Mixed Use

Broker Engagement for Leasing Vacancy

How to get brokers engaged with your empty commercial spaces:

  1. Depending on the size of the space and your ability to get people inside, host at your property several times a week. Have food from one of the nearby restaurants or coffee shops delivered and invite tenant rep brokers to walk through the space, in groups of no more than three.
  2. As you walk them through the space, provide them with the information of the building, the street and the growth drivers based on what is happening in the neighborhood. Explain to them the different ways the space can be used, whether it’s office, retail, or combining office and retail in a mixed-use capacity.
  3. Remind them of the incentives available if they were to bring in tenants and lastly, let them know your timings. Be clear with them about the timeline for when you need a lease signed and when you need the rent to start coming in.

The above steps will help you to build out a pipeline of tenants coming in to tour the space, by reducing friction and helping them to get their tenant knowledgeable.

Helping Landlords to Lease Smaller Commercial Spaces

For landlords having a hard time leasing smaller commercial spaces as part of their larger properties here are a couple of things we recommend:

  1. Create your own internal leasing flyer with more information about the building – including floor plans, photos and links to video tours – and ways to position it for different types of tenants. This can be provided as a supplement to your listing broker’s information.
  2. Send this to the tenant rep brokerage community using LoopNet.com.
  3. Host tenant rep brokers one-on-ones with event lunches and showings of the space so when their tenants are ready to come online, they can then show them the space. Focus on teams of brokers who have both senior and younger brokers and create incentives in the form of broker bonuses for them to lease the space.

All of the above aims to get brokers and target clients as informed as possible to engage further once the tenant is ready to plan their return to office.

A Recent LA Story

During 1st Shelter-in-place order – A bookstore / fortune teller leased space and opened its first store at our building on Windward Ave in Venice Beach. For them it was a momentous opportunity to experiment their business in physical space, practice protocols to safely service customers and “create positive energy during difficult times” as they put it. They also stayed open during the LA Riots.

During this 2nd Shelter-in-place order – A high-end ceramics/porcelain company just leased space to open its first physical location with a similar mandate. They invested their own money to bolster the storefront and are excited to be open every day.

Take-aways – As the lifeblood of LA, small businesses demonstrate resiliency and resolve to generally do the right thing for their customers and the community at large, regardless of political (mis)management. Straying from this would put them out of business by market forces – ie negative online reviews etc.

Moreover, this is a great time for landlords to flush-out current and prospective tenants and see how they react in times of uncertainty and structure agreements accordingly. I continue to bet on LA for these reasons.

How Collaboration with Neighbors can save Retail Brick and Mortar

Normally in commercial real estate districts, especially in high street retail, there are multiple owners on a street competing for tenants.

Covid has stripped down our competitive nature, at least temporarily, and opened a dialogue about how we can help each other get to the other side of the recovery. Reaching out to your neighbors and offering to help can uncover new solutions to meet mutual objectives.

With our Venice building, I’ve gotten to know almost every single one of the 12 or so surrounding owners on the street. We’ve shared tenant leads with one another and we’ve spoken openly about how to keep each other’s spaces leased and activated. In retail districts, the street really benefits collaboration between owners to drive foot traffic. People want to live where things are happening. If one building becomes vacant this can soon snowball and impact everybody.

This triggered the Alfresco dining program, which is the city of LAs program for outdoor dining, where we now have a plaza of amazing food places and coffee shops all happening just a stone’s throw from the beach.

You will not be at a disadvantage from speaking to your neighbors right now about ways to collaborate during these times. One plus one could equal three.

COVID has Accelerated the Rationalization of Space Use

The pandemic has triggered a broad rationalization of how space is used for each property type. This is going to be a slow iterative process, not a quick solution. However, there are trends and ways to create flexibility within spaces to service this process of rationalization.

