One of the biggest challenges with a mixed-use real estate development is finding tenants, especially the first one, for that street-level retail space. Matthew Wakenight, senior vice president for Equity Residential Properties, stated at an Urban Land Institute conference in November 2013 that “retail with apartments can be great, but it’s not good if the retail is suffering … Residents have to walk past empty storefronts.”
Although there is no way of knowing how much vacant space there is in mixed-use properties, it’s probably a safe assumption to say “plenty.” It’s not uncommon to drive or walk by a building with retail space on the street level and multifamily housing above, and see a “Space for Lease” sign in the window.
One company that seems to have a real solution for the empty-space syndrome of mixed-use properties is affordable housing builder C&C Development. Headquartered in Tustin, Calif., C&C is a family-owned company that builds mixed-use properties, including affordable housing in urban areas, throughout Southern California and has done so for 30 years.
The C&C solution
C&C’s solution? It has established its own retail tenant in the form of a laundromat service that, in the case of ParkView Apartments—its most recent mixed-use development in San Marcos—can be the first and frequently most valuable retail lessee in the door. With its laundromat, C&C can quickly fill a potential void clearly seen at street level that provides the all-important anchor that gives other potential lessees a comfort level to sign on the dotted line.
Called CBC Laundry, the laundromat operation is a subsidiary of C&C Development and is managed by Scott Bering. CBC Laundry was established in 2012 when C&C purchased its first laundromat as an investment that it thought would serve two important purposes. One, it could if necessary be that first tenant into a mixed-use property, and it would also add to the company’s portfolio of revenue-generating enterprises. Not a bad deal.
Always on the lookout for new opportunities, C&C Development is driven by a strong entrepreneurial spirit and tends to expand vertically within the development industry. It owns a property management entity, Advanced Property Services, and has its own general contracting operation. Now it has its own laundromat, which can be seen as a strategic addition to its vertical integration since a laundromat can help stabilize a property and create more value.
A profitable business
Today, CBC Laundry has four laundromat locations encompassing more than 300 washers and dryers—three are in the city of Orange and one is in its new 84-unit ParkView workforce housing property in San Marcos. With 70 highly energy-efficient washers and dryers, the ParkView laundromat is open for use to the surrounding community and has become a popular gathering spot for residents and neighbors as they wash and dry their clothes in the modern facility with state-of-the-art machines.
According to Bering, it’s also a profitable business that CBC Laundry is looking to expand if the right opportunity comes along, such as purchasing a stand-alone building to put its new knowledge and expertise to use in a larger facility with greater profit potential.
Indeed, the laundry business is big and getting bigger, and in many people’s lives it’s an absolute necessity. According to market reports, it’s a $5 billion industry that benefits directly from the myriad advances being made in digital payment technologies, such as near field communications. One of the upsides of a laundromat operation for C&C as the property owner, Bering says, is that it does not require intensive management or 24/7 supervision, especially with today’s coin and card operation technology.
But laundromats do have their challenges, such as the need to constantly maintain machines and cleanliness and to optimize the use of washers and dryers to achieve the best possible profit. “One of the advantages we have when a laundromat is part of our mixed-use property such as ParkView is that we already have maintenance people there who can repair the machines if necessary and property managers who can help keep the facility clean and in good operating condition,” Bering explains. “This certainly reduces overhead and improves profit.”
Bering’s laundromat experience will be put to work at other C&C projects. C&C is looking to expand upon its success and is scheduled to begin construction on two additional mixed-use properties this year that will include laundromats.
“Cities like mixed-use properties because they bring in sales tax revenue and so they frequently require that retail be part of a residential project if the developer wants it to be approved,” says Todd Cottle, a C&C Development principal. “We believe that our laundromat operation puts us ahead of the game by creating a comfort level that we know we have at least one tenant, and probably that first all-important tenant, to sign a lease. For us, that’s a big advantage and a profitable one at that.”
Sheri Gailliard is a freelance writer who lives in Orange County, Calif. She has done graphics and web design work for C&C Development. Gailliard can be reached at [email protected].