As Old Malibu Goes Out, Some TriBeCa Comes
In
• Another Sense of Somewhere Else Will
Be Making Its Way to the Local Scene
While construction continues on the old
Malibu lumber yard site as it is turned into a high-end
boutique shopping center, which is owned by the city,
discussion continues to focus on “the deal” that
was made with the master leasing agent Richard Weintraub and
Richard Sperber and what it portends for the city and local
retailers.
The controversy around the $150 million
deal continues. It was even debated briefly by city council
candidates and championed by one outgoing council member as the
“deal of the century,” yet it is still somewhat of
a vague idea for most folks in Malibu.
Much attention has been focused on the
local retailers who are sometimes described by critics as
the “poster children” for how local businesses are
being treated by city officials. Bernie Safire, the hairstylist
and Denyse Mclean of McLean Gallery have been touted as taking
space.
However, talk outside the city belies that
homespun image. Listing information on a website by CB Richard
Ellis, a Century City leasing firm, describes the mix of new
tenants as Scoop, Intermix, James Perse Flagship, Mayfield,
Tory Burch and other more urban-setting establishments.
The asking price for the remaining square
footage of the 30,000 square foot project that includes two
restaurants and retailers is reportedly between $18 to $23 per
square foot.
Talking to the Los Angeles Business
Journal, which described the transformation of the lumber yard
as Los Angeles’ next hot retail project, real estate
developer and Malibu resident Richard Weintraub insists
he is not interested in the more mainstream high-end retail
tenants like Gucci and Prada. He said it was going to be more
like Melrose and TriBeCa in New York City rather than Rodeo
Drive. Weintruab said they have turned down Beverly Hills Rodeo
Drive tenants.
For those not in the know, TriBeCa, which
is located in lower Manhattan, was described by Forbes magazine
as the twelfth most expensive zip code in the United States in
2006.
Notwithstanding Weintraub’s comments,
CBRE’s Jay Luchs, best known for his focus on leasing hot
properties in the Beverly Hills triangle, is the leasing agent.
Luchs has also completed recent deals on Melrose Place and
other hip L.A. streets.
The two-story project sits on a 2.7-acre
parcel and has been the object of lamentations by local
residents who say they miss the lumber and hardware store for
more than just two-by-fours and screwdrivers.
Current leasing plans posted by CBRE on its
website, call for Safire, McLean and Clout all to be
located on the less popular second level where there is still
space available.
The ground floor, or most desirable
locations, are expected to be filled by James Perse,
Intermix, Tory Burch, Scoop and others, such as Lucky’s,
J. Crew Malibu, Cos Bar, Vincie and Le Pain Quotidian.
The renewed interest in the deal is because
the city council in more colorful language is calling the
revenue stream a gold mine that is expected to be
generated by all of the Melrose and TriBeCa retailers.
“They can sell a lot of $700 jeans,” quipped
Mayor Jeff Jennings, when the council was talking about
how much more money was expected
Council members were told recently that the
profit participation aspect of the leasing agreement might mean
hundreds of thousands of dollar more than the original
estimates.
While the staff and its consultants
originally estimated that the city might get about $400,000 per
year in the next 10 years, the amount could skyrocket to more
than $800,000 or more annually, in addition to the base rent.
The staff is currently projecting firm numbers at the
council’s behest.
The agreement calls for the base rent to
start at around $1.3 million and to increase up to $1.8 at the
end of 10 years based on the Consumer Price Index. The lease is
for 39 years with an option that would lengthen the agreement
to 54 years. The projected sales taxes start at around $150,000
to almost $200,000 within 10 years. The figures are based on a
10-year financial analysis recently prepared by the staff.
Critics contend while the numbers pan out
for the city—paying back its debt obligations—the
deal allows the developer to pocket much more.
As originally structured, Weintraub
and Sperber are paying about $3 dollar per square foot,
investing about $8 million in rebuilding and maintenance and
taking home anywhere from $20 to possibly $25 per square foot
in the first year of operations, while offering a subsidy for
10 to 20 percent of the floor space for local retailers.
No one knows, of course, how much rent can
be charged in the next 25 years or even 50 years, but trends
suggest it will be more, especially if Malibu is any example.
Some of the city’s critics are also
wondering how city council members can lament along with
members of the community about the loss of locally owned
businesses, if municipal government is going to set the
bar for how much commercial rent to charge in Malibu.
