Administrative
Report
H.11., File # 22-5081 Meeting Date: 11/15/2022
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATEFRONT & ECONOMIC DEVELOPMENT DIRECTOR TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2211-097, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY TO UNAGI, INC.
APPROVE THE LEASE WITH UNAGI, INC. FOR A MONTHLY MINIMUM RENT OF $4,950 AND A TERM OF NOVEMBER 15, 2022 THROUGH NOVEMBER 14, 2025
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 Unagi, Inc. (“Tenant”) is for the space at 123 W. Torrance Boulevard, Suite 201. The lease area totals approximately 2,062 square feet.
The proposed lease is for 36 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 $4,950, or approximately $2.40 per square foot, with a 3% increase on the anniversary date each year thereafter. The proposed lease also includes four months of rent abatement to assist the Tenant with extensive interior office improvements.
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 exceptions being a restaurant and child care center. The proposed lease with Unagi, Inc. is for the office space at 123 W. Torrance Boulevard, Suite 201 (Premises). The lease area totals approximately 2,062 square feet. Unagi, Inc. is a Bay Area electric scooter company that is rapidly growing and expanding their markets. The Pier Plaza office will house their in-house advertising agency.
The proposed lease carries a 36-month term and $4,950 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. A security deposit of $4,950 will be kept on file for the lease, which has a corporate guarantor. The Tenant will take the space as-is, however, given the condition of the property, the proposed lease terms include four months of rent abatement, totaling $20,000, which will be taken in months three,
H.11., File # 22-5081 Meeting Date: 11/15/2022
terms include four months of rent abatement, totaling $20,000, which will be taken in months three, four, thirteen, and fourteen, to offset planned improvements. Since the former long-term tenant, Architectural Mailboxes, utilized a non-typical floor plan, the Tenant plans to make significant repairs and improvements to the walls, wiring and interior wall construction to create a space conducive to their business operations.
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 $4,950 with an annual total of $59,400. A 3% increase in the second and third years of the lease will result in total revenue to the Uplands Fund of approximately $184,000.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Resolution No. CC-2211-097
· Lease between the City of Redondo Beach and Unagi, Inc.