RiverPark Gateway counts on small tenants
Small Business Administration, or SBA, financing has been key to securing two buyers now in escrow for two of the eight buildings planned for the RiverPark Gateway office complex, which is scheduled for completion in September, said Scott Carper of Lee & Associates-North Los Angeles/Ventura.
Carper, who is representing the sales and leasing of the project with David Kim and Grant Harris, described the two buyers in escrow as a dental group and a holistic wellness center. In March, Western Commercial Bank signed a five-year lease for another building in the center, he said.
All three buildings are 3,622 square feet, totaling nearly 11,000 square feet of the 73,000 square feet available at Gateway. Carper said the developers plan to initiate tenant improvements concurrently with finishing the shells of the purchased buildings in order to move forward move-in dates for the buyers.
Developed by Landmark Teitelbaum, RiverPark Gateway is so named because of its 6.5-acre site at the entrance to RiverPark’s housing development and adjacent to Highway 101. The RiverPark community plan includes nearly 3,000 residential units and more than 2 million square feet of retail and hotel space.
Competitive SBA financing has helped some of the buyers at Gateway into the market, by allowing them to put as little as 10 percent down.
“With these two in escrow, that was kind of the driving force,” Carper said.
Santa Clara Valley Bank Senior Vice President and Chief Credit Officer Hugh Waddell, who was not involved in the Gateway loans, said the SBA 504 lending program is designed for small business buyers who plan to occupy more than half of the space they want to purchase.
SCV Bank is the fifth-largest SBA lender in the Tri-Counties.
According to Sandra Buck of the Los Angeles district office of the SBA, the 504 program offers growing businesses long-term, fixed-rate financing for assets like land and buildings. Certified Development Companies, or
CDCs, are nonprofits that work with the SBA and private lenders to provide the financing.
The buyer is required to put a minimum of 10 percent of the cost down, while the bank carries a first trust for up to 50 percent and the CDC, backed by the SBA, carries a second deed of trust for up to 40 percent of the total.
Both lenders set their own rates, Waddell said.
“Conventional financing is more like 25 percent down, so this program works pretty well for [small businesses],” Waddell said. “This program has been around for a very long time and even when the market was very good, this was a good program.”
A business qualifies as small if it does not have a tangible net worth in excess of $7.5 million and does not have an average net income in excess of $2.5 million after taxes for the preceding two years, the SBA Web site said.
Another group has shown interest in purchasing a 9,687-square-foot freestanding building at the office center,
Carper said, and multiple parties are in negotiations to lease space in Gateway’s 32,000-square-foot, multi-tenant office building.
Three 6,680-square-foot, two-story office buildings are also available for sale or lease.
Despite the recent activity at Gateway, Carper said the slowed real estate economy has made the commercial real estate environment more difficult.
Buyers are currently active only if they have an immediate need for space, he said. If not, potential takers are waiting for a better price.
“If [buyers] don’t have to have something now, a lot of buyers think it’s going to get worse before it gets better and are waiting on the sidelines for something to happen,” Carper said.
RiverPark Gateway broke ground in summer 2007.