Community Response Overwhelmingly Positive After Looting at La Mesa Springs

LA MESA SPRINGS SHOPPING CENTER

On the afternoon of May 30, Cheri Eckis, a Senior Portfolio Manager with Meissner Jacquet Commercial Real Estate Services discovered something alarming.   She was on Mt. Helix and could see the traffic stopped on the 8 freeway because of a protest.  A friend told her there were posts on social media indicating that protestors were moving towards the La Mesa Police Department. La Mesa Springs Shopping Center, a neighborhood center that Eckis has managed for ten years, is directly across the street from the Police Department.  She immediately contacted the property’s security guard and they continued to communicate via text the entire night.  Her team reached out to the property’s insurance agent to advise that there may be damage and to determine the next steps.

At some point after dark, the peaceful protest gave way to looters and rioters, and chaos ensued. Through the course of the night, rioters set two Vons delivery trucks in the parking lot on fire, bashed in windows and doors, looted the stores, sprayed profanity-laced graffiti around the property, and set a fire inside Vons and Play it Again Sports.  Eckis’ heart broke as she watched the violence unfold via social media.  “All I could think was, it’s a 40+-year-old structure, it’s going to burn down, but fortunately, the fire sprinkler systems kicked in and put the fires out quickly.”

Fred Hochrein of San Diego Building Services Security, the security company for La Mesa Springs, started calling 911 when the violence erupted; it took him 45 minutes to get through.  He and a fellow guard began to circulate the parking lot from a safe distance in his vehicle and they watched as the crowd grew.

Hochrein described the scene: “I called the police again for the second or third time and requested assistance.  It was at that moment the large crowds began to overcome and enter the Vons storefront.  [I heard] breaking glass, people screaming and [watched] a frenzy of people running along the plaza front destroying property, entering businesses, and leaving with merchandise.  A group of people running from Play it Again Sports wielding bats, approach[ed] my car.  My guard and I exited the parking lot and stayed above the perimeter to observe. Again, I reached out to police only to be told by dispatch that they were aware of what was happening and doing the best they could.”

Meanwhile, the looting and rioting continued.  After seeing a few people with handguns, and realizing he and the merchants were seriously outnumbered, Hochrein advised Eckis that he was going to “bow out.” However, he stayed on the scene but made himself invisible to avoid being a target. “There was nothing he could do to stop it,” Eckis advised. “The police weren’t even there.”  Finally, after 11:30 p.m., she was notified that the riot police were on the scene, but the damage was done.

Eckis knew the “place was going to be a mess,” and she needed to contact vendors to help clean, board up the windows, and cover the graffiti. “We couldn’t do anything until the situation was stable and we had our services lined up and ready to go.  We turned the irrigation off due to some broken lines and brought in cleaning crews.”  She arrived on the scene early the next morning, having already called in several vendors (Lot Management, San Diego Building Services, and Faro Lafata Enterprises) for help with the cleaning up and boarding up windows and doors.

When she got there, “the center was already packed with members of the La Mesa community. They brought their own brooms, trash bags, paint, and gloves to help clean up.”  She asked someone in the parking lot of California Coast Credit Union if they were with the bank and the person replied, “No, we live up the street.”  Hundreds of volunteers worked together to clean up the broken glass and debris and to paint over the profanity from the night before. Members of the community brought bottles of water to hand out to volunteers and Round Table Pizza, a longtime tenant in the center, handed out free pizza and soda to the volunteers. Starbucks, another shopping center tenant, brought coffee to the crowd.  “To me, it was like the community was saying, ‘Last night was not La Mesa; you’re not going to do this in our community,’ and it was personal to them,” Eckis said. Most of the tenants are long term, and as this shopping center is within walking distance of many homes, it is part of the fabric of this family-oriented community.

General Contractor Faro Lafata of Faro Lafata Enterprises brought in plywood on behalf of the property owner and, working in conjunction with construction workers from the apartment construction site across the street, proceeded to board up all broken windows and doors.  Ownership paid for the plywood, but the labor was all donated by these contractors. Eckis helped sweep up glass in several suites.

