CBM’s Retail Shopping Center Management & Leasing Blog

Retail Real Estate News & Trends in Southern California
 

CBM is proud to announce Dave O’Connell, Jason Ehrenpreis, and David Levcovitch have earned 2017 CoStar Power Broker Awards.

Thanks to the superlative efforts of these outstanding agents, in addition to the hard work by the rest of our industry-leading retail leasing team, CBM as a whole completed 288 leasing transactions in 2017.

This exceptionally high transaction volume scored CBM yet another firm-wide CoStar Power Broker Award. This latest win marks our 9th consecutive Power Broker Award.

For more details, read CoStar’s 2017 Power Broker Awards recap…


CBM’s own Geoff Grossman penned an article featured in the latest edition of Shopping Center Business – a leading retail real estate trade publication.

In the article, entitled “All Hail The Rise Of The Strip Center,” Mr. Grossman offers his insights on coming trends in the net lease arena. And opines on why now is the best time in history to own strip center retail real estate!

Check out the full article in April issue of Shopping Center Business


by Geoff Grossman

The internet is GREAT at a LOT of things…

Probably seems like the understatement of the millennium, huh? The World Wide Web has revolutionized communication, spawned entire new industries, and killed off quite a few trades, too.

In short, the web has fundamentally alternated the fabric of our society at large, not to mention drastically reshaped much of the business world, and commerce as a whole.

Real Estate and the Internet…

The impact of the internet upon commerce is CLEARLY evident in real estate.

One of the initial adopters of what, at the time, was a rudimentary form of the internet, early Multiple Listing Services put entire market inventories literally at the fingertips of every real estate agent working that market.

Few in the business now remember a time when there was no such thing as “comprehensive inventory list.” A time when agents relied on manually published lists share office-to-office and person-to-person. And local newspapers SINGULARLY DOMINATED real estate advertising.

Landlord + Tenant Deal-Direct Listing Services

Nowadays, beyond just the MLS, there are direct-to-consumer real estate listing and search tools. Landlords can list retail space and tenants can locate said space entirely online. An approach that ostensibly eliminates the need for a broker.

Marketing Vs Sales – Where an Actual Broker Defeats the Internet

But while this so-called “revolution” in real estate seemingly saves landlords on commissions (and potentially lowers rental rates for tenants based on those commissions savings), it forgets the fundamental HUMAN factors that have driven real estate since the very first property ever changed hands.

Yes, the internet is an exceptional marketing tool. Perhaps the greatest our society has yet to devise. But there is an essential difference between MARKETING and SALES. And in the real estate game, there is no better SALES tool than a real live broker.

How so? Well, friends, that’s the central question at play here. And to answer this query, here are four reasons a why a broker is every landlord’s most invaluable sales tool…

Information on its Own Only Has So Much Value…

The internet is GREAT at cataloging information. You can find ANYTHING + EVERYTHING. In fact, online you can stumble across lots you’d rather never have known even existed.

And the internet is great a making vast stores of knowledge immediately accessible. It’s all there, literally at your fingertips.

But information alone is just a pile of facts… You could exhaustively research the three laws of Thermodynamics. But if you’re like most people, that wouldn’t get you any closer to a thorough grasp of physics. For that, you’d need a knowledgeable expert to interpret and explain the material in language that someone short of Ph.D. in theoretical physics could understand.

Similarly, you could compile a list of every 1,500 SQFT retail unit for lease in Los Angeles. But that wouldn’t tell which vacancy genuinely suited your purposes. You’d need a knowledgeable expert to help you make that determination.

Information Vs. Persuasion

As stated above, the internet makes it easy for tenants to determine space availability. Anyone can hop online and pull up a relatively comprehensive list or the retail space available in a given market or even variety of markets.

But again, that’s just a big pile of info. The internet opens the door and peaks interest. But posting your vacancy online doesn’t persuade, it doesn’t close the deal.

That requires a knowledgeable sales professional…

The Value of a Sales PROFESSIONAL

A sales agent offers far more than just facts. An agent knows a property, intimately. An agent knows the tenants in and around the center. Understands the community and surrounding areas. And has a strong grasp on the type of tenant that will thrive or wither in a particular property and given location.

The qualification process, which is the ultimate deciding factor in any retail lease, resides solely with the leasing agent. The internet can’t help you evaluate a prospective tenant’s financial position, track record, or ultimate viability in particular property or broader location.

A Stake in the Final Outcome

The internet doesn’t care one way or another whether you lease your vacancy. It’s just a catalog of information. The internet persists irrespective of your circumstances.

A leasing agent, on the other hand, has skin in the game.

An agent…

== > Is motivated to lease your property as expediently as possible – because that’s how they get PAID…

== > Has vested interest in placing a viable tenant guaranteed to survive over the long haul – lest they must re-lease the vacancy after a failed tenant departs for little or no additional compensation…

== > Strives to do the best job possible – because they want to earn your repeat business and referrals thanks to you sharing your satisfaction with fellow landlords and real estate investors.

