CBM’s Retail Shopping Center Management & Leasing Blog

Retail Real Estate News & Trends in Southern California
 

802 S. Alvarado Street, Los Angeles, CA

Centers Business Management (CBM) leasing agent, Matt Saker, recently completed a lease transaction representing the landlord in a deal with a local credit union, on a 1,362 SQFT retail space. The unit is in a recently rehabbed corner strip center at the intersection of Alvarado Street and 8th Street. A block from the MacArthur Park + the Westlake / MacArthur Park Metro Station, this well-located center is anchored by 7-Eleven and features a diverse tenant mix, including WaBa Grill and a variety of other service and restaurant tenants.


3282 E. Anaheim Street, Long Beach, CA

Centers Business Management (CBM) leasing agent, Jason Ehrenpreis, recently completed a lease transaction representing the landlord and tenant, a discount store, on a 4,662 SQFT retail space. The large Food4Less + Rite Aid anchored shopping center is situated on Anaheim Street, near the signalized intersection at Redondo Boulevard in prime Long Beach. In addition to the notable anchor tenants, the center also features a busy McDonald’s drive-thru on a pad space, and is across from a newer Walgreens location.


1331 Lone Hill Avenue, Glendora, CA

Centers Business Management (CBM) leasing agent, Jason Ehrenpreis, recently completed a lease transaction representing the landlord and tenant, a Fatburger franchisee, on a 1,500 SQFT retail space. The sprawling, Home Depot-anchored community center is at the intersection of Lone Hill and Gladstone in prime Glendora. Additional A+ co-tenants include Verizon Wireless, GameStop, Blaze Pizza, Wendy’s and more.

 


13923 Van Nuys Blvd. Arleta, CA

Centers Business Management (CBM) Valley Division Director, Dave O’Connell, and leasing agent, David Guardado, recently completed a lease transaction representing the landlord and tenant, a local bakery, on a 1,300 SQFT freestanding retail building. The property is on busy Van Nuys Boulevard, immediately adjacent to the 5 Freeway on/off ramp in prime Arleta. A former Subway location, the site features ample parking in an onsite, wraparound parking lot.


9039 Reseda Blvd. Northridge, CA

Centers Business Management (CBM) Valley Division Director, Dave O’Connell, and leasing agent, Brett Mero, recently completed a lease transaction representing the landlord and tenant, Urban Cuts, a local hair salon, on a 1,300 SQFT retail space. The property is just off the intersection of Reseda and Nordhoff in prime Northridge. Co-tenants include popular quick-serve restaurants, WingStop and Dickey’s Barbeque. Additionally, the site is across from a newer, multi-pad retail center featuring Starbucks, Farmer Boys, 99 Cents Only and more. And adjacent to Chase Bank, Wells Fargo, and a Vons grocery store-anchored center with McDonald’s on the hard corner (of Reseda + Nordhoff).


Sale-Leasebacks Gain New Appeal for Retail Owner/Occupiers

By Globe St | June 25, 2018

Scott Holmes, Marcus & Millichap “Retail companies operating out of a property they own face new tax rules,” says Holmes, “and many could benefit from selling their property and leasing it back from an investor.”

CALABASAS, CA—Strategy changes for retail owner/users have become more frequently debated, says Scott M. Holmes of Marcus & Millichap, who reports that this shift in approach is largely due to changes to the tax code. This bodes particularly well for the sale-leaseback sector, as the SVP and national director of retail indicates in the firm’s Retail Spotlight.

“Investors’ desire to own stabilized assets with long-term tenants,” he says, “and the ability of owners to unlock equity for reinvestment into operations keep retail sale-leaseback transactions steady.”

This consistency in deal flow occurs against the backdrop of equally firm market fundamentals. “Encouraging single-tenant trends persisted last year,” Holmes states, “as demand for single-tenant locations held firm and rents continued their upward trend. Limited development will support the current trends through 2018, reinforcing the demand of these generally stable assets.”

Simply put, the new tax code minimizes some former benefits of ownership for companies operating from a location they own. “Previously,” says Holmes, “owner-user companies could deduct all of their interest expenses on their taxes, but the new provisions restrict the deductibility of business interest for companies with gross receipts in excess of $25 million. Now, interest totaling just 30 percent of earnings before taxes, depreciation and amortization can be deducted on taxes.” By selling the property and leasing it back from the investor, the facility cost once again becomes deductible.

