San Fernando Valley & Conejo Valley Landlords vs Tenants

 

2011 still has its challenges ahead for our economy.  I don't expect things to ease up a bit, but I do think our economy is slowly getting better. Still there is a lot of uncertainty with new and exisiting businesses. This uncertainty with businesses are very appearent in the San Fernando Valley and Conejo Valley and the leasing market reveals this truth.  Long term leases are challenging for majority of new and growing businesses and negotiating lease terms has been no easy ride.

Landlords need some incentives in this market to get their vacancies leased up.  1 month rent abatement per year, 6 month teaser rates, free parking, tenant improvement allowance and an active broker willing to work are some successful elements in this market. In the San Fernando Valley and Conjeo Valley market, there are still too many vacancies to raise rents much further. Creative rent structures is another creative element is consummating a new lease. Its not unusual to see a flat lease for the next few years either. 

Tenants getting closer to lease end have been beginning to tour the market place about a year to six month in advance to see where they can strike a deal. I convey to each tenant that every landlord has a different business model. Whether their model is occupancy percentage, credit tenancy, price per square foot for rent, etc. makes its difficult for some tenants to understand that even though there is vacancy in their local market place, landlords may not necessarily budge where tenants would like. I let each tenant I represent know that the only way to find out where the landlord is will to make a deal is by requesting a lease proposal and negotiating.

Majority of the time, unless specific reasons other than rental price, most tenants will continue to renew their lease. $.10 per square foot isn't really going to make much of a justification to move unless they are a small tenant.  It's typical for tenants to tour the marketplace and to have found themselves back at thier exisiting space renewing their lease for another few more years with some incentives like free rent, new carpet and paint.

For Landlords, it can be very advantagous to consider early lease renewals for tenants. Why? The known is better than the unknown and diminishes the risk of losing a credit worthy tenant. It's easier to control costs like improvements to space, commissions, loss of income for vacancy, and overall real estate costs associated with time. 

But the only really way to know if you had a good lease is only after the lease is over.   

San Fernando Valley Buildings Getting New Firerry Look

I recently got a call from a client of mine who reported that there was a fire in his shopping center in North Hills.  Aside from the bizarre entrance into the burnt space through a hole in the wall from the tenant next door (that's how they got in) we also noticed the new skylight remodeling where the fire department battled the blaze and salvaged the rest of the building.

Driving on Corbin in Northridge, I noticed a shopping center with distinct firerry charcoal look on the second floor. 

Over the past weekend, yet another fire in Van Nuys almost decided to take out another building a client of mine had interest in. 

Are the  summer days already here? Did we forget that all this rain gave way to new growth in the mountains and valleys. They will dry up you know.

I think something smells burnt! Is my firerry theory up in smoke or really a scheme businesses underwater can make out good from a bad situation. 

 A close friend of mine in the insurance biz had mentioned to me that there has recently been a string of  large insurance payouts for business owners in similar businesses that went up in smoke. It just so happens they lost all their non-selling inventory and business to a fire.

Vacancy has been on the rise. Recent insurance $/SF has jumped 10 fold due to vacancy. Why, the probability of vandalism is always greater in shopping centers with vacancy. Not to mention all the properties with debt service too great to carry for owners. O ya, I forgot that there are taxes and insurance to pay as well.  Can a landlord afford this kind of price hike on insurance. I suppose on the other hand, if you were a landlord also underwater with a vacant building, a firerry makeover might have crossed your mind at one point. But we all know that's against the law.