Ever wonder why certain pieces of retail real estate sit vacant, nearly vacant or undeveloped, even though they have prime exposure on some of the Valley’s busiest thoroughfares? Despite superstitions these properties might be “jinxed,” local brokers said the answer is simpler: Some are priced too high; others are logistically difficult to build out or re-develop; and the economic downturn has made many big box spaces hard to fill. “A space will sit vacant if asking rents are not in line with reality, and that often happens with properties built in the past five years because owners are in it for too much money,” said Ken Shishido of Lee & Associates, adding the economy has also reduced demand for larger spaces. One prominent, and seemingly vacant, piece of prime real estate is the former Wickes Furniture building on Sepulveda Blvd in Van Nuys. It includes 60,000 square feet of showroom space, 90,000 square feet of warehouse space, and sits on six acres. Dennis McCarthy, broker and consultant for the property, said when Wickes went bankrupt, the owner didn’t want the space to sit vacant. So he leased the property on discounted terms to a temporary tenant, while trying to secure a prime long-term tenant. “To avoid vandalism and boarding up the space, we brought somebody in for presence,” said McCarthy, adding some people still think it’s vacant because the current tenant, another furniture business, is constantly posting liquidation sale signs. There’s steady interest in the property, he said, and it has been under contract a few times. CarMax was the last company to plan on occupying the space, but the recession led to the deal falling through. And there are so many possibilities for redeveloping the property, said McCarthy Another important factor is that the property is owned free and clear. It’s “patient money,” said McCarthy, and the owner is willing to ride out the tough economy to fetch a better price and quality tenant. “We’re not going to rush out now to do a bad deal,” he said. “And the problem with every (prospective) tenant is 90 percent are not in the market right now and the other 10 percent are smelling blood.” Another piece of prime retail real estate is the Corbin Village shopping center located at 19836 Ventura Blvd in Woodland Hills. The western half of the mall is vacant and boarded up, with the exception of a 99 Cent Store. Barbara McAllister of CBRE, listing agent for the property, said the mall is far from jinxed. Vons/Safeway purchased the western half a few years ago and plans to build an up-scale grocery store and overhaul other spaces. For the past few years it has been going through the entitlement process and working with neighborhood groups on the plan. “It’s very much a pre-planned development, but it has taken longer than expected,” said McAllister. “It’s difficult to get anything approved through the city and difficult to go through the homeowner association process.” The reason most of the storefronts have remained vacant is Vons/Safeway did not renew leases after buying the property. This allows the company to re-develop the site more easily. And McAllister said they’re waiting for new site plans and the green light to start marketing the project. Thomasville site The Thomasville home furnishings and neighboring Aaron Brothers stores at 17130 Ventura Blvd. are located in the sparkly Encino Town Center –far from a barren wasteland. Thomasville vacated when its lease ran out, and Aaron Brothers only has a short term left on its lease. The combined retail spaces total 23,800 square feet. Despite the prime Ventura frontage and modern facility, J. Richard Leyner of NAI Capital said the Thomasville site has been on the market for six months. But there’s a lot of interest and quality retailers aren’t fighting as hard as the smaller ones. “Filling these spaces is a question of marketing and price point,” said Leyner, who has had a big hand in redeveloping parts of Ventura Boulevard in Encino. “We know who to look for, who’s moving, and who’s making noise.” Leyner said big box retail locations, which generally refers to spaces that are 30,000 square feet and larger, are the tough ones to fill these days. Many companies are changing their formats to smaller stores, and high unemployment has a direct impact on consumer spending. There’s still a lot of leasing activity in the 2,000 square foot mom and pap stores, and the 10,000 to 20,000 square foot range, he said. The latter can be occupied by a variety of retailers such as 99 Cents Stores and Fresh & Easy Neighborhood Market Shishido said the permitting process often slows down how fast a property can be occupied. After a lease deal closes, it can take up to a year for the tenant to open. Businesses such as health clubs, which typically occupy larger spaces, also have to jump through even more hoops. And Shishido said some developments (e.g. mixed use) that made sense during boom times are being re-thought these days in order to be viable in the current economy.
Big Empty Spaces: Filling a Void in Prime Locations