Investors are focusing heavily on several single-tenant retail types, including quick-service restaurants. These assets are especially attractive, given their brand visibility and ability to resist both economic mishaps and e-commerce. “Investors also seek grocery stores, discount stores, fast casual dining, pharmacies and a range of other business types,” Holmes adds.


In a prior post, we addressed our #1 most frequently asked question: How Much Does Property Management Cost?

Which brings us to our second most frequently asked question: What Services Does Property Management Include?

This is a GREAT question! And obviously, key to any landlord’s decision when considering hiring a property management company to oversee their portfolio.
So, to answer this all-important, burning question, here are the 7 Primary Services Retail Property Management Services includes:

Accounting

At CBM, we employ a dedicated accounting department and use specialized property management-specific software to monitor and track all aspects of Accounts Payable (AP), Accounts Receivable (AR) and Common Area Maintenance Reconciliation for our entire management portfolio.

Software platform – We use a property management software platform called Skyline, which is specifically design for commercial retail properties.

Accounts Payable – Our AP services include paying, recording, and cataloging all utility bills, vendor invoices, mortgages, and property taxes. At the end of the year, just hand your CPA our General ledger to provide a complete property accounting!

Accounts Receivable – Our AR services include receiving and depositing monthly rents and Common Area Maintenance (CAM) payments. Additionally, to make these payments, most of our tenants use an automated online bill pay service (ClickPay.com) that debits funds from their bank account and transfers them directly into the property’s trust account.

Common Area Maintenance Reconciliation – Our accounting department conducts Common Area Maintenance Reconciliations, ensuring tenants on Triple Net (NNN) leases are paying their proper share of Common Area Maintenance (CAM) fees.

Site Visitation

CBM property managers visit the sites they manage on regular basis with detial reprots that include photos communicated electronically. These visitations serve several purposes:

Monitor property condition – Managers ensure the property is in good physical condition and free of any damage or hazards that may cause accidents and lead to lawsuits. Additionally, managers monitor the property as a whole, and take note of any larger issues that may require maintenance – HVAC systems, roof, building façade + structure, parking lot, sidewalks + curbs, etc…

Confirm + evaluate vendor services – Managers ensure vendors are not only performing the services for which they have been contracted, but executing those services at a high level.

Develop a rapport with tenants – Managers make themselves visible to tenants onsite, both to establish authority at the property as an agent of the landlord, and to allow tenants the opportunity to voice concerns and make complaints.

Tenant Relations Management

Managing tenant issues is a never-ending and thankless task. Tenants gripe and complain. Tenants have disputes and conflicts (with one another and landlords). And tenants ask for breaks and reductions in rent and CAM payment, often accompanied by hardship pleas (whether legitimate or not). Meanwhile, dealing with this relentless stream of demands is exhausting and often emotionally draining.

To mitigate this drudgery, property managers step in to create a buffer between landlords and tenants. Managers fields tenant requests and report all communications to landlords. Landlords are then free to make carefully considered decisions, without pressure from emotionally overwrought or manipulative tenants.

Ultimately, managers enforce lease terms, carefully balancing landlord rights and tenant concerns. In short, exercising a firm but fair hand.

Vendor Oversight

To ensure your property remains in peak physical condition, property managers closely monitor vendor services to confirm consistent and high caliber performance.

As part of site visitations, managers verify that sweeping + general cleaning, trash removal, landscaping, and other Common Area Maintenance task are being executed. And executed with careful attention to detail.

Additionally, if a vendor fails to perform a contracted service, performs inconsistently, or performs poorly, the manager will hold that vendor accountable. And if the vendor fails to improve, the manager will terminate their services and hire a replacement provider.

Finally, if a vendor’s fees increase while their level of service declines, a manager will source alternative providers, solicit bids, and make recommendations as to which alternative makes the most sense for the property.

Project Management

Over time, as a property ages, wear-and-tear is unavoidable. Eventually, building exteriors + facades, roofs, HVAC systems, parking lots, sidewalks + curbs, etc… all need to be replaced.
Obviously, this is a Herculean task that involves identifying contractors, soliciting bids, selecting a suitable vendor, and overseeing the project.

Now, a property manager is by no means a general contractor. And possesses neither the expertise nor legal authorization to act as one.

But your manager can help you…

== > Source contractors for various construction projects

== > Solicit construction bids

== > Advise you on the pros and cons of each option

== > And interface with your contractor of choice, acting as your agent in monitoring the construction process

Lease Assignments + Subleases

In many cases, tenants come and go before the term of their lease is fulfilled. It’s just the reality of the retail strip center world.

