Local Landlords And LANL Address Property Lease Issues

View taken Tuesday of Central Avenue in downtown Los Alamos. Photo by John McHale/ladailypost.com

Los Alamos Daily Post

How to succeed in business is a frequently discussed topic that ignites a wide range of opinions.

It is certainly discussed heavily in Los Alamos. Los Alamos County has had initiatives to foster a successful, thriving business community, including the recent effort to develop downtown master plans for Los Alamos and White Rock that reflect the community’s downtown goals and needs. An outcome will be an extensive update to the Chapter 16 Development Code, which governs development, including commercial development and redevelopment.

During the May 4 County Council meeting, another option was suggested. County Councilor Sean Williams introduced a motion to request Planning and Zoning Commission review and make recommendations to council about adding a Pedestrian Retail Overlay Zone into Chapter 16 of the County Code. If approved, the downtown district would ban offices on the ground floor level of buildings. Pedestrian-oriented retail businesses, entertainment, restaurants, and personal and medical services would be allowed on the ground floor. Offices would only be permitted to occupy space on upper floors.

Would a Pedestrian Retail Overlay Zone work?

Not everyone thinks so.

When it comes to finding a reason behind Los Alamos’ struggles with keeping and attracting business, the finger often gets pointed at two entities: landlords and Los Alamos National Laboratory (LANL).

A comment often heard around town is that landlords raise rents to prices only LANL can afford or refuse to rent to anyone but the laboratory, so buildings remain vacant.

Shannon C’deBaca, owner of Shannon Properties, said there are misconceptions regarding local landlord practices.

First, rent prices are not as high as some believe in Los Alamos, she said. Prices range from $12 a square foot all the way up to $25 a square foot for properties owned by Kroger. C’deBaca also said LANL doesn’t pay rents as high as some may think. She pointed out that her company rents museum space to LANL and the rent is considered mid-range.

Another misconception is that landlords keep properties vacant for tax purposes. Unless it is a large corporation that is the property owner, having an empty building hurts the landlord, she said, pointing out that they are not getting any income, but remain responsible for upkeep and other expenses such as taxes, insurance, utilities and maintenance. Offices are not the deterrent for retail businesses, restaurants, etc. but instead can help those businesses by providing them with customers, C’deBaca said.

“Offices produce traffic where there is no traffic and do help,” she said.

C’deBaca pointed out that what is hurting small businesses isn’t rent prices but rather people spending their money off the hill or on the internet.

“We have a wealthy population, but they don’t spend it all on the hill,” she said, adding that to make it in retail, a good business plan and product is essential.”
“Businesses fail for other reasons than rent,” she said. “Rent may be a factor but not the big factor.”

C’deBaca said she feels the best thing the County can do is create a campaign for existing businesses that addresses their needs such as staffing, celebrating local businesses to bring more awareness to them or even offer listening sessions with local business owners.

“Anything that gives a business ‘business’ is good,” C’deBaca said. “Ignoring them is a critical oversight in making Los Alamos a destination.”

Pajarito Property Management Owner Bruce Norman said he also is concerned about the Los Alamos business community.

“I’ve really tried to support the community over the years,” he said, “because I am really concerned about the viability of Los Alamos … I don’t want it to be become (a place to) sleep and work and have three restaurants to choose from and three retailers and that’s it.”

Norman said he feels landlords shouldn’t be penalized but rather businesses should have incentives. For example, Norman said maybe the County could contribute to businesses’ rent, considering retail is such a volatile, tough industry. He added that subsidies to local business is another option.

So just how much of a hold does LANL have on the local commercial space?

A LANL spokesperson told the Los Alamos Daily Post that, “Triad/LANL currently manages 28 leases in Los Alamos and White Rock. These leases represent approximately 350,000 square feet of office space. There are approximately 1,400 staff currently housed in these spaces. Triad/LANL also just executed two new leases in Santa Fe that combined are approximately 106,000 square feet. Lastly, Triad/LANL manages two leases in Carlsbad, N.M., which combined represent approximately 15,000 square feet of warehouse and office space.”

The spokesperson said most of the leases are five-year agreements and vary in terms of who is responsible for utilities and maintenance, adding that most leases do require the building owner to do the maintenance.

Regarding rental prices, “NNSA is required to pay fair market value in any real estate market,” the LANL spokesperson said. “The Laboratory is required to contract with independent real estate firms to conduct market surveys and appraisals for the area. These surveys provide relevant market data including current lease rates in the market, and the appraisal enables the site to negotiate a rate within the fair market value.”

In an email to the Los Alamos Daily Post, Councilor Williams expanded on his reasons for bringing the motion forward to create a Pedestrian Retail Overlay Zone.

“It is a fact that business is anemic in Los Alamos, and it’s been getting worse (even before the pandemic),” he said. “Why is that?…”

Williams said he believes Los Alamos’ population isn’t a factor. He said he feels the County’s small population might be a concern to national chains, but local businesses have more latitude to scale to lower demand. In fact, Williams said there are municipalities smaller than Los Alamos that are commercially vibrant.

He also pointed out a section of the County’s comprehensive plan, which states:
“Through coordinated and aggressive marketing of the community using established national and regional networks for the past three years, the County and Los Alamos Commerce & Development Corporation (LACDC) have been able to bring dozens of business prospects to visit Los Alamos sites. These prospects range from large housing and senior living project developers, and high technology firms, to local entrepreneurs and national retailers, restaurant, and lodging companies. This effort is enhanced through the County’s partnership with LACDC and the brokerage community. However, despite numerous site tours, few investors and developers have completed a purchase or investment in Los Alamos. The reasons most often given are the lack of well-located properties with sufficient infrastructure at a fair market value.”

“This all paints the picture we already know,” Williams said, “offices crowd out customer-facing business in Los Alamos. And zoning is the appropriate solution to this problem.”

Williams also inquired in his email whether the Post was going to disclose that Publisher Carol A. Clark is a member of the LACDC Board.

“I have served on the LACDC Board since 2018 and find it to be a fine organization dedicated to economic development,” Clark said.

Whether or not the proposed Pedestrian Retail Overlay Zone would be effective still needs to be evaluated, County Planning Manager Bryce Ternet said, adding that it is an interesting concept.

“We can now evaluate this with other alternatives being considered in the ongoing development code update effort,” Ternet said.

He pointed out that work still needs to be done on the two downtown master plans and the Chapter 16 Code revisions.

“I was in the private sector before being in the public sector and I understand the challenge for businesses, and I think as County officials we need to do everything we can to make it easier for businesses to move in and thrive in this environment,” Ternet added.