AGENDA REPORT
Meeting Date: August 23, 2022
Item Number:
To: Board of Directors, Parking Authority of the City of Beverly Hills From: Logan Phillippo, Policy & Management Analyst
Subject: FIRST AMENDMENT TO BROKER LEASING & COMMISSION
AGREEMENT BY AND BETWEEN THE PARKING AUTHORITY OF
THE CITY OF BEVERLY HILLS AND CUSHMAN & WAKEFIELD OF
CALIFORNIA, INC. FOR THE LEASE OF SECOND-FLOOR OFFICE
TENANT SPACES AT 439 NORTH CAÑON DRIVE
Attachment: 1. First Amendment to Broker Leasing & Commission Agreement
RECOMMENDATION
Staff recommends City Council approve the First Amendment to Broker Leasing & Commission Agreement by and between the Parking Authority of the City of Beverly Hills and Cushman & Wakefield of California, Inc. for the lease of second-floor office tenant spaces at 439 North Cañon Drive.
INTRODUCTION
The proposed amendment extends the term of an existing agreement with Cushman & Wakefield of California, Inc. (the “Broker” or “Cushman”) through December 31, 2023 and allows additional office suites to be included in the agreement.
DISCUSSION
The Parking Authority and Cushman entered into into a Broker Leasing & Commission Agreement in May of 2021, which allows the Broker to assist the City with marketing and leasing the vacant office Suite 220, located at the Parking Authority building at 439 North Cañon Drive. Due to a volatile office market, the space remains vacant and other suites on the second floor of the building are anticipated to become vacant in the coming months.
As such, the amendment expands the premises covered under the agreement and applies to all unleased office spaces, provided the City Manager first authorizes the Broker in writing to assist with obtaining tenants for a particular suite.
D-1
Meeting Date: August 23, 2022
The proposed amendment includes the following key terms: Expands the premises covered under agreement to apply to all unleased office spaces at the building, provided the City Manager first authorizes the Broker in writing to lease a particular office suite; Extends the term of the agreement December 31, 2023, subject to extension by the City Manager for one additional year; and
Adds to the list of excluded tenants under the agreement so that the Parking Authority is not responsible for paying a commission to the Broker if it leases a space covered under this agreement to an existing tenant of the building.
Cushman is currently the landlord broker for Suite 220 at the building and was the landlord broker for Suite 207 in 2019. Additionally, the Broker was selected through a Request for Proposals (RFP) process in May of 2019 to lease vacant office spaces at the City-owned building at 331 Foothill Road, leasing more than 40,000 square feet in the building.
FISCAL IMPACT
There is no fiscal impact or request for funding at this time.
Per the terms of the existing agreement, the broker has agreed to a commission consisting of 4% of the base/fixed rent for the first five years of the term and 2% of the base/fixed rent for the second five years of the term, if any. If there is a tenant broker, these fees would increase to 6% and 3% respectively. The commission would be paid in five equal installments, with the first installment due upon the mutual execution of a lease agreement, the tenant’s prepayment of the first month of rent, and delivery of the security deposit to the City. The remaining four installments would be paid on each anniversary of the lease term commencement date. The broker will be required to share the commission payment with the tenant’s broker, if the tenant has a broker.
Staff estimates the total commission (including the existing Suite 220 and anticipated additional office suites) to be between $131,515.15 and $197,272.73 for a five-year lease.
However, the commission will ultimately will be subject to the base rent negotiated in each lease. Staff anticipates there is sufficient funding within the existing Real Estate Management program budget to cover anticipated commissions. Staff will present necessary budget actions, if any, to City Council concurrently with approval of future leases.
Gabriella Yap, Deputy City Manager
Approved By
Attachment 1
B0785-0001\2700408v1.doc
FIRST AMENDMENT TO BROKER LEASING & COMMISSION AGREEMENT This FIRST AMENDMENT TO BROKER LEASING & COMMISSION
AGREEMENT (“Amendment”) is dated as of August 23, 2022 and is entered into by and between THE PARKING AUTHORITY OF THE CITY OF BEVERLY HILLS (“Landlord”) and CUSHMAN & WAKEFIELD OF CALIFORNIA, INC., a California corporation (“Broker”).
RECITALS
A. Landlord and Broker entered into a Broker Leasing & Commission Agreement dated May 4, 2021 (the “Agreement”).
B. Landlord and Broker now desire to amend the Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and other consideration, the sufficiency of which is hereby acknowledged, Landlord and Broker hereby agree as follows:
1. Expansion of Premises Covered by Agreement. The Agreement shall apply to all unleased office space in the building at 439 North Canon Drive, Beverly Hills, CA 90210 (not only to Suite 220), provided, however, that the City Manager must first authorize Broker in writing to assist with obtaining tenants for any office space other than Suite 220.
2. Extension of Term. The term of the Agreement is hereby extended to December 31, 2023. The City Manager shall have the right to further extend the term for up to one (1) additional calendar year provided the extension is in writing.
3. Addition of Excluded Tenant. Negroni Beverly Hills, LLC is hereby added to Exhibit “A” to the Agreement.
4. Counterparts. This Amendment may be executed in counterparts, all of which shall be considered one and the same agreement.
5. Effect of Amendment. Except as specifically amended by this Amendment, the remaining provisions of the Agreement shall remain in full force and effect.
BROKER:
CUSHMAN & WAKEFIELD OF
CALIFORNIA, INC.
Phil Brodkin, Managing Principal
LANDLORD:
THE PARKING AUTHORITY OF THE
CITY OF BEVERLY HILLS
Lili Bosse, Chairperson
DocuSign Envelope ID: B98FB881-0506-4614-B937-B41C573C2188 B0785-0001\2700408v1.doc
ATTEST:
___________________________________
Huma Ahmed, Secretary
APPROVED AS TO CONTENT:
___________________________________
George Chavez, Executive Director
Sharon L’Heureux Dressel, Risk Manager
APPROVED AS TO FORM:
Laurence S. Wiener, General Counsel
DocuSign Envelope ID: B98FB881-0506-4614-B937-B41C573C2188 Certificate Of Completion
Envelope Id: B98FB88105064614B937B41C573C2188 Status: Sent Subject: Please DocuSign: 2022.08.08 CW Amend._439 N. Canon.docx Source Envelope:
Document Pages: 2 Signatures: 3 Envelope Originator:
Certificate Pages: 3 Initials: 0 Logan Phillippo
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Time Zone: (UTC-08:00) Pacific Time (US & Canada)
455 N. Rexford Drive
Beverly Hills, CA 90210
[email protected]
IP Address: 76.168.110.145
Record Tracking
Status: Original
8/8/2022 12:52:43 PM
Holder: Logan Phillippo
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Phil Brodkin
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Managing Principal
CUshman & Wakefield
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Sharon L'Heureux Dressel
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Risk Manager
Sharon Dressel
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Logan Phillippo
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Senior Management Analyst
City of Beverly Hills
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George Chavez
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Lili Bosse
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Huma Ahmed
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Jonathan Gernes
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Management Analyst
City of Beverly Hills
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Pete Collins
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