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How Retail Tenants are Saving on Rent Right Now

We recently read an article in Bis Now highlighting how small retailers are finding their opening while old giants shrink. The general premise is that retail landlords are willing, more and more, to take on smaller retailers by dividing up their spaces and leasing them out where they can instead of holding off for the big fish that probably isn’t coming.

From Bis Now:

“As the country’s largest retailers struggle to adapt to 21st century consumer demands, retail landlords are increasingly willing to slice up their space, take on riskier tenant options and offer flexible lease terms — and smaller retailers are reaping the benefits. […] The market has been marred with a number of big-name store closures in the city. But brokers said the conditions are paving the way for smaller retailers to get their foot in the door, as increasingly desperate landlords stop holding out for the national operators with established track records.”

This article is a great example of how a retail tenant can save on rent right now. Even better news? We can help. Contact David Massie at 805-217-0791 or david@djmcre.com if you are a retail tenant and you want to find a great deal on a retail space like mentioned in the article. For more details, read the full article here.

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Westlake Village Medical, Dental or Office Space for Lease in Prime Location

We have a fantastic property for lease currently. This existing dental office is in a prime Westlake Village location and the price was just reduced from $1.95/SF/month to $1.50/SF/month. This space is not limited to dental office use though. The office can be used for dental, medical or even office uses.

This amazing location has the best of both worlds. It sits appealingly at end of a quiet cul de sac while also being walking distance to retail, the post office and many other amenities nearby.

There are several opportunities with this location as the landlord will allow new prospective tenants to sublease all or part of the space. The landlord is also giving the option to have the lease assigned or do a direct lease, your choice.

This really is the perfect opportunity to dive in on a prime Westlake Village location with a sublease or a direct lease with low rent for dental, medical or office space. Interested in learning more? Full property details can be found by clicking here.

Contact us today for more information! Call 805-217-0791 or email david@djmcre.com

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Agoura Hills City Mall Retail Spaces for Lease!

If you have a retail business, including a restaurant, and would like to join existing successful tenants with a great location, this is a great opportunity for you! The Agoura Hills City Mall currently has openings for new retail spaces. Most recently, there is new restaurant space available at what is now a current Pizza Hut and a new location for a smoothie / yogurt / coffee or dessert location available!

A few of the already established and thriving businesses in this shopping center include: Agoura’s Famous Deli, Vincitori, Sushi Wasabi, Maral Cuisine, Citibank, Kanan Pharmacy, California Dance Theatre, I Love Kickboxing, Journey Martial Arts, Agoura Mexican Café and more!

The landlord has agreed to give a reasonable amount of time for you to construct your retail space, without having to pay rent! This location comes with a new common area, improvements and renovations. Some of the spaces have outdoor patios. The space is great, but the location is truly what can’t be beat.

The Agoura Hills City Mall is adjacent to two major retail centers anchored by large grocery and drug stores. The location also includes great signage that is visible from Kanan Road. It’s located on Kanan Road near Thousand Oaks Boulevard. This is a main and busy intersection that’s less than one mile north of the Ventura Freeway (101) on Kanan Road for easy access! For those that don’t know, Kanan Road is the main road in Agoura Hills linking to the Ventura (101) Freeway. The shopping mall is centered in an area with great demographics; there are over 100,000 people in a 5 mile radius. Click here for more property listing details and additional photos.

Contact us today for more information about introducing your business to this busy retail center with great traffic from local residents as well as the nearby schools! 805-217-0791 or david@djmcre.com

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Full Service Hair Salon For Sale in Busy Retail Center

The full service hair salon BLO is for sale in Newbury Park in a busy retail center. This property has great potential! It’s an upscale hair salon located in a high traffic area that’s right off the 101 freeway. This sale is a turnkey deal that will include established clientele as well as stylists ready to transition right into your new business.

Also includes:

  • Modern décor with all fixtures custom built
  • A waiting area with a beverage station
  • A reception desk
  • 6-7 hair stations, 1 makeup station, a color processing area with two seats, 2 shampoo bowls, and a dispensary with a full washer and dryer
  • The inventory is included in the asking price

This is a great opportunity for buyers. The property is 900 sf and has a private office that can be used as additional storage. The salon includes a retail display, a camera system throughout the premises for security, lots of free parking and more. This space is conveniently located in a newly renovated shopping center with no major competition in the immediate area! This is a truly great buying opportunity in Newbury Park. Click here for more details on the property!