Eckis met with each of the tenants, advising them to contact their insurance company immediately and to assess the damage to each of their suites.  As for the exterior of the property, she says, “The common area didn’t get hit as hard as the individual tenants.” Most of the common area damage, aside from two electric vehicle charging stations being vandalized and the landscaping being trampled, was graffiti.  “The community brought paint – all different colors – and painted over the hate. They covered everything up that day, they just brought what they had in the garage. It was awesome.  The community came together that day – churches came together in the parking lot and prayed over the community.”

By the following Monday, local artists came to paint murals at La Mesa Springs. La Mesa Glass donated all of the replacement glass for the broken windows and doors.  As of today, much of the glass has been replaced but the plywood is back over it due to two additional notifications of protests in the area.  Many of the tenants were open for business the following day. Vons was reopened within a week, despite the fire inside.  A local radio station is holding a drive for Play it Again Sports – to drop off used sporting equipment to help the business.

Eckis says La Mesa Springs is “really a special property to me. When we took over management, there was a pigeon problem, a homeless problem, and some deferred maintenance.  We have taken care of the deferred maintenance, installed new LED lighting, renovated the landscaping, added electric charging stations and increased the level of service to the property, all without increasing the CAM more than ten cents in the past ten years.”

Though most of the tenants are considered essential services and were able to stay open despite the state’s stay-at-home order, a few tenants – Sport Clips, Diamond Nails, Wang Ho Tae Kwon Do, Crazy Fred’s, and Play it Again Sports have been closed and are planning to reopen shortly. The community has started several GoFundMe accounts to help these tenants reopen and the La Mesa Chamber of Commerce has set up an account for the more than $200,000 in donations received outside of the GoFundMe accounts.  The Chamber is ready to help the tenants rebuild using funds from this account.  “Mary England, the President and CEO of the La Mesa Chamber of Commerce, has been awesome.”

San Diego Building Services Security typically has one standing guard in the morning and one in the evening for a total of 16 hours per day; however, Eckis advised that she increased their service to 24 hours per day for a couple of weeks after the incident.  They also provided additional guards the next day to maintain the peace and make sure people did not try to go inside the tenant spaces.

“Overall, there’s really nothing you can do as a manager in a situation like this where the police couldn’t go in. You certainly do not want to send your own security company in where the crowds just want to burn down buildings.  Just let police gain control, which they did.”

When asked if she had any closing thoughts, Eckis replied, “I can’t look back and say, ‘What would I do differently?’ In this situation, the only thing we could do is react. As a manager, making sure all the tenant’s certificates of insurance were up to date is key. Kudos to my Administrative Assistant Lisa Johnsen for consistently making sure they are. Also, having good service providers we can rely on to be there first thing to help us. Communication is very important – we are staying in communication with our tenants, letting them know what we are doing and that we’re here to help.”  Eckis added, “It was a really emotional time for all of us. I shed a few tears with the tenants that day.”

MJ TEAM STARTS RETURNING TO THE OFFICE

The New Normal: Opening The Office Back Up Post Covid-19

After more than ten weeks under California’s Shelter at Home order, the Meissner Jacquét team is excited to start returning to the office.  What does that look like in our new normal, you ask? Lots of new signage, additional glass dividers, temperature checks, and wearing masks when not at our desks, just to name a few of the changes. Many things have changed, and we thought we would share some of the things we are doing to keep our team and our visitors safe.  Please keep in mind that each business is unique and the requirements for your business may be different than ours, so please check and follow the County of SD’s requirements for your business. SD County’s COVID-19 Website

Meissner Jacquét has remained fully operational during this entire crisis, with the majority of our team working from home and a small group of individuals in the office.  We have implemented a staggered return to the office, and on Friday, May 15th, the first wave of MJ employees returned to the office, with new COVID-19 safety protocols in place.  Below is a downloadable copy of our Safe Reopen Plan for your review, but a summary is below:

