By Kelsi Maree Borland | GlobeSt.com
Property management firms are proving to have an important impact on driving value and the success of an asset. One example of the growing importance of property managers is Catalina Landing. Colony Northstar purchased the struggling 280,00-square-foot office property in August 2015, and hired Rising Realty Partners to develop and execute a strategy to turn the property around. Leveraging the firm’s third-party property management Asset Enhancement Program and 5×5 Telecom, Rising was able to increase rents by 20%—the highest rates in Downtown Long Beach—renewed or expanded leases with 19 tenants and signed substantial new leases with Sprint, the California State University Chancellor’s Office, and Barrett Business Systems. To find out more, we sat down with Marc Gittleman, EVP at Rising Realty Partners and chair-elect of BOMA-GLA, for an exclusive interview.
GlobeSt.com: How has Catalina Landing evolved since Rising was hired as a property manager?
Marc Gittleman: Catalina Landing is now one of the premier office destinations in Downtown Long Beach. Asking rents at the property have increased more than 20 percent since Rising’s Asset Enhancement Program™ commenced in 2015. The campus now commands the highest asking rates within the Downtown Long Beach submarket. Since Colony engaged Rising, 19 existing tenants have either renewed or expanded their leases. Additionally, three prominent new tenants have moved to the building: Sprint, the California State University Chancellor’s Office, and Barrett Business Systems. Rising also created significantly more value for Colony by activating 29,000sf of previously un-leasable space and converting it into, what is now, the most desirable office offering in the campus.
GlobeSt.com: How did you drive leasing activity and interest in the property?
Gittleman: Rising brought a thorough Asset Enhancement Program to the assignment and implemented capital projects focused on creating a lifestyle workplace with a focus on experience, community and sustainability. The unique waterfront location and need for capital investment led to a great opportunity to not only repair the neglected property but to enhance aesthetics, utility and attractiveness to new and current tenants alike. Among Rising’s changes include: The removal of two large harbor-side landscape berms, installing new glass sliding wall systems, and transforming a dungeon-like storage space, previously leased for $1PSF, into 25,000sf of lifestyle office space with two private waterfront patios. Filled with natural light from all sides, the newly activated space is the premier location at the property, with commensurate asking rates, and frankly, is the most unique office space in Long Beach. Colony engaging 5×5 Telecom to provide direct fiber Internet to One Wilshire, saving tenant customers $.05 to $.30per square foot, per month through substantial reduction in their telecom cost. Since installation, every new tenant at Catalina Landing chose to use 5×5 Telecom, and existing tenants are converting to this fast, valuable, cost-saving amenity. 5×5 Telecom also installed the fastest free Wi-Fi in the world (200mb x 200mb) and Connectible Square Footage Catalina Landing tenants can have access to their own private secure Wi-Fi throughout all the new outdoor common areas. Connectible Square Footage effectively expands tenants functional workspace by thousands of square feet.
Creating the Promenade Lounge, an outdoor ocean-view tenant patio with shaded space to work or play, the space is also available for private events creating additional revenue opportunities for Colony. Implementation of cost-saving, tenant-centered, sustainability initiatives such as the installation of EV charging stations, upgrading of landscaping to drought tolerant and native plant species, and the use of renewable hardwoods throughout the exterior common areas.
In addition to these substantial changes, Rising’s Asset Enhancement Program also includes the installation of modernized elevators, upgraded restrooms, and welcoming lobbies. Best-in-class property amenities, added by Rising designed to attract more tenants, include a fitness center, conference center, Long Beach Bike Share and daily-catered lunches by Fooda in the onsite cafe.
GlobeSt.com: What were the major challenges of this property?
Gittleman: The property faced significant challenges having fallen into a state of disrepair after years of neglect by a previous owner: The property commanded only average market rental rates despite the prime location, an occupancy rate below market standards, and was fast becoming an eyesore. The effect: Severe issues in retaining existing tenants and an even bigger challenge: attracting new tenants. Despite the issues, Catalina Landing had significant potential: Offering exquisite waterfront views, the Catalina Landing campus wraps around a uniquely dedicated and active harbor, home to the Catalina Express ferry service and the gateway to Catalina Island. The property is adjacent to Downtown Long Beach landmarks, the Pike, Aquarium of the Pacific, and Shoreline Village.
GlobeSt.com: Did you approach the lease-up differently because you don’t own the property?
Gittleman: Rising and our listing brokers worked hand-in-hand on the Asset Enhancement Program in prioritizing projects that would have the largest impact on leasing activity. Curb appeal was issue number one, so the exterior repair, appearance and amenities were tackled first. The idea of removing the berms to create the sea level space came from the brokers. Rising ran with it and engaged a structural engineer and architect to plan and price the project. At owned/managed buildings, Rising has the same relationship with the brokers, where it is truly a team effort in creating the vision and driving it to completion. We brought the same approach and energy that we bring to our owned and managed buildings to this 3rd Party Contract successfully.
GlobeSt.com: What is next for the property?
Gittleman: We are continuing to implement our Asset Enhancement Program. Our next projects include creating an additional first floor spec suite; renovating and modernizing the lobbies; and two to three more sets of restrooms will be updated in conjunction with leasing activity.