Administrative
Report
H.7., File # 23-6093 Meeting Date: 8/1/2023
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATEFRONT & ECONOMIC DEVELOPMENT DIRECTOR TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2308-069, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY TO HOLIDAY CARPET & FLOOR COVERING, INC.
APPROVE THE LEASE WITH HOLIDAY CARPET & FLOOR COVERING, INC. FOR A MONTHLY MINIMUM RENT OF $1,972.50 AND THE TERM AUGUST 1, 2023 THROUGH JULY 31, 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 Holiday Carpet & Floor Covering, Inc. (Tenant) is for the space at 115 W. Torrance Boulevard, Suite 200 (Premises). The lease area totals approximately 789 square feet.
The proposed lease is for 24 months with the City retaining the option to terminate the lease with a twelve-month written notice. Monthly rental revenue to the City’s Harbor Uplands Fund will be $1,972.50, or approximately $2.50 per square foot, with a 3% increase on the anniversary date.
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 Holiday Carpet & Floor Covering, Inc. is for the office space at 115 W. Torrance Boulevard, Suite 200. The lease area totals approximately 789 square feet. Holiday Carpet & Floor Covering, Inc. has been a regional design center and flooring installation contractor for homebuilders for over fifty years. Dan Aitken, one of the company’s employees, has been a tenant at Pier Plaza since 2021 and will continue to serve as the personal guarantor of the lease. The 2021 lease expired on March 8, 2023.
The proposed lease carries a 24-month term and $1,972.50 monthly rent, or approximately $2.50 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 $1,972.50 will be kept on file for the lease. The Tenant has occupied the premises since 2021, accepts the location in an as-is condition, and will continue to utilize the space as an
H.7., File # 23-6093 Meeting Date: 8/1/2023
office for the flooring design center.
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 Resolution and lease 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 $1,972.50 with an annual total of $23,670. After including the 3% increase to the rent on the anniversary date of the lease, the total revenue to the Uplands Fund over the two-year term of the agreement is approximately $48,000.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Resolution No. CC-2308-069 Leasing Certain Property to Holiday Carpet & Floor Covering, Inc.
· Agmt - Proposed Lease between the City of Redondo Beach and Holiday Carpet & Floor Covering, Inc.
· Agmt - Previous Lease between the City of Redondo Beach and Holiday Carpet & Floor Covering, Inc., March 9, 2021