  • Posted the County of San Diego’s required document at the entrance of our business.
  • No visitors are allowed beyond the front lobby.
  • Each employee is required to check their temperature upon arrival before reporting to work and required to sanitize their hands after entering our suite.
  • Social distancing plan for the entire office, including a one-way path of travel throughout the office and new break room protocols limiting the number of people in the area at one time.
  • Masks are required when away from the workstations.
  • Because our cubicles are only 4 ½ feet tall (to facilitate that open work plan environment that was popular pre-COVID-19), we added 16 inches of glass to the top of all workstations to facilitate social distancing.
  • Increased sanitation in common areas, including sanitizing conference rooms after every meeting, and sanitizing frequent touch points and the break room three times per day, in addition to the nightly cleaning by the janitorial company.

Please Click Here To Download Our Complete Safe Return Plan

Please Click Here To Download Our Complete Safe Return Plan Signage

It is our hope that as California opens back up for business, these protocols being adopted by all businesses will keep the virus at bay and all of us safe.  We wish you, your team, and your family good health.

If you would like more information about what we’ve done, the plan created, or suggested resources for any of the work, please contact us at: info@mjcres.com

For more information about Meissner Jacquét and our services, please go to Meissner Jacquet’s Website.

Business Development Department Welcomes Kristin Howell and Dustin Sutton

Longtime Meissner Jacquet employee Kristin Howell has joined the Business Development department with the title Vice President and Head of Business Development.  Mrs. Howell has been with Meissner Jacquet for 20 years in the Property Management department overseeing all asset types including retail, office, industrial, and commercial associations.  She served two years as the President of BOMA San Diego and several years on the Board of Directors, earning numerous awards including “Principal Member of the Year” twice.  In 2014, she was named nominated for San Diego Magazine’s “Woman of the Year” and in 2016, was named as one of the “100 Influential Leaders in San Diego” by the San Diego Daily Transcript.  Mrs. Howell graduated cum laude from California State University Bakersfield with a Bachelor’s degree in Political Science and has earned the designations of Real Property Adminstator (RPA) and Facilities Management Administrator (FMA) from BOMI.

Dustin Sutton has over eleven years of real estate experience and another five years in sales, marketing, and business development. He has worked at some of the top real estate firms in San Diego and has collectively managed over 20 Million SF of real estate across 19 states including residential, mixed-use, office, retail, and industrial portfolios. Mr. Sutton’s duties include the development of effective relationships with owners and tenants, supervision of vendors, general property maintenance, problem solving, strategic planning, construction and project management, budgeting, leasing and financial reporting. Mr. Sutton is a licensed CA Real Estate Broker and has his Bachelor’s degree in Political Science and Communication from the University of Delaware.

Both Mrs. Howell and Mr. Sutton are excited to bring their extensive experience to Meissner Jacquet’s Business Development Department.  Mrs. Howell added “I look forward to finding ways that Meissner Jacquet can help existing and future clients achieve their business goals.”

Tim Meissner Named as One of the Most Influential People by San Diego Business Journal

Tim Meissner, founder and Principal of Meissner Jacquet Commercial Real Estate Services, was recently named by the San Diego Business Journal as one of the Most Influential People in San Diego.  Meissner’s  over thirty-five years of experience in commercial real estate operations including leasing, construction, due diligence, acquisition and disposition, finance, and property management contributed to this distinction. For the past twenty-eight years, Meissner has served as Principal at Meissner Jacquet Commercial Real Estate Services.  In addition to his duties at Meissner Jacquet, Meissner serves on the Policy Advisor Board for University of San Diego’s Burnham-Moores Center for Real Estate and is on the Board of Directors of Rise Up Industries. When not working tirelessly within the real estate industry, Meissner and his wife Mary enjoy travelling, and spending time with their four children and four grandchildren. He also enjoys fly fishing and organizes annual trips with friends and business associates to Alaska, Montana and Northern California.

