humanely as possible. We’ve shared creative strategies major regional property management firms have used to minimize the impact of the homeless on retail properties they manage.
But in some cases, situations arise in which you simply need to have an individual, or individuals, removed from your property.
Unfortunately, the removal process is far from straightforward. A great deal of legislation has been passed both nationally, and in California specifically, that “protects the rights of the homeless.”
So, the questions is… How do you make this happen?
The process varies to some degree based on the municipality. As such, you must always check with your local city officials. The basic process, however, is roughly the same.
Here’s How it Works:
1. Post a “No Trespassing” Sign
This indicates that while your property is “open to the public,” and loitering of any kind is not tolerated.
2. Ask a “Trespassing” Party to Leave
This demonstrates that you’ve attempted to enforce your stated “no trespassing” policy
3. Contact the Police and Report a Trespassing Violation
To make such a report, you must be the property owner, a tenant, or otherwise have vested interest in the property.
The police will visit the property and issue the offending party a formal, written “warning.”
In some municipalities, trespassing alone is not enough to prompt the police to issue a formal warning.
You must witness the person littering, defecating, urinating, using drugs, camping, storing property, loitering, stealing, or otherwise detracting from business, generating customer complaints, etc…
In other words, you must explain how person’s presence is disrupting your business.
4. Contact the Police if the Person Returns
If the person returns, the police now have grounds to arrest the person. And the police have ongoing grounds to arrest the person should they continue to return even after the initial arrest.
Need Help Dealing With the Homeless or Handling Other Aspects of Managing Your Shopping Center?
As already noted, the process described above clearly is not the most straightforward path to ousting a homeless person plaguing your center. Unfortunately, it’s your only legally legitimate option.
The good news is this is EXACTLY the kind of problem professional property management can help resolve!
Your property manager can…
== > Act as your agent (satisfying the “vested interest in the property” requirement necessary to file a police report).
== > Wait onsite and meet with the police to file the report (reports must be filed onsite) and point out the trespassing party so the police can issue the written warning.
== > Serve as the contact point person to notify the police when the trespassing party returns.
And this is just one of the MANY services professional property management provides!
For More Information on CBM’s Property Management Services…
Visit our Services page at cbm1.com/services.
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