A local commercial brokerage is closing its doors later this month amid the slowing real estate market and a bitter lawsuit.
Kelli Todd, owner of Los Angeles-based Commbroker Inc., which does business as RE/MAX Commercial Brokerage and has offices in West Los Angeles and Woodland Hills, said that her company will close Oct. 1.
The culprit according to Todd: “The aftermath of the 2007 subprime financing crisis resulted in a rapid and steep decline in the commercial brokerage business. That’s what’s driven the transaction counts to levels they haven’t seen in 20 years. It slowed to a trickle,” she said.
“We’d certainly planned for a slower market and less transaction counts and reduced prices but I don’t know anybody that’s predicted the credit crises that we’ve had and the impact on funding.”
Todd’s separate residential brokerage, which has 10 offices in the region, will remain open. She opened her first commercial office 10 years ago in West L.A. and that business has grown to include 65 commercial agents. The commercial business has expertise in multifamily transactions, such as apartment buildings. Both brokerages are franchises of RE/MAX International Inc.
But others say the closure has to do with a legal battle.
Jeffrey Sax is a real estate and business litigator who is representing Joseph Miner, owner of All Cities Realty Inc., in several trademark lawsuits against CF Real Estate Loans Inc., the former corporate name of Todd’s residential brokerage.
Miner claims Todd used the All Cities Realty name in conjunction with her residential and commercial businesses for several years despite a federal trademark he had on it. Miner’s business was hurt as a result, Sax said.
Todd no longer uses the All Cities Realty name and a federal lawsuit on the matter is set for next year. Sax claimed the business closure is part of Todd’s legal strategy.
“They are manipulating their businesses to avoid us,” said Sax, adding Todd can argue that now the business is closed and therefore there is no further harm to Miner’s company.
For her part, Todd said the lawsuit has nothing to do with the closure.
“It is a completely separate issue. We’ve made a decision to close the commercial brokerage because of a downturn in the real estate market and the economy,” she said. “They are simply wasting the courts’ time and that will be proven when we get our day in court.”
Todd said that she also faced an increase in operating costs, though she acknowledged some of that was her legal fees related to the lawsuit.
“Unfortunately people have to make tough business decisions right now,” she said.
Fox Lease
Fox Interactive Media Inc., which earlier this year in Playa Vista cut one of the year’s biggest lease deals, recently signed another lease valued at $4.8 million in Beverly Hills.
The unit of News Corp., which includes MySpace, signed a three-year lease for 28,584 square feet of space at the Wilshire/La Peer Building owned by Beverly Hills developer and landlord Casden Properties Inc.
Fox Interactive will take the entire second floor of the three-story building at 8942 Wilshire Boulevard. The lease was signed in July and starts next month.
“It’s a competitive deal for Beverly Hills, it worked for them,” said Gary Weiss of Madison Partners, who represented Casden in the deal. “They liked the fact they can move in quickly.”
The building was formerly occupied by talent agency International Creative Management, which has since moved to Century City. It was originally built for the now defunct Columbia Savings & Loan.
Fox Interactive is planning on consolidating much of its local operations and moving more than 2,000 employees into the Playa Vista property, where it leased 421,000 square feet of space. The development is still under construction and is scheduled to be completed in June of next year.
Brad Feld of Madison Partners also represented the landlord and Maury Gentile of Grubb & Ellis Co. represented Fox.
Homebuilders Up
Since the subprime and housing meltdown began in early 2007, homebuilders have been pummeled on Wall Street. Ryland Group Inc. and KB Home have been no exception.
Now, however, at least some investors believe the real estate market may have hit bottom, boosting the local companies’ stock. Shares of Calabasas-based Ryland have risen 16 percent since August 5, closing at $22.70 Sept. 4. Shares of Los Angeles-based KB were up 18 percent over the same period, closing Sept. 4 at $20.11.
Despite the continued decline of home prices, several analysts and economists have suggested that the bottom of the market could be near, which is apparently all investors needed to hear.
Deutsche Bank Securities Inc. analyst Nishu Sood wrote in a report that Ryland’s use of a “build-to-order” strategy for homes has allowed it to keep pricing in line with the market. “Ryland’s balance sheet more accurately represents market conditions than peers’, so we maintain our buy (rating),” wrote Sood in July, before the run-up started.
According to a Bloomberg News poll of analysts that cover Ryland, six rate it a buy, six a hold and one a sell. As for KB, two rate it a buy, 10 a hold and one a sell.
Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.
