City Council
Report
City Council Meeting: July 24, 2018
Agenda Item: 3.B
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To: Mayor and City Council
From: Susan Cline, Director, Public Works, Airport
Subject: Award Agreement to Corporate Realty Group, Inc. for Commercial Real Estate Broker Services at the Santa Monica Airport
Recommended Action
Staff recommends that the City Council:
1. Award RFP# 167 to Corporate Realty Group Inc., a California-based company, to provide commercial real estate broker and related consultant services for Santa Monica Airport; and
2. Authorize the City Manager to negotiate and execute an agreement with Corporate Realty Group Inc. in an amount not to exceed $430,611 (including a 10% contingency) for three years, with two one-year renewal options in the amounts of $639,634 in year one and $74,794 in year two, for a total amount not to exceed $1,145,039 over a five-year period, with future year funding contingent on Council approval.
Summary
The City currently contracts with commercial real estate firm Corporate Realty Group (CRG) to assist staff with commercial real estate broker and consulting services for City-owned facilities at the Santa Monica Airport. Staff anticipates the continued need for commercial real estate broker and consulting services in future fiscal years. Staff recommends CRG to provide these services at the Santa Monica Airport for an amount not to exceed $1,145,039 over a five-year period.
Discussion
The revenue derived from Airport leasing supports the City’s goals of achieving a financially self-sufficient Airport, eliminating subsidies from the General Fund, and repaying the principal and interest of past General Fund loans.
Staff anticipates the continued need for commercial real estate brokerage services.
There are certain facilities at the Airport that due to their size and/or complexity require 2 of 4
the expertise of a commercial real estate broker to optimize marketing and negotiations to yield maximum revenues for the City. Additionally, the commercial real estate broker would provide consulting services to staff during other lease negotiations that might arise during the term of the contract.
The commercial real estate broker services that would be provided by CRG for certain facilities at the Airport would include but would not be limited to:
• marketing the properties,
• negotiating the terms of new and renewal leases,
• coordinating the execution of all attendant documents, and • facilitating the completion of the leasing transactions.
Under the proposed agreement, CRG would receive the following commissions:
• For new long-term leases: 3% of the aggregate lease value (1-5 years), and
1.5% for the remaining lease term (6-10 years) for leases in which CRG is the sole broker. In the event of a lease with two brokers (i.e. CRG and the tenant’s broker), there would be an additional 3% of the aggregate lease value for years 1-5 for a total commission of 6% and an additional 2% of the aggregate lease value for years 6-10 for a total commission of 4%.
• For lease renewals and expansions: 2% of the aggregate lease value (1-5 years), and 1% for the remaining lease term (6-10 years) for leases in which CRG is the sole broker. In the event of a lease renewal or expansions with two brokers (i.e. CRG and the tenant’s broker), there would be an additional 2-4% of the aggregate lease value for years 1-5 and an additional 1%-2% of aggregate lease value for years 6-10.
• Month-to-month agreements: CRG would receive a commission equal to one month’s rent for administrating new month-to-month leases. • Consulting service fees would be based on an hourly rate schedule.
Anticipated costs for CRG’s services during the term of this agreement would be more than offset by the lease revenues associated with the commission and consulting fees. 3 of 4
It should be noted that anticipated costs for year four of this agreement include an estimated commission of $571,486 for the renewal of the City’s current lease with Snap, Inc. at 2800 Donald Douglas Loop North.
Consultant Selection
RFP Data
RFP Posting Date RFP Posted
On
RFP Advertised In
(City Charter & Municipal
Code)
# of Vendors
Downloaded
# of
Submittals
Received
Date Publicly
Opened
04/02/2018
City's
Online
Bidding
Site
Santa Monica Daily
Press 20 3 05/02/2018
RFPs Received
Corporate Realty Group
PAR Commercial Brokerage
Secured Properties, Inc.
Justification to Award
Responses to the RFP were reviewed by a selection panel from the Public Works Department (Airport Division), Economic Development Division, and the Office of the City Manager.
Proposals were evaluated based on the criteria in SMMC 2.24.073 and criteria listed in the RFP, including experience and technical competence, conceptual plan and approach, quality control, cost of service/cost control, and references. Corporate Realty Group offered the most comprehensive and relevant experience and expertise needed by the City. Based on the criteria, staff recommends CRG as the best qualified firm.
Financial Impacts and Budget Actions
Staff seeks authority to award a contract with Corporate Realty Group for commercial real estate broker and consulting services for City-owned facilities at the Santa Monica Airport.
Contract
Request Amount FY 2018-19 Budget
Public Works Department Account #
Total Contractual
Amount Not to Exceed
$155,171 57500001-552010 $1,145,039
Future year funding is contingent on Council budget approval. 4 of 4
Prepared By: Kate Schlesinger, Senior Administrative Analyst Approved Forwarded to Council
Attachments:
A. Corporate Realty Group 2018 Oaks Initiative Form