The CBM Difference…

These days, most leasing and sales brokerages provide agents with a phone + computer, and turn them loose. Meanwhile, most of those agents spend the majority of their time hanging around the office, waiting for leads to fall into their lap.

Because it’s the “internet age,” right? So, everything comes to you. Not hardly.

At CBM, “Old School Methods” of retail leasing reign supreme!

So, what does that look like, practically speaking? Our agents are…

== > In the car, driving their territories. Every day. Day after day…

== > Out canvasing, meeting + greeting, glad-handing, passing out flyers, and generally seeing and being seen in their marketplaces…

== > And actively sourcing new listings and potential tenants.

Our agents are NOT…

== > Hanging around the office, playing on the computer, waiting for the phone to ring.

Need Assistance Leasing Your Shopping Center?

If the CBM method of retail leasing appeals to you, find out at: cbm1.com/services.

About the Author

Geoff Grossman, a senior retail broker, joined Centers Business Management (CBM) in 1999. Mr. Grossman primarily handles landlord representation, specializing in retail leasing and investment sales throughout Southern California.


Los Angeles, CA – April 2018, Centers Business Management (CBM) takes over management of four retail storefronts on Abbot Kinney Boulevard, near Venice Boulevard, in the prime West Los Angeles community of Venice Beach.

003-5311393-smallCBM recently took charge of property management on a four-unit storefront parcel at 1504-1508 Abbot Kinney Boulevard, one block north of Venice Boulevard, in the heart of Venice Beach. This eclectic neighborhood, a fabulously Bohemian community, is one of West Los Angeles’ most culturally distinctive regions. Home to the famed “Muscle Beach” and ever-popular Venice boardwalk, a long-time favorite tourist destination, Venice now also hosts the headquarters of popular social media app, Snap (formerly Snapchat). Thus, in addition to its tourist appeal, the neighborhood has also evolved into a bedroom community serving the area tech-boom, which has lately seen Venice dubbed “Silicon Beach.”

Abbot Kinney Boulevard serves as the community’s primary retail trade hub, home to countless fashionable boutique retailers, hip cafes, and trendy eateries. The storefronts CBM is now managing hosts four high-end retail outlets, including Aesop, a custom bath, body and skin care product manufacturer; Fiorentini + Baker, an artisan shoemaker that crafts shoes from repurposed vintage goods; Made in Earth, handcrafted jewelry fashioned from crystals and other natural materials; and Satine, a BoHo women’s clothing boutique.

006-5310191-small“Abbot Kinney is unique, in the true sense of the word… The funky-hippie-locals, the new money Snapchat crowd, out-of-town tourists, and everyday Angelenos all coverage on Abbot Kinney,” says Pamela Ozell, senior property manager now overseeing the parcel. “And retail, especially high-end boutiques and upscale cafes, are BOOMING in the midst of this eclectic melting pot! And those are the type of businesses in the parcel I’m now managing,” Ozell adds in reference to Venice’s continuing transformation into an upscale retail hotspot and popular leisure destination.

004-5310193-small“Many of the older, character buildings and shops, which the parcel we now manage represent, have been demolished and replaced with far more contemporary-styled structures,” notes Rick Rivera, CBM President. “But regardless of whether sites host character buildings or modern construction, area rents and property values have SKYROCKETED! Which is a huge boon to landlords and real estate investors alike,” Rivera adds underscoring Venice’s growing appeal among savvy real estate investors.

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


Centers Business Management (CBM) leasing agent, Jason Ehrenpreis, recently completed a lease transaction representing landlord and tenant, a local Boba cafe, on 1,977 SQFT retail space. The end-cap unit is in an exterior food court adjacent to an Edwards Cinemas theater on Mountain Avenue at the 10 Freeway in prime Ontario.


Centers Business Management (CBM) Valley Division Director, Dave O’Connell, recently completed a lease transaction representing the landlord and tenant, Warehouse Shoe Sale, on a 7,217 SQFT retail property. The freestanding building as at the intersection of York Boulevard and Avenue 63 in prime Highland Park. The property, situated in the quickly gentrifying and in-demand NELA area, is positioned between a busy Rite Aid drug store and a 99 Cents Only Store, and across from drive-thru Jack-the-Box and Starbucks locations.


Centers Business Management (CBM) property manager, Tina Flor, recently completed a lease transaction representing the landlord and tenant, Little Caesar’s Pizza, on a 1,140 SQFT retail space. The property is on Saviers Road, just south of Bryce Canyon Avenue, in prime Oxnard. The newer, well-maintained neighborhood center features a diverse tenant mix, including Fred Loya Insurance, mini market, nail salon, and more.


Last fall, international toy merchandising giant, Toys ‘R Us, filed for bankruptcy under Chapter 11 protection. The move was intended to give the struggling business “greater flexibility” in dealing with it’s $5 billion in long-term debt.

Then last month, the company announced the intention to close 184 stores, paring down its 700+ locations across the United States. This step was a further effort to clear the financially ailing retailer’s balance sheet in hopes of attracting a would-be investor to bail out the company.