Of course, to vacate before a lease term has expired, a tenant must “assign” their lease or or sublease their space. And while not quite as difficult as executing a brand-new lease, assigning a lease is still an involved process that requires fully qualifying a replacement tenant.

Managers undertake this qualifying process, conforming prospective replacement tenant’s use-type acceptability, verifying their experience and business ownership track record, and determining their overall financial fitness. Ultimately, managers strive to ensure the replacement tenant will meet the vacating tenant’s financial responsibilities.

Lease Renewals

Whether lease options are in place or an initial lease is simply expiring, tracking and executing lease renewals is an integral part of maximizing a shopping center’s profitability.

To ensure lease options + lease renewals are handled accordingly, managers…

== > Keep landlords appraised of approaching renewal dates

== > Update landlords on tenant decisions to exercise options or vacate following lease expirations

== > Advise landlords on current market rents to negotiate competitively price renewal agreements

== > And assist landlords in negotiating financially beneficial lease agreements

And These Are Just a Few of the Core Services Property Management Provides…

For more information, visit our Property Management Services page at cbm1.com/propertymanagement


Why Fitness Tenants Are Leading Retail Leasing

By Globe St. June 29, 2018

Petra Durnin is the director of research and analysis for the Southern California market at CBRE.

Fitness tenants are driving retail leasing activity in Southern California. According to a new report from CBRE that looked at retail leasing activity, fitness tenants are among the top five retail users in Southern California, and they are expanding. This is a stark change from the activity from this retail segment in the past, when fitness centers were not considered a primary tenant. Today, fitness centers are occupying big boxes as well as smaller footprints and in some cases can even serve as anchors in shopping centers. Last year, there were nearly 1.2 million square feet and 100 transactions of fitness centers in Orange County, the Inland Empire and Los Angeles. This year, there has already been 400,000 square feet in fitness leasing activity and nearly 40 transactions. We sat down with Petra Durnin, director of research and analysis at CBRE Southern California, to talk about the research and what is driving fitness center activity.

GlobeSt.com: Why have fitness tenants become such active retail occupiers?

Petra Durnin: Fitness clients seek more experiential retail options that extend beyond the workout period. Fitness centers provide a service that is internet proof, occupy much of the space left behind from big box/department store closures, fill non-peak retail hours, and attract new customers willing to travel farther for unique fitness experiences. The natural partnership between anchor tenants such as grocers is formed due to the trend towards healthy living. Nearby amenities such as restaurants, coffee shops and personal services attract gym goers, increase foot traffic and sales.

GlobeSt.com: These were once considered undesirable tenants. How have landlords responded to this new demand, and has the lease negotiation or vetting process changed?

Durnin: Fitness retailers have become much more demanding in their requirements for stronger co-tenancy, earlier termination rights, and more exclusive contracts to protect their brand and business. There is also strong demand among budget-oriented fitness clubs that require 15,000 square feet and up to provide a no frills experience and a clean/well-equipped center.

GlobeSt.com: Is the growth of fitness operators enough to absorb the space from some big box closures that we have seen? Why or why not?

Durnin: Big box product appeals to many different types of tenants, but those located in close proximity to amenities that tie in to fitness and health will appeal to gym goers and attract fitness tenants.

GlobeSt.com: Restaurants have been another tenant that has driven retail leasing, but there is some talk about a surplus of restaurant options. Is there any concern about the number of fitness spaces opening or if the consumer demand can support the trend?

Durnin: The rise of health and fitness supports the current growth and options are important in relation to the live/work/play paradigm. Both the aging population and younger generation will further drive the evolution of this sector.

GlobeSt.com: Is this a lasting trend? What is your outlook for fitness center activity?

Durnin: A future trend could be for fitness clubs to locate near residential communities or medical/hospital complexes. They could partner with mixed-use and lifestyle centers with a larger experiential platform instead of traditional retail centers. Boutique fitness clubs could look to diversify further to provide an even more personalized experience with unconventional offerings such as trampoline parks and skydiving centers.


We wish you a happy and safe holiday 4th of July as you enjoy this holiday with your family and friends!


853 Atlantic Avenue, Long Beach, CA

Centers Business Management (CBM) leasing agents, Aaron Guido and Daniel Barriga, recently completed a lease transaction representing the landlord and tenant, a salt therapy clinic, on a 1,152 SQFT freestanding office building. The unit is in a completely remodeled, corner freestanding office/retail building at the intersection of Atlantic Avenue and 9th Street in prime Long Beach. Boasting exceptional curb appeal, this architecturally distinctive property is situated amid a dense residential neighborhood.