HomeMy WebLinkAbout2023 Palm Desert Brokers ReportEconomic DevelopmentCommercialBroker's Report
2023
Item 2A-5
Introduce City staff and recent organizational changes at City Hall.
Allow staff to better understand current market conditions: “What trends are
you seeing?”
Understand specific opportunities and challenges in property transactions and
leases.
Allows for discussion, “How can the City help your efforts in leasing/sales?”
As a follow-up to the 2021 Commercial Broker's Report, the City’s Economic
Development team has once again met with several commercial brokers active in
Palm Desert and the Coachella Valley. The intent of these meetings was
multifaceted:
The report below highlights feedback and themes provided by the participating
firms. In addition, the Economic Development team is providing specific
recommendations for implementation in the coming months.
Commercial Brokers Engaged
Baxley Properties: Matthew Longstreth
Coldwell Banker: Steven Lyle
Johnson Commercial: Matt Johnson
Lee & Associates: Shawna Strange & Maggie Montes
NAI Capital: Lynn Coker and Nancy Portolesi
Smoketree Investments: Josef Jonathan
The Firm: Adam Gilbert
Wilson and Meade: Noel Ramos & Matt Rifkin
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Demand for big box (25,000 sq.+) retail is high, however, inventory in Palm
Desert is low.
Industrial real estate inventory is near zero, with no new industrial space under
development.
Currently, new commercial construction costs are extremely high due to labor
costs, thus, new industrial or commercial inventory are not being proposed.
Commercial/retail space is performing well.
Leasing vacant space is slow and there is limited to no space available.
Demand for warehouse space to support existing businesses is needed, but not
available.
Less than 1% vacancy on industrial properties.
Storage is a hot product right now, however, there is limited space to develop.
Lease rates across all sectors continue to rise.
With rents on the rise, small businesses are starting to be priced out.
Office rents are at an all-time high, averaging around $1.50 - $1.75 per square
foot. Pre-Covid costs were about .85¢ per square foot.
Office requests near the freeway are on the rise.
Turnover is low.
El Paseo continues to have steady lease opportunities and limited availability.
Industrial prices are as high as office rents, at about $1.30 per square foot.
Consistent Themes
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3.
Sales and leasing
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2.
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7.
Office
1.
2.
Retail
1.
2.
Industrial
1.
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2.Potential tenants are extremely hesitant to go through any City discretionary
entitlement process.
Insights
1.Businesses want to locate in Palm Desert because of its central location;
however, finding space is problematic and zoning hurdles impede this process.
3.Property owners are also hesitant to go through any City discretionary processes
related to architectural design for building façade updates.
4.Las Sambras Shopping Center has challenges for leases due to unique zoning
Planned Commerical 4 (PC4).
5.The City’s façade enhancement program is not being utilized, as most buildings
which would benefit from an enhancement are outdated and out of ADA
compliance. Thus making any updates to the building would trigger ADA
regulations and prevailing wages making construction twice as expensive
6.New fast-food/casual dining is seeking drive-thru options with the City;
however, the City's ban on drive-thrus has forced brokers to turn deals away.
7.Downtown Edge Transition Overlay - (DE-O) continues to pose challenges to
fill, as the current zoning does not allow for certain types of office use.
8.Concerns with the Architectural Review Commission (ARC) process, as projects
can be held up for months due to minor changes that the ARC requests.
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Staff Recommendations
Based on the feedback provided, staff is recommending a few changes to the City’s
Zoning Ordinance and other process improvements that will assist in the opening of
businesses within the City.
1. Zoning
Downtown Edge Transition Overly (DE-O)
Adding a “non-conforming” clause to the existing office buildings in the DE-O.
Currently, these buildings have higher vacancy rates due to the inability to conform
to the City’s zoning restrictions. A zoning amendment to allow existing office
buildings to utilize “office professional” use standards would help to fill these
vacancies.
Requires:
Zoning Ordinance Amendment (ZOA) and approval by the Planning Commission and
City Council.
Downtown
Update of land uses and its definitions. Allowing for greater flexibility of auto retail
and medical use.
Requires:
ZOA and approval by the Planning Commission and City Council.
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2.Discretionary Entitlement Process
Restrict new self-storage facilities by requiring applicants to observe the
Conditional Use Permit (CUP).
Requires:
ZOA and approval by the Planning Commission and City Council.
Currently, projects are being held up for months due to the Commission’s
comments/recommendations, as projects cannot move forward to the Planning
Commission until ARC approveal. Brokers are asking that projects continue to
move forward if ARC comments are based on landscaping or cosmetic concerns.
Comments will be addressed prior to the project commencing. Currently, the City
of Palm Springs has adopted this type of procedure which has helped to move
projects along.
Requires:
Internal policy changes are already in the works, including the development of
specific design standards.
3.ARC Process
4. Increase Communication between Brokers and the City
The desire to continue to strengthen the relationship between Brokers and the
City has sparked the concept to create a quarterly newsletter which will allow the
City to notify Brokers of any zoning or procedural changes at City Hall. This will
allow both parties to ensure the best customer service and most accurate
information is provided to potential businesses seeking to call Palm Desert home.
Requires:
In the works! Staff will develop a quarterly newsletter on various City and zoning
topics to keep the Broker community better informed of City policies.
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