Valvoline Centers Seek Tenants to Sublease

IRVINE, CA-GlobeSt.com has learned exclusively that Henley Pacific, an affiliate of Boston-based Henley Enterprises, has assigned Colliers International with subleasing new excess space within 59 of its high-visibility Valvoline Instant Oil Change stores in Southern California. The space, once used as customer waiting lounges, will be marketed to small-chain retailers.

Henley Enterprises, one of the largest quick-lube operators in the nation, acquired 72 Southern California VIOC sites in 2012 through its affiliate as part of the single-largest acquisition in industry history. It has given Colliers the unique assignment of repurposing the now excess space in a large majority of those locations into complementary profit-bearing enterprises. While most of the excess space available average about 500 square feet, there are some spaces as large as 4,000 square feet and others as small as 400 square feet.

According to Terrison Quinn, a retail specialist in Colliers' Irvine office, “The new VIOC business model allows customers to remain in their vehicle for the brief time while it's serviced, eliminating the need for waiting areas and creating excess space within the stores that could be subleased to retailers with complementary products or services. What we are attempting to do is to provide a convenient retail experience complementary to VIOC's business model, where customers can grab a cup of coffee, a sandwich or browse the latest in mobile technology. These are the types of tenants we hope to attract.”

Quinn tells GlobeSt.com that the assignment is an example of what can happen on a broader level when a company's business model changes, as Henley's did. “This created a unique opportunity for other retailers to capitalize on this available real estate—to open up a coffee shop, juice bar, sandwich shop or cell phone store.”

Quinn allows that the subleasing could have occurred before the change in business model, with customers in a “captive” environment waiting for their cars to be serviced. “This type of disposition could occur more often, but it takes a decision from ownership to trigger something like this. From our perspective, we're just glad they did. This presents an opportunity for a lot of auto-related businesses, rental-car agencies, other retailers and food users to capture the discretionary income of customers.”

Other Colliers team members joining Quinn in this task include SVPs Kirk Allison and Vic Gausepohl, based in the San Diego office, and Peter Spragg, a senior associate in the firm's Downtown Los Angeles office.

“The optimal solution would be for one retailer to occupy all the available sites, but we understand we will need to be flexible given the different sizes of available space,” says Spragg. “Accordingly, we will be targeting small-chain retailers who already have shown they can operate their businesses in small, flexible footprints in high-visibility locations.”

In order to participate in leasing the excess space, retailers are required to commit to a minimum package of five stores, all of which are already enjoying high traffic volume in locations including Thousand Oaks and Simi Valley; greater Los Angeles; Orange, San Bernardino and Riverside counties; and San Diego. “We are hoping to quickly locate a regional or local user who can capitalize on the highly visible locations with their products or services,” says Gausepohl.

Finding new uses for retail space has been a trend lately. As GlobeSt.com reported last week, newly consolidated larger medical groups are beginning to lease retail space that formerly held sizable stores such as Barnes & Noble, Sonya Dopp-Grech, SVP/director of healthcare services for NAI Capital here, told GlobeSt.com. As GlobeSt.com reported earlier, as healthcare moves toward retail settings, many retail landlords are finding themselves for the first time involved in build-outs and tenant improvements for medical practices. While this trend is welcome among most landlords, they may not be prepared for the high cost of some of these improvements, according to Dopp-Grech.