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Exclusive Unlisted Off-Market Commercial Property for Sale in Conejo Valley

David Massie of DJM Commercial Real Estate has an exclusive unlisted off market income property for sale in Conejo Valley in Rock River Plaza that is an amazing opportunity. The address is: 28118 Agoura Road, Agoura Hills, CA 91301.

Property details for this sale listing: 

  • 100% occupied with quality long term leases and credit tenants in place
  • 2018 net income projected to be about $248,000
  • About 13,000 RSF
  • Owner only occupies a 600 sf space and can stay and lease out or move out
  • One tenant’s lease expires in Feb. 2019 of about 3,500 RSf – owner can move into this space or can move into owner’s unit mentioned above. Another option is to keep the tenant in place.  All other leases expire in 2020 and 2021
  • The property is about 15 years old.  Very quality “A” type build
  • There is enough parking at between 4-5 per 1,000 to do some medical/dental uses
  • Exterior building with signage potential has good exposure
  • 28118 Agoura Road, Agoura Hills, CA 91301
The current owners are asking for about a 5% cap, which is about $5 million, but they are also open to reasonable offers. This is an incredible opportunity to move quickly on as it’s currently unlisted and off-market for the time being!
If you have someone interested in buying this off market listing, or if you have any additional questions, please contact David Massie at david@djmcre.com or call him at 805-217-0791.
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Best Ways to Negotiate Your Commercial Lease Renewal

Whether you have an office, retail or industrial commercial lease, there is really only one good way to negotiate your lease renewal: Hire a good commercial real estate broker. If you don’t hire one and try and negotiate the renewal on your own, then you will be sorry as you will most likely miss out on your best deal.

One of the main reasons commercial tenants don’t hire a commercial broker to renew their lease is because the tenant thinks they will have to pay the broker directly. Although this might happen, I normally am able to get the landlord to pay me a commission for representing the tenant at renewal time. Why would a landlord pay me a commission when they have the tenant already leasing space at their project? Because I can find this tenant another location elsewhere. And the landlord also wants to entice me to bring them more deals to their project in the future.

What if the landlord won’t pay me, your broker, a renewal commission and the tenant doesn’t want to move to another project? Then I usually enter into a flat fee agreement with the tenant I represent. But my very reasonable fee pays for itself many times over. This is because I am able to negotiate things on behalf of my client that my client could not negotiate on his own. Landlords don’t give you, as the tenant, a credit for not using a broker and it is simply the wrong choice not to use one.

There is more to a successful lease renewal negotiation than just negotiating some of the numbers like rent. The lease itself is complicated and you need to understand what you are agreeing to and how each of the clauses in the lease might adversely affect you in the future. This is especially true in terms of hidden costs you aren’t aware of. So, having your broker review the lease and negotiate the clauses that are unfair or costly is huge reason not to do it yourself.

Think about it. You, Mr. Tenant, don’t know the commercial real estate market like your landlord does. So why, Mr. Tenant, do you think you will do your best if you negotiate against your landlord? You won’t until you hire the right broker. It’s always worth a try to hire a broker to see if the broker can do better than you can and better yet to see if the landlord will pay your broker so you don’t have to. Stop leaving money on the table and hire me now for your renewal or new commercial lease negotiation. I have negotiated over 1,000 leases successfully.

If you want to learn more about leasing, buying and/or selling any and all types of commercial spaces in California or if you have questions about any subject related to commercial real estate, please contact David Massie of DJM Commercial Real Estate at david@djmcre.com or 805-217-0791.

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Is It Better to Buy or Lease Commercial Real Estate?

Clients ask me this question quite a bit.  The answer depends on many factors and it is different for each client depending upon the current market parameters and their unique circumstances.

Right now, the California commercial real estate market for retail, office and industrial properties for sale and for lease in which I specialize in is pretty hot and has been for many years.  Prices for both sales and leasing have exceeded all-time highs historically in most California cities especially in Southern California where most of my transactions take place.  So, when prices are high it means that it’s not a good time to buy or lease, right?  Not necessarily.  And what if you have a business and have to do one or the other, which one do you choose?

I define businesses that can occupy at least 51% of a building as “owner/users”.  Many times owner/users can pay more for a building because they can get a better loan than investors buying properties not occupying at least 51% of the building.  They also usually get better tax treatment when owning rather than leasing.  Owner/users have been buying quite a bit in the last couple of years.  They are buying even though prices are high, because of low interest rates and preferential tax treatment. The draw for these types of buyers is that it is better compared to leasing and, many times, that proves to be the case.  If they don’t occupy the entire building, but at least 51%, then they can lease out the rest of it which can also add to the positive bottom line.