“I am honored to be listed alongside so many great San Diegans. These are exciting times,” says Tim Meissner, founder and Principle of Meissner Jacquet, “We’ve established a great reputation over the years in commercial property management and are now focusing on succession plans for individuals and families who own real estate and are looking to retire or take a step back from the day to day operations of their assets.  We’ve also created a separate, wholly owned subsidiary firm, Opt-In, which specializes in real estate accounting.  We’ve taken our years of expertise and excellent work and extended our accounting services to others – small companies who have management staff but either don’t want to add accounting staff or aren’t able to add accounting staff. We serve as their accounting service. Opt-In offers the same excellent customer service that has been provided to our property managers in house to Owners and managers that manage their own portfolios.  Our ability to customize our services to the needs of our client is what makes us unique.”

Meissner Jacquet, established in 1992, was named the #1 commercial management company in San Diego by the San Diego Business Journal for the second year in a row.  Though the distinction is based on Meissner Jacquet’s 16 million square feet currently under management, the company is known for its longevity and it is one of the most trusted companies in San Diego.  Meissner Jacquet clients range from Real Estate Investment Trusts and publicly traded companies to small individual owned assets and everything in between. 

For more information on how Meissner Jacquet can help you, please call Kristin Howell, RPA, FMA at (858) 373-1240 or Dustin Sutton at (858) 373-1134.

Sources: San Diego Business Journal

Elimination of Net Interest Deduction could Result in Dire CRE Economics

Included in the House Ways and Means Committee hearing on tax reform in May was the Republican House proposal to eliminate net interest deduction. This is causing anxiety for commercial real estate investors and developers as it would disallow the conversion of ordinary income into capital gains for a lower tax rate. Instead, it would be taxed as regular income.

Opponents say that the net interest deduction is a key incentive for commercial real estate investment and that without it the economics of underwriting would be dire and could alter how developers account for debt. The policy was intended to reduce double taxation – where the development’s accrued interest is viewed as income, and a payment on top of that interest is in addition to that income and therefore viewed as a deductible expense.

While President Trump is against the proposal to remove net interest deduction, the House GOP has kept it as an option for tax reform saying that as it currently stands it’s a tax loophole and its elimination would make the economy less susceptible to recessions. They further allege that corporate entities are overstating deductions and underreporting income. House Republicans are looking to deliver a reformed tax plan where companies would be able to treat capital expenses like money spent on hard equipment as a write-off, where they would immediately be able to expense a payment for its full amount.

Although the House plan intends to show how tax reform will grow the economy by generating investments and creating jobs, economists have weighed the impact of the two changes and it has been calculated the tax revenue loss from capital expenditures in the near term would greatly outweigh the positive economic impact from ending the net interest deduction.

Sources:

NAIOP, House Ways and Means Committee Hearing on Tax Reform

Bisnow, Why Eliminating the Net Interest Deduction Is Giving Some CRE Players Anxiety

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U.S. Seaports Drive Industrial Real Estate Industry

As office occupiers shutter space, e-commerce induced expansion of the distribution and logistics industry drives industrial leasing and investment activity. Many industrial occupiers are focusing on “last-mile” delivery systems and retrofitting existing assets to include fulfillment centers for online orders. One company that is finding ways to fill pockets of empty space within occupied warehouses is Flexe. Flexe connects organizations that need warehousing space to organizations with extra space by subletting empty warehouse space to small retailers. Its network of more than 400 warehouses in over 45 markets allows online retailers to position products where they can be delivered overnight by truck.

U.S. seaports also play a big role in the industrial industry. As one of the top industrial real estate demand drivers, U.S. seaports continue to drive industrial demand in a big way by generating economic growth, to the tune of $5 trillion, and jobs. With the increasing popularity of online shopping, ships and ports are undergoing improvements to accommodate the increase in import and export volumes. Seven major seaports highlighted in Colliers International’s Industrial U.S. Seaport Outlook report shows that the flourishing U.S. economy should assist in keeping import volumes high, at least in the short term, until it is seen how possible shifts in U.S. trade policy will play out over the longer term.

