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20130515f&bitem53

20130515f&bitem53

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Published by sourcemetro
Staff report on leasing space in LAUS.
Staff report on leasing space in LAUS.

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Published by: sourcemetro on May 13, 2013
Copyright:Attribution Non-commercial

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11/03/2013

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Lns
Angeles
County
One
Gateway
P)aza
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Tel
Metrapotttan
Transpartafion
AutErar3tyl.os
Angelzs,
CA
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metro.net
Me~r~
FINANCE,
BUDGET
AND
UDIT
COMMITTEE
MAY
5,
2013
SUBJECT:
LOS ANGELES
UNION STATION
ACTION:
AUTHORIZE
THE
HIEF
EXECUTIVE OFFICER
TO
EXECUTE
A
REALESTATE LEASETRANSACTION
RECOMMENDATION
Delegate
authority
to
theChief
xecutive
Officer
(CEO)
o
conclude
negotiation,
approve
and
execute
a
revenue
producing
lease
for
the
former "Union
Bagel"
ocation
in
Union
Station.
ISSUE
We
re
currently
negotiating
with
a
local
chef
o
open
a
new
restaurant
in
the
space
formerly
occupied
by
Union
Bagel.
Over
the
proposed
15
-year
term
(10
ears,
plus
one
5
-year
option),
this
lease
s
anticipatedto
generate
$1.2
million
in
rent
based
on
the
current
market
rate
per
square
oot,
andup
to
an
additional
$1.0
million
based
on
potential
sales
volume,
which
exceeds
the
CEO's
urrent
authority
of
$500,000.
The
potential
tenant
s
expected
to
invest
befinreen
$300,000 and $400,000
n
tenant
improvements.
Negotiations
are
expected
to
be
concluded
within
the
next
3
-4
weeks
with
occupancy
anticipated
within
nine
months.
DISCUSSION
LACMTA
as
engaged
a
commercial
real
estate
broker
specializing
in
downtown
Los
Angeles
etail
and
restaurantleases.
Along
with
LACMTA
xecutives
and
Morlin
Asset
Management,
Union
Station
property
manager),
he
broker
has
completed
a
market
analysis
of the
current
proposal
under
negotiation
by
the aforementioned
local
chef.
The
lease
not only
meets
appropriate
market
conditions
but
promises
to
exceed
other
current
Union
Station
lease
arrangements.
The
inancial
analysis included
a
comparison
of the
proposed
lease
to
otherrecent
downtown
restaurant
leases
as
well
as
o other
proposals
received
for
Union
Station.
 
The
ositive
factors
for
accepting
this
proposal
are
he
following:
Reflects
current
market
alue
for
space
lease
Requires
minimal
improvements
o
the
leased
premises
o
be
funded by
LACMTA
Proposer
provided impressive
financial
investors
Provides
or future
revenue
growth
n
base
rent
escalations
and
percentage
rents
as
estaurant
business
ncreases
Tenant has
agreed
to
make
a
ubstantial
investment
n
tenant
improvements
that
will
maintain
historic
Union
Station
while
improving
existing location
Proposal
s
afull-
servicerestaurant
that
will
appeal
o
both
passengers
and
ill
attract
people
o
visit
Union
Station
Proposed
restaurant
menu
has
a
broad
appeal
f
quality
offerings for
breakfast,
lunch
and
early
evening.This
restaurant
concept
s
consistent
with
the
Board's
ision
that
Union
Station
reflects
the
bestof
Los
Angeles by
using
locally
-based
businesses. This
approach
has
been
successful
in
recently
re-
developed
airport
terminal
retail
spaces
moving
away
rom
national
chain restaurants
and
toward
greater
local
flavor.
With the
acquisition
of
Union
Station
in
2011,
MTA
has
new
pportunities to
enter
into
longer
-term,
commercial
/retail
leases
n
the
East
ortal,
Passenger
Concourse,
Passenger
aiting
Area,
heFred
Harvey
Restaurant
spaceand
the
Ticket
Concourse
areas
f the
Station.Additional opportunities
will
emerge
as
the
Union
Station
Master
Plan
moves
nto
the
development
tage.
DETERMINATION
OF
SAFETY
Increasing
occupancy
n
Union
Station
will
have
a
positive
impact
or
safety
and
security
ofthe
station
and
our
atrons.
FINANCIAL
IMPACT
The
proposed
action
is
expected
to
generate
between $1.2
million
and
$2.2
million
in
new
revenue
over
the
15
-year
term
of
the
lease.
ALTERNATIVES
CONSIDERED
Other
proposals
for
the
formerUnionBagel
space
have been
reviewed
by
the
broker
and
LACMTA
easing
team
but
were
rejected
because
they
were
not
as
inancially
attractive
or
did
not provide
the
ambiance
desired
for
Union
Station.
Real
Estate
Leasing Transactions
Page
2
 
NEXT
STEPS
Upon
approval,
taff
ill
continue
work
o
conclude
negotiations
and
execute
a
lease
for
the
former "UnionBagel"
ocation
at
Union
Station.
Prepared
by:
Steve
Jaffe,
Executive
Officer,
Human
ervices
(213)922-6284
Velma
Marshall,
Deputy
Executive
Officer,
Real
Estate
(213)922-2415Kenneth E.
ratt,
Director,
Union
Station
Property
Management
(213)922-6288
Real
Estate
Leasing Transactions
Page
3

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