Whether you are an owner/user, or a business that can’t qualify as an owner/user, you have to compare the costs of leasing versus buying.  You have to take into consideration not only the loan and down payment costs, but also the tax implications.  This is where your unique circumstances come into play.

Here are some common reasons why you shouldn’t or can’t buy.  In these situations, leasing is better:  If you don’t have enough money for a down payment, if you can’t qualify for a loan, if you might significantly expand or contract your space in the future, if you don’t have money for building improvements that landlords take care of if leasing instead, and many more reasons.

There are many factors that go into figuring out if it’s better to buy or lease.  Every situation doesn’t come out with the same answer.  A good broker can advise you and help you to figure out the right answer for you.  More on how to find a good deal on a property to buy in any market.

If you want to learn more about leasing, buying and/or selling any and all types of commercial spaces in California or if you have questions about any subject related to commercial real estate, please contact David Massie of DJM Commercial Real Estate at david@djmcre.com or 805-217-0791.

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Who Pays Your Commercial Real Estate Broker and How Much?

Although the answer might seem obvious to some, this question is asked of me quite a bit in my role as a commercial real estate broker in California.  Generally in California for retail, office and industrial properties (and I am going to focus only on these since these are the ones I specialize in), the landlord or seller of a commercial property pays your broker a commission for your broker bringing you to the property. Many people believe that commissions are negotiable. This is true to some extent in theory and legally. In reality, about 99% of the time there is a market standard commission in the commercial real estate industry for a particular type of commercial property lease or sale that everyone agrees to.

The total commission usually paid by a landlord or seller is 5-6% of the total rent over the lease term or the sale price.  This commission amount can vary.  This is especially true for more expensive properties for sale in excess of 10 million dollars. In those cases, the commission total is usually less and can instead be a set fee of say $200,000 as an example.  The landlord/selling broker enters into a contract with the landlord/seller for the entire commission, but then has to split that in some fashion with a tenant/buyer broker unless the landlord/seller broker also represents the buyer. (This latter scenario is called a dual representation and something I strongly recommend against ever doing as a tenant/buyer for many good reasons; more here on this subject.  In Southern California, the splits vary between the two brokers depending upon whether the deal was retail, office, industrial or other type of property.

Let’s assume a 6% leasing and sales commission for our examples that follow.  Retail and industrial deals usually split the leasing/sales commission evenly (3% to each broker). Office deals usually pay 4% to the tenant’s leasing broker with the remaining 2% going to the landlord’s broker. But, for sales, the commission is split evenly. Therefore, in this example, it would be 3% to each broker.  Note that industrial deals for leasing and sales tend to be at total of 5% and not 6%, but office and retail are usually 6%.

So, if you are a tenant or buyer, you can see that hiring your own broker to represent you doesn’t cost you anything. It also doesn’t make your deal more expensive, because the landlord/seller is already paying one commission and requiring his broker to split that fee with another broker as necessary.

Bottom line:  It’s a no brainer to always have your own broker representing you when leasing or buying. It doesn’t cost you anything.  Having your own broker should save you time, money and headaches.  You do have to choose your broker wisely to get the most of them (more here on how to find a good broker).

If you want to learn more about leasing, buying and/or selling any and all types of commercial spaces or if you have questions about any subject related to commercial real estate, please contact David Massie of DJM Commercial Real Estate at david@djmcre.com or 805-217-0791.

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Potential Fix For Medical Space Shortage & Retail Vacancies in Southern California

There is a shortage of medical space and an increase in retail vacancies in southern California right now.  So, why don’t medical tenants lease space in retail centers as compared to an office or medical building that they traditionally lease space in?  Doesn’t this solve some of the problems for both types of spaces?

Some medical tenants such as optometrists, dentists, physical therapists, chiropractors, and a handful of others do lease space in retail centers.  Why do they lease space in a retail center?  Because they probably make more money when their businesses are in a quality retail center with good parking, signage, and retail visibility from shoppers at the retail center.  The main criteria for any business is usually the bottom line so, if being in a retail center increases your net income, wouldn’t you want to be there?  This is rule #1.

