City Council
Report
City Council Meeting: June 27, 2023
Agenda Item: 5.A
1 of 5
To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Airport Subject: Award RFP #349 to Corporate Realty Group for Airport Commercial Real Estate Brokerage and Consulting Services
Recommended Action
Staff recommends that the City Council:
1. Award RFP #349 to Corporate Realty Group (CRG), a California-based corporation, to provide commercial real estate brokerage services and related consulting services for non-aviation properties at the Santa Monica Airport.
2. Authorize the City Manager to negotiate and execute an agreement with CRG in an amount not to exceed $298,608 for three years, with two additional oneyear renewal options of $134,877 for renewal option one and $333,962 for renewal option two, for a total amount not to exceed $767,447 (including a 10% contingency) over a five-year period, with future year funding contingent on Council budget approval.
3. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
Summary
The City of Santa Monica currently contracts with a professional commercial real estate brokerage firm to assist staff with commercial real estate broker and consulting services for City-owned properties at the Santa Monica Airport. Professional commercial real estate brokerage services ensure that the Airport secures fair market leasing rates as required by the Santa Monica Leasing Policy and Guidelines adopted in 2018 (Attachment A). Based on the results of a competitive Request for Proposal (RFP) process, staff recommends that a new professional services agreement be awarded to Corporate Realty Group (CRG) to continue providing these services to the City for an 2 of 5
amount not to exceed $767,447 (including a 10% contingency) for a term of up to five years.
Discussion
The City is the owner and operator of the Santa Monica Airport. The Airport includes aviation and non-aviation facilities with various uses that include aeronautical services, commercial office space, creative space, educational classrooms, artist studios, aviation hangars, tie-downs, and a museum. Approximately 92% of Airport revenues are derived from leasing these properties. The City’s ability to optimize revenues from the Airport’s leasable space helps ensure the Airport Fund’s financial self-sufficiency and aligns with the City’s priority of Economic Recovery.
There are certain facilities at the Airport that due to their size or complexity within the rental market require the expertise of a commercial real estate broker that can optimize marketing and negotiations to yield maximum revenues for the City. The Airport currently contracts with Corporate Realty Group (CRG) for professional commercial real estate brokerage and consulting for five of the Airport’s non-aviationrelated properties, representing approximately 215,000 square feet of non-aviation uses and commercial office space.
The City’s contract with CRG will expire on August 31, 2023. To ensure the continuity of such services, the City issued an RFP for the selection of a vendor to provide nonaviation commercial real estate brokerage, and consulting services at the Airport.
Staff recommends CRG as the best and most qualified firm to provide these services.
If approved by Council, staff will proceed to negotiate a new professional services agreement with CRG and have it become effective on September 1, 2023.
Scope of Services
Brokerage services include facilitating, negotiating, and completing new and renewal lease agreements with the City of Santa Monica for non-aviation properties assigned including artist studios, commercial offices, event venues, shops, and restaurants. 3 of 5
CRG will provide consulting services in matters relating to non-aviation real estate brokerage and lease negotiations.
Pricing
Commissions
CRG ’s brokerage fees will be commission based. CRG would be eligible to earn commissions for completing any new or renewal lease agreements at the Airport during the contract period. The new lease commission percentages as well as the renewal rate are favorable to the City as they are less than other brokers’ comparable rates and are consistent with CRG's current rates. The yearly budget amount varies based on the commissions for anticipated new leases and the renewal of expiring leases in each year of the contract, with the City’s largest tenant renewal scheduled for renewal option year two. Commissions would be based on the following terms and conditions:
Table 1. CRG Brokerage Commission Fee Schedule
Reimbursements Years Percentage or Flat Fee With Tenant’s Representative/ Outside Broker
New Term
Leases
1-5 3% of aggregate lease
value
An additional 3% of aggregate
lease value
6-10 1.5% of aggregate
lease value
An additional 2% of aggregate
lease value
New Month-toMonth LeasesEqual to one month’s
rent
An additional 6% or the value of 1
month’s rent, whichever is greater.
Term Lease
Renewals
1-5 2% of aggregate lease
value
Additional 2%-4%
6-10 1% of aggregate lease
value
Additional 1%-2%
Term Lease
Expansions
1-5 2% of aggregate lease
value
An additional 2%-4% of aggregate
lease value.
6-10 1% of aggregate lease
value
An additional 1%-2% of aggregate
lease value.
Consulting Service Fees
CRG will provide five hours of consulting services at no cost for each project (eg. research reports on competitive market rates and financial analyses). CRG will provide 4 of 5
the City with a proposal and scope of services for consulting projects which exceed five hours. CRG consulting fees are based on the following terms:
Table 2. CRG Consulting Fee Schedule
Personnel Hourly Rates Percentage of Scope of Work
Craig Zund/Principal $225.00 Per Hour 90%
Associates $150.00 Per Hour 10%
Project Manager $125.00 Per Hour On Demand
Consultant Selection
Bidder Recommendation
Best Qualified Firm Corporate Realty Group
Evaluation Criteria Experience and technical competence; quality control; conceptual plan and approach; stability and references, and cost of services based on fair and cost-effective work pricing.
Municipal Code SMMC 2.24.190
Proposals Received
Clear Blue Commercial Muselli Commercial Realtors
Corporate Realty Group Transwestern Real Estate
RFP Data
Posted On Posted On
Advertised In
(City Charter & SMMC)
Vendors
Downloaded
Date Publicly
Opened
March 10, 2023 City’s Online
Bidding Site
Santa Monica Daily
Press 13 April 14, 2023
Justification to Award
Responses to the RFP were reviewed by a selection panel from the Public Works Department (Airport Division), Economic Development Division, and Architectural Services Division. Proposals were evaluated based on the criteria in SMMC 2.24.190, staff recommends Corporate Realty Group, as the best-qualified firm to provide commercial real estate brokerage, and related consulting services to the Santa Monica Airport based on the firm’s documented expertise in commercial real estate and consulting services, experience with similar projects at the City; conceptual plan and approach, quality control; positive reports from reference checks, and fair and costeffective pricing of services. 5 of 5
Environmental Review
The award of an agreement for commercial real estate services would have no possibility of significant effect on the environment, and therefore, is exempt pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
Past Council Actions
Meeting Date Description
8/14/2018 (Attachment A) Santa Monica Airport Leasing and Licensing Policy Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from the Airport Fund to award an agreement with Corporate Realty Group to provide commercial real estate brokerage and related consulting services for the Santa Monica Airport. Funds are included in the FY 2023-25 Proposed Biennial Budget. Future year funding is contingent on Council budget approval.
Agreement Request
FY 2023-24
Request Amount Future Years Department # Total Contract Amount $121,599 $645,847 57500001.552010 $767,447
Prepared By: Ria Valas, Real Estate Project Manager
Approved Forwarded to Council
Attachments:
A. Airport Leasing and Licensing Policy 2018-08
B. Oaks Initiative Form - Corporate Realty Group (CRG)