Los Angeles

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Formula Retail Ordinances have sprung up in select markets, andthey can create an extra layer of challenges when leasing retailassets. In an effort to protect local and small businesses, newleases require planning clearance through the city. Brokerage firmBeta recently completed leasing Malibu Village, a50,000-square-foot retail center in Malibu, which has thisordinance within its city limits.

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"To get the lease approved by the city, a tenant can sign alease if they have 10 or under retail locations," JamesKeefe, senior account manager at Beta,tells GlobeSt.com. "Once they have signed the lease they can openup additional stores over 10 but they must open in Malibu firstbefore going over 10. The process then becomes more challenging dueto the criteria as the tenants you begin to work with are lessfamiliar with the leasing process so there is a more hands-onapproach."

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While there are a handful of markets with this ordinance inplace, particularly markets with a lot of growth, the ordinance isstill rare. "It is uncommon in Southern California. DowntownManhattan Beach has a very scaled down ordinance that pertains torealtor offices, San Francisco has an ordinance and Coronado alsohas an ordinance in place," says Keefe. "I believe that across theUS there will be smaller towns that fight hard to keep their smalltown charm and will adopt similar ordinances for retail andrestaurants."

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The biggest challenge of a Formula Retail Ordinance is thatthere is a smaller and more select group of tenants for a shoppingcenter. "The pool of tenants becomes smaller so our marketingstrategy becomes more targeted to businesses that fit thedemographics of the center, meet the ordinance criteria, and havethe infrastructure to open additional brick-and-mortar locations,"says Keefe.

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However, in the Los Angeles area, small boutiques are thrivingand often preferred to larger chains in certain sub andmicromarkets. "Consumers are becoming more loyal to smaller brandswith a mission that they identify with and are less enticed to shopat bigger corporations that they feel their values aren't aligned,"says Keefe. "There is a high demand from consumers and landlordsfor one-off brands in the L.A. retail market but physical retail ischallenging for many smaller brands to navigate."

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The popularity of smaller brands follows a similar trend curveas national brands. "F&B are rapidly growing due to theconsumers preference of unique dining experiences over chainrestaurants," says Keefe. "Many L.A. based apparel brands areexperimenting with brick-and-mortar retail through collaborationswith existing stores that are curated to providing consumers withlocal brands, Wittmore at Malibu Village is an example of this.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.