Sometimes the rent, improvements and other costs can be higher in a retail center, but not always. If you make enough additional income leasing at a retail center to offset this cost, then this objection isn’t a good one.  Another objection might be that medical providers get more referrals from other medical providers that lease in the same medical building.  This can also happen in a retail center if there are other medical providers there. They can still get referrals from outside the retail center from these medical providers that lease in the medical office buildings if they develop a relationship with them. It might not be the same, or potentially as many, referrals as the medical building scenario, but again, see rule #1 above. At which location are you making more net income?  The referrals might not be the same as in the medical building scenario, but there might actually be more referrals in a retail setting because of the other retail tenants now referring you and the amount of potential customers a retail center has. This is especially true in comparison to a traditional medical building scenario which is much more limited in potential new customers finding you.  Finally, it’s possible that some medical providers simply think their status will be somehow lowered by leasing space in a retail center and that a nice medical building is preferred by their patients.  This might be true for some patients, but I would doubt most of them would care. If they are like me, they want their trip to the doctor to be the least painful as possible. Not to mention that a good retail center is much more fun than a boring medical building any day.  I can see some types of medical users and their patients wanting it to be quieter than a retail setting, but again -doesn’t rule #1 above trump even that for most medical tenants?

Retail space in southern California is undergoing a change.  The smaller to medium sized retail centers in particular are starting to become more restaurant/food and service focused as opposed to other types of retail uses.  Customers at retail centers want to enjoy their experience and be able to do as much as they can at one location.  So, with the foregoing in mind, wouldn’t many medical tenants fit in with this new retail trend of a retail landlord leasing to service providers like doctors and providing a better experience for the retail customer?  I think so.

If you want to learn more about leasing, buying and/or selling any and all types of commercial spaces or if you have questions about any subject related to commercial real estate, please contact me at david@djmcre.com or 805-217-0791.

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Options to Renew Your Lease: The Good, The Bad, The Ugly

You are a tenant leasing some kind of commercial space like retail, office, industrial or otherwise.  You were smart and negotiated at least one option to renew your lease.  But, should you exercise that option to renew?  Do you really understand what conditions in which it would be favorable or not to exercise this option?

In my market in Southern California, most landlords will grant a tenant who is leasing commercial space an option to renew their lease for one additional lease term that is less or equal to their original term.  For example, if you leased for a 5 year term then you could usually negotiate a 5 year or less option to renew.  If you leased for 10 years, you might get one 10 year option to renew or perhaps two 5 year options to renew.

But here is where it gets tricky.  It’s generally not in your best interest to exercise your option to renew. Instead, you should think of it as a last resort.  Option to renew language usually contains a certain minimum rent to the landlord. For instance, it may be no less than what you were paying at the end of you current term or maybe it has a 3% bump above what you are paying at that time.  I have found that market rents are usually lower than what your option to renew requires you to pay.  And what about current market tenant concessions like free rent, improvements, etc.?  You will most likely miss out on these.

Another provision that option to renew language usually contains is that the lease (except for the rent) will be on the same terms and conditions.  So, if there is a clause in your lease that needs to be negotiated you may want to reconsider the option to renew.  These clauses could include receiving a new base year for operating expense increases for an office tenant or excluding unreasonable lease clauses from applying. For instance, certain Triple Net clauses could be excluded for a retail tenant if you negotiated your renewal instead, but these exclusions won’t apply if you simply exercise your option to renew.

What is a tenant to do?  Hire a good commercial broker to help.  This broker will know the current market rents and be able to review the lease with you and recommend all necessary changes.  If the broker is active in your area, then the landlord will be concerned that this broker might relocate you to another building if the landlord isn’t fair.  You simply don’t have the same clout without a good broker and you won’t get as good of a deal.  But do it at least 6-12 months in advance of when your current lease terminates or at least 3 months before you have to exercise your option to renew so your broker and you have time to review your needs and options. One other really good thing that happens when you don’t exercise your option to renew, but rather negotiate your renewal, is that your option to renew many times gets left in place and is still valid the next time your lease terminates.

I have successfully represented many commercials tenants for renewals for their leases and not just new leases.  I can’t remember the last time I didn’t do much better than the tenant could do on their own.  Many times the landlords end up paying my fee for the tenant’s renewal just like they always do when I represent a tenant for a new lease.

For more information about commercial leasing, buying, and selling please contact David Massie at DJM Commercial Real Estate at 505-217-0791 or david@djmcre.com.