Title
Introduction of Ordinance Authorizing the City Manager to Execute a Lease for a Retail Suite Portion of the Historic Alameda Theater Building, with Shear Terror, LLC dba It’ll Do, a California Limited Liability Company, Located at 2315 Central Avenue, Suite 122, Alameda, California, for a Term of Sixty-three (63) Months with One Extension Option for Sixty (60) Months. [Requires 4 affirmative votes]
In accordance with the California Environmental Quality Act (CEQA), this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Section 15301 (Existing Facilities). (Base Reuse and Economic Development 29061822)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
Staff recommends that the City Council authorize the City Manager to execute a lease with Shear Terror, LLC dba It’ll Do, a California Limited Liability Company (It’ll Do) for an approximately 700-square-foot retail space in one of the retail suites that are part of the City-owned Historic Alameda Theater Building located at 2315 Central Avenue, Suite 122, Alameda, California, for an initial term of sixty-three (63) months with one (1) extension option for sixty (60) months.
BACKGROUND
The City of Alameda (City) owns the Historic Alameda Theater Building (Theater) located at 2315 Central Avenue, which includes the movie theater and two retail suites, one currently occupied by Play House, LLC operating as a restaurant named Project Burger and a vacant 700-square-foot space which was formerly leased to the Park Street Wine Cellars. The Theater opened in 1932 and was designed by architect, Timothy L. Pflueger, in an Art Deco style. Pflueger also designed The Castro and The Alhambra Theaters in San Francisco and was part of the committee to designing structures for the Golden Gate International Exposition on Treasure Island in 1936. In 2006, The City initiated major restoration work of the Theater which included significant repairs and upgrades in the lobby as well as installing a new cineplex and the construction of the parking garage.
This vacant suite has been available for lease since Park Street Wine Cellars vacated it in January 2024. The City’s real estate brokers at Cushman & Wakefield listed the space and several parties showed interest in the location and were provided information. Staff were initially negotiating with a nearby business to pilot a stationery store in this space on a one-year license, but the business was unable to expand as they had planned. It’ll Do barber shop approached the City’s broker following this other opportunity turned out not to be viable and was selected among the interested parties as they are seeking to relocate an existing Alameda business, provide the greatest financial stability, and do not introduce new competition with other Downtown Alameda businesses.
It’ll Do has been in business in Alameda since 2019 and is owned and operated by Alameda residents. The shop specializes in offering precision men's haircuts, beard trims and shaves. The shop is currently located about three blocks away on Santa Clara Avenue and the owners are excited to relocate the business as the new location in the theater building presents an opportunity to grow and expand the services offered. The space will provide the owners with room for an additional barber chair and offer retail sales of grooming products. The current landlord for It’ll Do is seeking to reposition the property and this is contributing to the business’s decision to relocate.
In the July 18, 2024 meeting, City Council and staff discussed concerns about the impact of ground floor retail vacancies in the Park and Webster Street neighborhoods. The Base Reuse and Economic Development Department is currently advancing a Retail Vacancy Strategy to address these concerns. Staff believe filling this City-owned retail space near Park Street with a barber shop that has an established clientele is an important step in increasing the foot traffic and vibrancy in the Downtown.
DISCUSSION
The recommended lease would commence January 15, 2025, for an initial term of 63 months, with an option for one, 60-month extension at the discretion of the tenant if they are not in default under any of the terms of the lease agreement. The initial 63-month term was requested by the business during negotiations and found reasonable, as they will need three months to reestablish in the new location and maintain continuity of operations.
The lease includes an initial three month rent credit which is discussed below. The negotiated monthly rental rate for the initial fifteen months of the lease is $1,645 per month or $2.35 per square foot with annual 4% increase thereafter for the remainder of the term. Staff and the City’s broker agree the negotiated rental rate in the proposed lease is reflective of current market value for a similar size and location within an historic Downtown Alameda property. If the tenant exercises the option for the second term of 60-months, the rental rate would be recalculated to an amount equal to current market rate for a similar sized and located space.
The leased Premises include interior areas only with no exclusive parking or exterior spaces. The tenant will provide a security deposit, and pay all utilities, taxes, required licenses and fees, as well as its proportional share of other expenses for the Premises.
The new lease includes a negotiated period of three (3) months of rent abatement totaling $4,935.00 as the business relocates and reestablishes in the new location. There is no tenant improvement allowance included in the lease and the business will pay for all improvements to the space necessary for their operation and no exterior modifications are anticipated beyond signage. The proposed interior improvements may include new plumbing and sinks, replacement and upgrade of light fixtures, interior paint, electrical outlets, window treatments and installation of barber chairs and fixtures. Tenant will need to obtain all required permits and approvals for the work but interior modifications within the retail suite of the theater are not subject to any separate review by the Planning Department.
The business is owner-operated, and City staff requested and reviewed the business’s tax returns for tax years 2022 and 2023 to ascertain the financial suitability of the prospective tenant. The owners also allow for other licensed barbers, as independent contractors, to utilize chair space and pay a set fee which is very typical in this industry and provides additional financial support for the operation of the business.
ALTERNATIVES
After opening the public hearing and considering all of the documents and testimony, City Council may consider several alternative courses of action, including:
• Approve the first reading of the ordinance authorizing the City Manager to execute the lease with Shear Terror, LLC dba It’ll Do, a California Limited Liability Company.
• Direct staff to renegotiate lease terms. Under this alternative, staff would continue to negotiate lease terms with Shear Terror, LLC dba It’ll Do, a California Limited Liability Company based on City Council direction.
• Direct staff to seek other prospective tenants. If Shear Terror, LLC dba It’ll Do, a California Limited Liability Company is not the desired tenant, staff would direct the City’s broker to continue to market the property.
FINANCIAL IMPACT
The lease will contribute approximately $105,855.00 over the initial 63-month term. The funds from these Lease payments will be deposited in the Commercial Revitalization Fund 227.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The proposed use as a barber shop is consistent with the General Plan and Alameda Municipal Code zoning requirements for the property. The proposed lease is consistent with Economic Development Strategic Plan vision and the City FY 2023-26 Strategic Plan Project TIE26 to expand Citywide business economic development activities.
This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
In accordance with CEQA, this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Section 15301 (Existing Facilities).
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Approve the first reading of the ordinance authorizing the City Manager to execute a lease for a retail suite portion of the Historic Alameda Theater Building, with Shear Terror, LLC dba It’ll Do, a California limited liability company, located at 2315 Central Avenue, Suite 122, Alameda, California, for a term of sixty-three (63) months with one extension option for sixty (60) months.
Respectfully submitted,
Abigail Thorne-Lyman, Base Reuse and Economic Development Director
By,
Alesia Strauch, Base Reuse Manager
Financial Impact section reviewed,
Margaret O’Brien, Finance Director
Exhibit:
1. Proposed Lease