In terms of the West Coast ports, they are better suited for the increased volume and subsequent ship sizes due to deeper harbors – the ports of Long Beach, Los Angeles and the Northwest Seaport Alliance (Seattle and Tacoma) boast harbor depths of 76, 53, and 50 feet respectively, while East Coast ports hover around 45 – 50 feet in depth.  Regardless of harbor depth, all ports were found to be the main economic driver in surrounding markets, and in some cases the state, which not only contributes to job growth but also to strong industrial occupier interest, development activity, leasing, and rent growth.

With industrial supply growing – nearly 200 million square feet was under construction in early 2017 – user demand is set to be met for the first time in over ten years. However, the effects of the proposed border adjustment tax and new shipping alliances are still yet to be seen on global trade and U.S. port activity.

Sources:

NAIOP, Warehouse Startup Sublets Unused Storage Space

NAIOP, Canadian and U.S. National Industrial Trends

Colliers International, Industrial U.S. Seaport Outlook

Bisnow, 7 U.S. Seaports Driving Economic Growth and Industrial Demand

Retailers Risk Losing Millions with Proposed Border Adjustment Tax

Retailers are against the proposed border adjustment tax for good measure. The possible import tax could result in higher prices for goods, costing consumers roughly $1,700 more a year, CNBC reports. Retail executives were set to meet with the Treasury Secretary in May to protest the implementation of the controversial tax that would allow companies to deduct the cost of American-made products, but increase the cost of foreign imports.

As one of the Republicans’ key measures in their tax reform tax plan, the tax proposal aims to help keep jobs in the U.S. but retailers have been lobbying against it as they only see the risk of losing millions in profits if passed. Major retail associations, including the National Retail Federation and Retail Industry Leaders Association, want pro-growth tax reform but they want it accomplished in a way that doesn’t disrupt the supply chain while allowing American companies to retain their profits.

The House Ways and Means Committee started their series of hearings in late May to discuss the GOP’s tax reform blueprint, including the highly controversial border adjustment tax proposal. The U.S. is only major industrialized nation that uses a “worldwide” tax system, taxing U.S. exports twice – once by the country where they are sold, and a second time when profits are repatriated to the U.S., rather than a “territorial” tax system, where goods are taxed by the country they are consumed in. Despite differences, Republicans and Democrats agree that lower tax rates and a broadening of the tax base would lead to greater economic growth and increase jobs. The outcome is yet to be seen but there is concern that eliminating tax preferences would cause economic disruption to the retail industry and businesses at large that have made investment decisions based on existing tax law.

If the proposed border adjustment tax does not receive support and its estimated $1.1 trillion increase in federal revenues is not felt over the next decade, Congress and the White House will look elsewhere for revenue generation. Possibly putting provisions such as Section 1031 like-kind exchanges and capital gains treatment for carried interest on the chopping block.

Sources:

Bisnow, Major Retail CEOs Meet With Mnuchin To Lobby Against Proposed Import Tax

NAIOP, House Debates GOP Tax Reform Blueprint

NAIOP, Trouble for Tax Reform?

Flexible Office Space Attracts Tenants and High Rents

While office rents in the hottest markets – such as Manhattan, San Francisco, and Washington, D.C. – soften, landlords are looking for new ways to remain profitable. One area that is gaining the attention of building owners is flexible space – a relatively new market where landlords offer flexible options to tenants who desire temporary space or a lease commitment under three years. The reasoning behind a tenant’s need for flexible space can vary from shorter business cycles, increase in contract assignments and temporary staffing, and flexibility for growth of early-stage incubators.

Building owners are recognizing this need by providing flexible workspaces that are move-in ready, complete with open floor plans, technological tools and collaborative software, and a full-range of amenities. As more office occupiers are downsizing due to only using 40% of their desks, landlords are leveraging the shed square footage to establish flexible space that will not only attracts tenants among the likes of technology companies, consulting firms, and financial services, but that does so at about $139 per square foot, compared to the average rent of $49.59 per square foot for traditional Class-A office space as reported by a JLL Shared Workspaces report. The number of office landlords entering the flexible market is rising but it might be just a glimpse of what’s yet to come due to the continued innovation of how and where work gets done.

