For the low, low price of 10.6 million dollars, you could own a nice little strip mall. Here's what it looks like:
Familiar?
A couple of weeks ago, this ad was in the Pacific Coast Business Times, a Santa Barbara-based weekly. (What? Not advertising in the Lompoc Record??) I'm told that it's been on the market for about a month, this time. It was for sale about a year ago, then taken off the market.
(Just so you know: I have no affiliation to The Lompoc Plaza, no financial stake in it, I don't want to buy it, nor do I know who owns it except that it is someone Not Local. I do have a special place in my heart for middle-aged strip malls, so the ad caught my attention.)
I took a wander down to The Lompoc Plaza and spoke with several of the tenants there. My primary questions: Did you know that the shopping center was for sale? and Are you concerned about it? Four of the business owners I interviewed - and another I heard from later - didn't know anything about it. On the other hand no one was terribly surprised. Emily Vargas-Smith of Vargas Jewelers shook her head with a little laugh.
"Again?" She asked.
When I mentioned the listing price - $10.6 million! - Vanessa Vargas rolled her eyes and Emily pointed to the tire-sized pothole out her window. She said, "I think they're going to have to fix it up first!"
The shop owners I talked to weren't optimistic about The Lompoc Plaza's chances on the market. Two other tenants, who didn't want to be named, also had complaints about basic maintenance. One said, "This place is in such bad condition - good luck getting a buyer!" Another told me he's currently on a short term lease, he has a couple of "issues" with shopping center management, and he definitely won't stay if his rent is raised.
Bob Scanlan of the Box Shop, who, he says, is usually "in the know" before the rest of us, had just heard about the listing from an unnamed source. "It doesn't bother me, though, because I'm locked in for the next 18 years." That's one 5-year lease with three 5-year options to renew, and that's some serious long-range planning!
Rose Isaac, owner of Anything Athletic and Rose's Embroidery, has owned her business for 27 years and was an employee of the shop before that, back when it was Pico Sporting Goods. Now she has three years left on her lease in The Lompoc Plaza, and her shop is for sale. She's working with two prospective buyers, but if she can't make a deal, she'll just close her door when the lease term ends.
Rose says she wants to be careful about who takes over. "I want to sell it to someone local, because only the community can understand this place."
Rose knows first hand, what happens when "local" goes out of town. She remembers when a local guy owned the Plaza. Lately... well, she's seen the "bank men" come and go with their clipboards and calculations, and she wonders what the current owners are doing with the rent checks they're collecting. (Definitely not fixing potholes.)
I went to the Radius Group website and found a nice packet of information about The Lompoc Plaza.
On page 1, for example, I learned that The Lompoc Plaza offers a 6.2% CAP rate, which is less than you might get from the stock market in a good year, but way better than a CD from Lompoc Community Bank. ( "Home of..." what kind of banking? Seriously. Get a new tagline.)
According to Radius, The Lompoc Plaza has nothin' but potential. From page 1, this quote:
The proximity to other shopping and being on a main thoroughfare bring value to the underutilized nature of the center and present an opportunity for repurposing the center for greater retail exposure.Say what?
On page 2, Lompoc High School has been demoted to a Junior High. How embarrassing.
On page 3, you may note that Vandenberg is spelled with a "u," but on a positive note the arrow IS pointing in the right direction. The vacancies (indicated by asterisks), haven't been updated since Attitudez Salon and Spa relocated to a brand new space at Northside Lompoc. Back in June.
All this, it makes me worry. That some unknown person/entity might buy this shopping center without knowing how to spell Vandenberg or find the local high school. I wonder if he/she/it may want only to take money OUT of Lompoc, without putting money IN.
Here's what I think, Lompoc. BUY THIS STRIP MALL. It could be a cooperative enterprise. If 300 people contribute $20,000 each, they could make a solid offer of $6 million. Or 600 people, $10,000 each. You get the idea. If it's managed well - i.e. LOCALLY - the member-owners will make enough money to do some updating (repave the parking lot, maybe?) and still turn a reasonable profit. (Consult with the Lompoc Cooperative Development Project on this. They've already launched one successful co-op, the Green Broom Brigade. The Lompoc Plaza could be Lompoc Co-op #2.)
But wait. What if not all investors can afford a steep $10K or $20K buy-in, but they still want to contribute? I have another idea. Form an REIT. This structure allows for different investors to contribute different amounts. Each share could cost $100 and investors could buy "shares," like they would of any stock. I don't know much about forming a REIT, but it can't be that hard: there's even an "eHow" article with six easy steps!
I'm not kidding, Lompoc. If your commercial property is owned by out-of-towners, there's a pretty sizable chance that those owners care less than you do.
"Space vacant for ten years? Whatever. It's a tax write off."
Rose is right about this. Sell to someone local: someone who understands and cares about the community.
