One Less Invisible Retail Deal

Awesome news! Over the last 6-9 months I’ve noticed countless retail spaces in downtown that are available for lease (most all of them brokered by Derrick Moore at CBRE). Why aren’t we seeing more of these spaces fill up faster?

Also, I’ve lost a lot of faith in the Downtown News’ credibility. Time and time again they get it wrong and don’t verify the easy stuff. They’ve reported several times that a Coffee Bean and Subway “have already opened” in Vero. The Coffee Bean deal fell through, no sign of any Subway. They’ve also reported Starbucks being open in GLO. Starbucks hasn’t even begun to build the space out. The Downtown News office is located 3/4 mile away from these buildings… there’s no excuse for this. Not to mention they can’t ever get a date or figure accurate.

I think blogdowntown should become the new Downtown News source.

There is a lot of empty retail space downtown because the owners are asking too much money for space in transitional areas. These leases should begin with very low rents, which will increase with time. The tenants may change over time, but unless street life is activated gradually, new tenants who pay top dollar my find there is not enough business to keep them afloat.

It’s a no brainer to me, but a lot of people don’t get it.

^Owners have no idea what to charge for rent, it’s why you see brokerage signs everywhere. When a landlord hires a broker to represent available space, the broker is responsible its valuation and curbing the owner’s rent expectations. I work with commercial brokers and I see it everyday. If the broker is savy (and from Mr Moore’s popularity I would assume he is) then he’ll no doubt negotiate rent incentives for new tenants. That part is a no brainer. I’m just remembering article from months past that mention bidding wars between retailers for some commercial space in the Financial District.

The city needs to enact a retail version of the adaptive reuse ordinance.

Just as the city relaxed the conditions and codes governing certain kinds of residential space in order to promote the conversion of empty office buildings into lofts, they should come up with a similar set of incentives and benefits for retailers looking to open businesses on the ground floors of these buildings. City planners should be coming up with ways to expedite the opening of small business in DT storefronts, as opposed to complicating the process in order to deliberately and artificially suppress the vitality of the streets.

With the economy and real estate marketing going soft, this is a precarious moment in the evolution of DT. In order to keep the momentum going, the city needs to make sure the next wave of development is a mix of retail services to support the growing community. if that retail does not arrive in the next year or two, all the progress made in the last 3 or 4 years could begin to drain away as the new residents sense that DT is no longer improving, and that the street life – and the very vitality of the neighborhood – has stagnated.

Damn beaurocrats.

Isn’t the slowness in obtaining things like tract maps from various city departments the main reason the Grand Avenue hotel and condominum complex sponsored by the Related Companies has been delayed by a few months?

Now that deal fell through for the Fine Arts Bldg. space, can we encourage the Pig N’ Whistle to reclaim that location that they had in the 1930’s once again?? That would be fantastic. Somebody call up the Pig N’ Whistle people.

Number One:

The City process for approval is sooo difficult… even if they don’t serve alcohol, just getting a permit is lengthy, and complicated. Alot of restaurant owners have found they can build their own restaurant in the suburbs and open for business much faster than getting approvals in L.A. Bureaucracy kills.

Number Two: If I was a building owner, I’d give all restaurant tenants a whole year for free. Having a street level restaurant, grocery, or bar is an amenity for condo residents and the community. It raises the property’s value, even if you don’t collect any retail rent money.

I never understood pricing.

Its like people would rather collect 0 money than collect say .75/sqft just on principle.

Sign leases where it starts as .75 and be selective on what businesses come in. If its a porn shop or liquor store, dont sign them, but if its an art gallery/wine bar, or a music lounge, or a furniture store, then sign em up.

LA in general always overprices things. In 2001 the price of real estate in downtown LA was worth more than Seattle. Why? Because its LA, thats why.

I agree with Jeremy. I never understood why someone would list space at $2.50 per square foot, sit on a space for 3 years (Santa Fe Lofts, anyone?), and then end up renting at $1.25 with several months free, when there were people lined down the block who would have paid $1.25 per foot in 2004. If it filled in 2004, and the street got activated, by now it would be $2.50 per foot.

Duh.

High initial pricing just shows that the broker has no vision or strategic planning. The best thing a broker can do in this situation is to promote confidence in this development by offering incentive pricing to key tenants. More over, high rent is just going to fill the development with starbucks, subways, and every other chain under the sun. Of course chains only go to proven areas thus creating a conundrum. The city already makes it difficult enough for entreprenuers. Now business owners have to cut through red tape, pay overpriced rent, and take a chance on an unproven area! no wonder downtown’s progress has slowed.

The brokers need to realize that time IS NOT ON THEIR SIDE. They cant afford to let rents stay high while they TEST THE WATERS. Once the waters are tested and they find the rent is too high, downtown could have lost momentum and then they will have unsold units to go along with empty retail.

My only explanation is that developers are pricing based on the fact that downtown is the “center of one of the largest global metropolises” and will soon be discovered with the mega projects. They are also basing it off of incomes of tenants. All of that maybe true, but they are missing the point. You still have to grow naturally in this untested environment.

Look how robertson, w. 3rd st, or abbott kinney, or main st. grew! Those are the best streets in los angeles and they all started at under $1/sqft and moved up rapidly from there. Silverlake, echo park are the same. Compare those regions to old town pasadena and 3rd st. promendae and you can easily tell which places grew naturally and which places had developers come in and charge super high rents to begin with.

Speaking of retail…

There’s a 1934 survey map of Broadway listed on eBay, Pig ‘N Whistles included.

Kinda neat to see the Historic Core with so many candy stores!

I think you’re right Jeremy. Brokers are basing prices on what they hope the neighborhood will be tomorrow - not on what it is today. And i think its a little bit of greed as well. Residential has done very well over the past few years, but leasing retail has lagged. Isnt helping business and retail in downtown what the DCBID supposed to do, or is this beyond their scope? It is frustrating to see so much empty retail space sit there year after year. PJ - excellent idea to spur leases by having the city enact a retail version of the adaptive reuse ordinance. We need more creative ideas like that.

hey, im a chef from ny and im looking to open a healthy creative salad takeout business in the Mandel builidng. is this a good idea? is the area busy at lunchtime over there?? any info will help! thanks robert

hey, its robert. if you would email any info on my questions, i would be so appreciative. my email is sombradesol1@aol.com

thanks! robert