Shopping center owner and developer Sandy Sigal has lived in the San Fernando Valley his entire life.
He doesn’t recall an event comparable to the devastation caused by the Palisades and Eaton fires. Now, as talk of recovery dominates the landscape, the question of what role residential and commercial developers, such as Sigal, play in rebuilding has come to the fore.
“You have multiple communities that have been decimated almost entirely,” Sigal, CEO of NewMark Merrill, said. “Housing, commercial, schools, infrastructure totally destroyed.”
For Sigal — who helms a $3 billion portfolio of over 100 neighborhood and power centers in California, Colorado and Illinois — the big question is around development for those who temporarily or permanently move.
“The impact of having at least two major sections of L.A. having to relocate at least for the next three to five years is going to have a dramatic impact on other parts of California,” Sigal said.
For retail developers it offers potential opportunities to build wherever people end up going. It’s early days, but initial reads have shown some south movement into markets such as the South Bay and Orange County. Time will tell where else people migrate. It could be to markets where there’s a need for more commercial development.
That could make NewMark’s decision in September to establish a new division focused on communities with a shortage of retail development a prescient move.
The new venture, called NewMark Merrill Hadler Community Partners, will handle acquisitions, development and property management of centers in underinvested markets. The division is co-founded by Sigal and Jermaine McMihelk, who serves as managing director. Sigal said it’s a chance to build up a team with McMihelk at the helm and on the ground to establish relationships with city and community leaders. He was largely mum on specifics around acquisitions or development for the new group.
“We will embrace, involve and empower residents and businesses in every community that we serve,” McMihelk said at the time of the division’s launch.
McMihelk “has a pipeline of things that he’s working on, but in a lot of ways he’s still selling the vision of why people should work with him and how does this align with NewMark Merrill,” Sigal said. “Our expectation in the beginning is just to establish why we’re a different group.”
NewMark came out of 2024 with leasing activity exceeding internal expectations. The flipside of that was several tenants at its centers went bankrupt. That includes 99 Cents Only stores, which used to be one of NewMark’s largest tenants until the chain’s bankruptcy filing last August. Last year’s high interest rates and uncertainty around the presidential and local elections posed other headwinds for the business.
“It was a year filled with good success and some apprehension and I think this year has some of those same characteristics,” Sigal said of what he expects to be a “decent” year for NewMark.
It’ll force the company to be creative, and the strategy isn’t as black and white as new construction or acquisitions.
“We have other ways that we can do a transaction,” Sigal said. “We can build and there’s a margin on building that makes sense for us and so development this year will be a very strong year for us. We can assist other people who are stuck and can’t refinance because the interest rates are not working for them. We can manage assets for other people.”
While Sigal said NewMark keeps an eye on new markets, expansion beyond its core states would have to offer an “equivalency” to the places it already does business, the CEO said. That could mean moves into parts of Texas or other central parts of the country, he added.
Looming large above all this talk, whether it’s fire rebuilding or preparing for global events such as the Olympics and World Cup to come to Los Angeles, is California’s permitting process.
“I’m in three states. California is by far the worst as far as entitlements and the ability to get things built in any sort of reasonable timeframe,” Sigal said. “We’re experiencing that in real time.”
The CEO said the city of Los Angeles tends to be “tougher” than other communities in which the company has built. He offered as an example the city of Rialto to the east of Los Angeles in San Bernardino County. Sigal said the city was “phenomenal” to work with, so much so the company completed its second center, the Rialto Village, in 2023.
“We have very well-intentioned people at the local level,” Sigal said, “but they’re overburdened by the amount of regulation and how difficult it is to get things built.”
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