Administrative
Report
H.10., File # 22-4386 Meeting Date: 7/5/2022
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATEFRONT & ECONOMIC DEVELOPMENT DIRECTOR TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2207-046, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY
TO DEPRECIATION REALTY, LLC
APPROVE THE LEASE WITH DEPRECIATION REALTY, LLC, FOR A MONTHLY MINIMUM RENT OF $2,460 AND A TERM OF JULY 5, 2022 THROUGH JULY 4, 2024
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 Depreciation Realty, LLC, is for the space at 107 W. Torrance Boulevard, Suite 202. The lease area totals approximately 1,025 square feet.
The proposed lease between the tenant and City is for a 24-month period 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 $2,460, or approximately $2.40 per square foot, with a 3% increase on the anniversary date of the second lease year.
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 of less than 4,000 square feet. The proposed lease with Depreciation Realty, LLC (“Tenant”), is for the office space at 107. W. Torrance Boulevard, Suite 202 (“Premises”). The lease area totals approximately 1,025 square feet. Depreciation Realty, LLC is a national real estate investment company that is located in Redondo Beach and needs office space outside of its current home-based operation.
The proposed lease carries a 24-month term and $2,460 monthly rent, or approximately $2.40 per square foot, which is consistent with other similar office leases in the waterfront and the 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 Daniel Adam Scheele and requires a security deposit of $2,460 that will be kept on file. The Tenant will take the space in an as-is condition.
H.10., File # 22-4386 Meeting Date: 7/5/2022
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 lease and resolution documents 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 $2,460, with an annual total of $29,520. A 3% increase for the second lease year will result in revenue to the Uplands Fund of approximately $59,000.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Resolution No. CC-2207-046
· Lease between the City of Redondo Beach and Depreciation Realty, LLC