Administrative
Report
H.9., File # 22-3704 Meeting Date: 2/15/2022
To: MAYOR AND CITY COUNCIL
From: LAURIE KOIKE, ACTING DIRECTOR, WATERFRONT & ECONOMIC
DEVELOPMENT DEPARTMENT
TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2202-004, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY TO CORNERSTONE CONSTRUCTION GROUP, INC. A CALIFORNIA CORPORATION APPROVE THE LEASE WITH CORNERSTONE CONSTRUCTION GROUP, INC. FOR THE PREMISES AT 105 W. TORRANCE BLVD., SUITE 202 FOR A MONTHLY AMOUNT OF $5,357.25 AND A TERM OF FEBRUARY 15, 2022 - APRIL 14, 2027
EXECUTIVE SUMMARY
In March 2012, the City purchased the Pier Plaza leasehold and began the process of direct leasing to various tenants. Pier Plaza is comprised of several buildings totaling approximately 75,000 square feet of office and retail uses. The proposed office lease with Cornerstone Construction Group, Inc. is for space at 105. W. Torrance Boulevard, Suite 202. The lease area totals approximately 2,381 square feet.
The proposed lease is for sixty-two (62) months with the City retaining the option to terminate the lease with a twelve (12) month prior written notice. Monthly rental revenue to the City’s Harbor Uplands Fund will be $5,357.25, or approximately $2.25 per square foot, with a 3% increase on the first anniversary date and each subsequent year thereafter.
BACKGROUND
The Pier Plaza leasehold is comprised of buildings 103 to 131 West Torrance Boulevard (on the top level of the Pier Parking Structure) and totals approximately 75,000 square feet of space. The property is comprised almost entirely of office uses; with the lone exception being a restaurant use of less than 4,000 square feet. The proposed lease with Cornerstone Construction Group (the “Tenant”) is for the space at 105 W. Torrance Boulevard, Suite 202 (the “Premises”). The lease area totals approximately 2,381 square feet, which is an increase of approximately 484 square feet from their original lease. Tenant has been interested in expanding the office to accommodate its steadily increasing business.
Cornerstone Construction has specialized in providing general construction and Design/Build services in all segments of the health care, commercial and industrial markets since 1985. The tenant has been in good standing at Pier Plaza since 2014 and has been operating on a month-tomonth basis since the expiration of their first lease in October, 2019. The proposed Lease carries a sixty-two (62) month term with a monthly rent of $5,357.25, or approximately $2.25 per square foot,
H.9., File # 22-3704 Meeting Date: 2/15/2022
sixty-two (62) month term with a monthly rent of $5,357.25, or approximately $2.25 per square foot, which is consistent with other similar office leases in the waterfront and broader market. The Lease contains a provision that escalates the rent at 3% per year for the remaining term of the Lease. The City retains the right to terminate the lease with a twelve-month written notice. The lease is personally guaranteed by Vic Braden.
As the Landlord, the City will make standard tenant improvements to the space comprised of painting and new carpeting for a not-to-exceed total of $7,143 or $3.00 per square foot. Tenant will be given five weeks of abated rent to make additional interior improvements.
COORDINATION
The Waterfront and Economic Development Department collaborated with the City Attorney’s Office on this report. The City Attorney’s Office has approved the document as to form.
FISCAL IMPACT
Lease revenue from the property will accrue to the City’s Harbor Uplands Fund. The proposed lease will result in a monthly rent of $5,357.25 with an annual total of $64,287. Annual increases of 3% over the five-year term will result in revenue to the Uplands Fund of $341,307.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
Resolution No. CC-2202-004
Lease Between the City of Redondo Beach and Cornerstone Construction, Inc.
Cornerstone Construction, Inc. Lease (2014 - 2019)