Since Amazon purchased Whole Foods in 2017, retail has been evolving to complement online purchase activity as well as the demand for experiential spaces leading up to 2020. As a result of the pandemic, retail’s evolution has been put through the equivalent of a meat grinder such as the number of space tenants require, their uses of the space, lease structure, and the necessary alignment with the retailer’s business model. There is still too much mall retail space that is ripe for conversion to housing.

Office space has been accelerated too. The question remains, what is the net demand for office space and how is that space going to be laid out? We believe the ultimate answer is “omniwork” created through a hub and spoke model, where employees have the flexibility to work from anywhere as well as coming into the office. This provides flexibility to employers to accommodate individual employee migration patterns driven by affordability and taxes, COVID prevention preferences and household formation. This will have different implications for different-sized businesses that require different footprints of space.

Resetting Landlord-Tenant Dynamics to Lease Commercial Space during COVID

Landlords and prospective office and retail tenants are advised to explore ways to reset and help each other grow over the next 1-2 year recovery. This will involve both parties to become “experimentation partners” to determine what works and what doesn’t work, toward achieving a stabilized rent payment stream.

Here are three ways landlords can adjust their offerings to partner with tenants to get through COVID recovery:

  1. New commercial leases can be structured to set the first 1-2 years at a COVID recovery rent rate. At the end of this period, both parties will have the opportunity to revisit and reset the rent to the market rent rate to continue operating with flexible timing and payment structure.
  2. Landlords can offer tenants temporary use of additional vacant and/or amenity spaces in the building to create additional spacing for their employees and patrons.
  3. Landlords can offer online “digitally native” retail tenants with hybrid flex office-retail space to run their online business and experiment with physical retail space starting with short-term pop-up retail to establish brand awareness and ultimately sales.

Structuring the alignment of interests and seeing the current problems from side is the key. It’s a different conversation now with your tenants and you actually have to partner with them in more ways than you would have ever thought.

B.RE assists investors and lenders of commercial mixed-use properties to structure and execute these strategies through our asset management services. Feel free to contact us if we can be of assistance.

Structuring Solutions for Commercial Properties

I think what differentiates our platform is that we create investment structures with partners, investors, lenders and community members to not only create alignment but also unlock property value.

How do you actually get multiple parties to agree that they’re going to benefit from an investment, and that from this, the result will be a larger total pie for everyone involved? How can we make 1 + 1 = 3 ? How can we leverage these partnerships in a property investment to in turn provide better outcomes for the neighborhood and community at large?

On the advisory side of things with BrandView.RE, we provide structuring solutions to owner-investors for all property types to unlock value.

1. Commercial Lease Restructuring – We are formulating more ways to structure commercial leases to get through COVID and grow each other, or survive and then thrive. What lease you sign and how you structure can materially affect your property value and capital structure.

2. Capital (Debt & Equity) Restructuring – Most properties have both cash and loans that make up the capital ownership of a property. How you buy a property and what levels of equity and debt you need in order to buy that property affect the outcomes of that property.

3. Property Owner Joint Venture Structuring – We can structuring property purchases in which we form joint ventures with the property owner in which they contribute the property to the venture in exchange for a limited partnership investment interest. This works great for undercapitalized, legacy property owners to have us bring the necessary capital to drive the execution and earn there % interest’s share in the value creation.

Why I Re-launched our Consulting & Asset Management Business, BrandView.RE

The coronavirus pandemic has accelerated and disrupted the evolution of retail, but even more so, the need to adapt commercial properties and evolve of mixed-use properties. We now need the flexibility across spaces to serve multiple uses and multiple types of need from housing, office, retailing, selling, feeding, healthcare, extended stay, everything.

All of this is now pushed to the forefront. I formed BrandView R.E as a strategic advisor to solve the complex problems around re-adapting properties to this new environment. We also have expertise in structuring, whether it be the acquisition, the financing, or the recapitalization.

This is where we endeavor to provide value as a focused niche in providing strategic advisory and mixed-use consulting services. As a fully integrated firm, we can then provide asset management execution on our advisory and consulting recommendations to unlock cash flow, reduce risk and realize property value appreciation.