Another new trend for landlords with empty office space located in prime markets, is to rent virtual space to tenants on a need-by-need basis. This solves the building owner’s vacancy dilemmas, while also fulfilling many small business’ needs of maintaining a prime business address in a major market. The benefits to the landlord are many – no build-outs, little to no common area management – as the tenants don’t actually occupy the space. Instead, tenants pay a monthly fee for the desired business address, a local phone number, a receptionist to answer calls, and the option to hold occasional meetings in the space.  While this model may work with strong office market fundamentals, it’s unclear as to how it will fare when those markets soften.

Sources:

National Real Estate Investor, Landlords Enter the Flexible Office Marketplace

Bisnow, Landlords with Empty Prime Space Turn to Virtual Offices for Profits

Bisnow, Tech’s Greatest Impact May Be in the Workplace Itself

Trepp, Office Rents in Top Markets Begin to Soften

Technology Advancements Influence Commercial Real Estate Demand

Parkway Center Two

14145 Danielson Street

Poway

117,354 square feet, Industrial

The fully-leased 14145 Danielson Street industrial building sold in May to new corporate-user Sorrento West Properties Inc., a real estate holdings entity of San Diego-based General Atomics, for $20 million according to CoStar. Meissner Jacquét’s valued commercial real estate industry associations and relationship with the previous owner, also a current client, prompted the new ownership to retain Meissner Jacquét as the property management service provider.

Meissner Jacquét provides commercial real estate management services to the property’s tenants, Mitchell 1 and General Atomics, including maintaining the property’s 7.21 acres and managing vendor contracts. General Atomics does manufacturing, research and development related to technologies including unmanned aircraft systems, surveillance and radar imaging. It is a prominent contractor in the defense, aerospace and related industries.

Five Policy Issues Hindering Commercial Real Estate Demand

Despite uncertainty as to how President Trump and Senate Republicans will approach tax reform ideas and several controversial proposals, NAIOP’s annual study of “Economic Impacts of Commercial Real Estate,” published by the NAIOP Research Foundation, showed positive improvements made by the commercial real estate industry. Namely that commercial real estate generated significant economic growth to the U.S. economy. Development, construction and operations of office, industrial, warehouse and retail property types, at the state and national levels, supported 6.25 million American jobs and contributed $861 billion to U.S. GDP in 2016. With 410 million square feet of commercial space built in 2016, the industry continued to improve infrastructure and create places to work, shop and play.

Cushman & Wakefield’s report that assessed President Trump’s impact on nationwide commercial real estate in his first 100 days in office highlighted several positive points, including a 2.4% increase in commercial real estate values since the election, and a 10% rise in the S&P stock index. Although the first 100 days rendered some positives to the industry, there are still some key policy issues that could affect commercial real estate demand.

  1. Defense Spending —the rollback of the defense budget sequester and increases in defense and Homeland Security spending could benefit commercial real estate professionals in jurisdictions that have historically attracted these budget dollars.
  2. Trade Policy — Potential changes to U.S. trade policy is a hot topic, and trade-related movement of goods is an essential part of the industrial market. Trade policy uncertainty can slow companies’ site selection, leasing and investment decisions.
  3. Border Adjustment Tax — Trump’s proposed Border Adjustment Tax (BAT) is opposed by the retail industry, among others, because it would levy a 20% tax on all imports of goods and services into the U.S. This increase may influence commercial real estate occupiers’ decisions regarding expansion or relocation.
  4. The wall and immigration — Trump’s plan for a wall along the U.S. – Mexico border that has yet to move forward but might be funded through a destination-based “cash flow tax” applied to U.S. – Mexico trade could raise import prices and disrupt the flow of workers.
  5. Health Care Reform — Due to the uncertain status of health care reform, new medical office and health care property development and demand may slow and soften.

 

Sources:

NAIOP, Latest Report: U.S. Commercial Real Estate Development Supports 6 Million Jobs, Contributes $861 Billion to the Economy

San Diego Business Journal, Political Changes Begin to Play Out in Real Estate

NAIOP, While Waiting for Tax Reform, Do Not Overlook Recent Victories