Unfortunately, the bid failed. As a result, Toys ‘R Us has announced plans to close all US-based stores.

The company’s faltering sales are largely attributed to increased competition from eCommerce outlets, chiefly, Amazon. In addition to a strong push among discount retailers, such as Target and Walmart, to capture a larger portion of the toys sales market. An effort that has proven successful, much to the chagrin of Toys ‘R Us.

Toys ‘R Us has offered no immediate timeline for store closures. And no outline for where the process will begin or how it will progress regionally.

The silver lining…

In CoStar’s recent State of The Retail Market presentation, the firm’s economists noted the majority of Toys ‘R Us stores boasts a strong “location score.”

This is a proprietary scoring metric that factors income demographics, the financial health of adjacent retailers, and overall commercial property values to determine a location’s “investment quality.”

And according to CoStar’s data, Toys ‘R Us anchored or occupied shopping centers demonstrate consistently high investment quality.

This indicates that despite the fact that Toys ‘R Us happens to be vacating a center, the property is none-the-less an ideal site for replacement credit tenant.

In other words, a bevy of prime real estate ripe for willing takers is about to open up!

And this is good for…

Landlords:

Yes, many an aggrieved landlord is about to lose a major credit tenant currently occupying a LOT of space in their center. That said, however, there is a sizable pool of strong replacement tenants waiting in the wings.

Tenants:

The shortage of A+ space has been one of the biggest roadblocks to many expanding tenants. Meanwhile, the locations the majority of Toys ‘R Us stores currently occupy are exactly the type of sites most credit tenants salivate over. And more than a few of these locations are about to become available.

Brokers:

There many big deals looming on the horizon ; —)

Thus, despite Toys ‘R Us’ clear misfortune, the situation is by no means a net loss.


Grocery Stores Slow Expansions, but Prepare Big Changes

By Globe St | February 28, 2018

CHICAGO—Grocery-anchored centers continued to be an attractive property type for investors in 2017, with sales volumes increasing by 5.3%, according to JLL’s Grocery Tracker 2018 report. The asset class remained stable even though investors kept most other retail types at arm’s length.

But regardless of the overall stability, many grocers continue to experiment with new strategies like healthier food options, more advanced technology, and the possibility of alliances with non-grocery companies, leading Chicago-based JLL to conclude that this retail sector will have an eventful 2018.

Last year, the industry took a breather in some ways. Builders slowed the pace of new construction in 2017, opening 13.4 million square feet of space, which represents a decrease of 28.8% year-over-year, JLL finds.

“It’s not surprising that overall grocery store expansions fell in 2017, when compared to the boom in 2016,” says James Cook, the company’s director of retail research. More than one-third of new store openings were in just three states: CA with 1.6 million-square-feet, and NC and VA with growth of 2.7 million-square-feet across both states. “Retail follows rooftops, so the states with strong population growth will continue to see an influx of grocers.”

Consumers have become partial to specialty grocers, discount grocers and wholesale clubs, he adds, putting pressure on the largest grocery chains. “But we are seeing strong local chains competing head to head, and winning. Locations within the trade area and in the right markets is key.”

Healthier food choices, especially at affordable prices, was one of the three main strategies which helped many grocers compete. Aldi, Lidl and Grocery Outlet have done well by embracing gluten free and vegan-only diets. Aldi, for example, launched LiveGFree, a gluten free product line, in 2014, while Lidl offers shoppers a vegan option.

Moves like this helped Aldi expand its market share, JLL finds. The discount grocer significantly grew its presence last year in CA, VA and TX. And it plans to invest $3.4 billion in store expansions over the next four years while also remodeling 400 existing properties.

Grocers that sell products under private labels also have a competitive advantage. Consumer tastes can change quickly, JLL points out, but private labels allow grocers to quickly respond to market changes. Furthermore, cutting out the middlemen can double profit margins. Albertsons, one of the nation’s top grocers, recently added hundreds of new USDA-certified organic products to its O Organics private label. The line just hit $1 billion in sales in the most recent year, a 15% increase, and the grocer plans to add hundreds of more new products in 2018.

Like most brick-and-mortar retailers, grocery stores have begun establishing online shopping options. Still, JLL finds that online penetration in the sector remains at a mere 0.8%.

But property owners can expect grocers to continue experimenting with online shopping, grocery delivery and click and collect. Kroger opened its 1000th ClickList store, where customers can have items brought to their car after ordering online. The service has been a hit with shoppers, and Kroger has seen digital sales more than double since the launch.

JLL advises investors to pay attention to the strategies adopted by grocers. “Owning a property anchored by one of the top grocery chains is no longer a guarantee of strong performance,” says Chris Angelone, the company’s retail investment sales leader. “Owning retail is like owning an operating business, and investors need to keep in mind changing consumer preferences.”

The biggest recent news in the grocery world was Amazon’s $14 billion acquisition of Whole Foods. The implications of that move are not yet clear, but JLL expects more partnerships between grocers and non-grocery companies “that focus on innovation and technology that can build upon digital networks, logistics, delivery, and customer engagement.”