I was reminded the other day about a very successful strategy we’ve used to upgrade and revitalize an existing retail center in order to maximize our client’s investment.
This particular shopping center, totaling 155,000 sq. feet, was located in the west San Fernando Valley of Los Angeles, California. It was originally built in the 1960’s and had been somewhat upgraded in the 1980’s but was never maximized to its real potential. Lucky Food Store, HomeLife Furniture, JoAnne Fabrics, Pep Boys and numerous smaller local tenants occupied the center.
The owners were very positive about this center due to its location and demographics, so they decided to have us do what we could to maximize its potential.
Often that means negotiating with the largest anchor (in this case, Lucky–which was later merged with Albertson’s Food Chain), to build a new 52,000 sq. feet store under a new 35-year lease at more favorable terms and rents for the landlord.
We also negotiated with all the smaller local tenants to buy them out of their leases to make way for three new national tenants: Pet Smart, Harbor Freight Tools and Sav-On Drugs (now a CVS Store). HomeLife Furniture was not doing well financially at the time so we suggested replacing them with HomeGoods, a chain under the TJ Maxx corporate umbrella.
In the end, we were able to almost double the annual rents and to increase the value of the center by over 50%.
Today the center is fully leased to all national retail tenants and looks like a newly constructed shopping center. It remains a tremendously valuable asset for the owners and a real benefit to the tenants and community.
Moral of this story: sometimes it’s helpful to step back and re-assess your facility, your tenants and your opportunities–even when all the economic signs are less than optimal. Find yourself an experienced negotiator…and turn them loose…
