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Thursday, Nov 30, 2023

Retail — Seaport Village Tenants Likely to See Rent Hike

Retail: Increases Called ‘Minimal’ Following

Port District Decision

The San Diego Unified Port District has increased the rent for one of its tenants, Seaport Village, which now is deciding how to pass those rents along to its own tenants.

Ann Lane, vice president and general manager of Seaport Village Ltd., said increases would be commensurate with those approved by port commissioners this month.

The new rents had not been finalized late last week, she said, but she added there would be a “small” increase in minimum rent, then an increased percentage of sales above that minimum.

While the old schedule called on Seaport Village Ltd. to pay the port 10 percent of every retail tenant’s sales after meeting the minimum, the just-approved schedule calls for the shopping center to pay the port 15 percent of a retail tenant’s sales.

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Different percentages apply to different types of businesses. Seaport Village Ltd. pays the port 3 percent of every food vendor’s sales; now it will have to pay 4.5 percent. Percentages in other categories were raised 50 percent.

Shopkeepers in the 75-shop Downtown complex have expressed fears that their rent increase could be a big one. The changes may be “challenging” for the smaller shopping center tenants, said Dick Cloward, executive director of the San Diego Port Tenants Association.

Seaport Village Ltd.’s old lease called on it to pay the port a minimum of $200,000 per year, then a percentage of sales after that amount is reached. The new deal calls on the shopping center owners to pay the port a minimum of $1.7 million per year, then a percentage of sales after that amount is reached.

The new rent schedule, approved by port commissioners, will increase the port’s annual rental income from $1.1 million to $1.7 million, said a summary prepared for the commissioners.

Back Rent

Port commissioners also called on Seaport Village to pay $596,806 in back rent, plus interest, over the next 60 months. The Seaport Village lease expired in 1998, according to port spokeswoman Rita Vandergaw.

Seaport Village Ltd. and the port have been negotiating over the rent for 19 months, said Vandergaw.

Vandergaw noted the port has not increased rents for Seaport Village in 20 years.

The tenant group’s Cloward said his main concern is that the increase may become a blueprint for future increases for other tenants around San Diego Bay.

Yet there are favorable components of Seaport Village’s new lease deal, he acknowledged, including a single rent review over the next 18 years. Normally rent reviews are every five years, he said.

Port commissioners also forgave a $1.5 million debt owed by Seaport Village for its 50 percent share of relocating Harbor Drive.

In related action, port commissioners this month adopted a resolution consenting to the collateral assignment of an existing, $40 million San Diego Seaport Village Ltd. note from San Diego Seaport Lending Co., LLC to Tokai Bank of California.


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