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Looking Up – Commentary

SURF Air seemed so promising a year ago. But alas, now that the teensy airline is ready to take off, perhaps as soon as Wednesday, its viability suddenly seems iffy.


You may recall last year that Surf Air caught the attention of L.A.’s tech community in particular because of its potential to provide air service between Silicon Valley and Silicon Beach. Tech execs imagined motoring the short distance from the Third Street Promenade to the Santa Monica Airport, handing their keys to a valet, breezing through the general aviation airport with no humiliating TSA pat-down and quickly hopping on a small plane that would land in Silicon Valley.


They could fly up in the morning and back in the afternoon. And they may as well fly often, since Surf Air was to offer a Netflix-like, fly-all-you-want-for-$1,000-amonth subscription.


Little wonder that Surf Air reportedly got a standing ovation when it made its presentation to investors at the end of its class at the MuckerLab accelerator last year and quickly racked up $4 million in investments. “(Surf Air) could have easily raised three times that amount,” MuckerLab’s president told the Business Journal’s tech reporter, Tom Dotan, at the time.


But when Surf Air last week announced that it had gotten approval from the Federal Aviation Administration to take wing, the startup said it will indeed fly to Silicon Valley, but it will be doing so from the Bob Hope Airport in Burbank. There was no explanation of why Santa Monica Airport was not the base. However, given all the protests aimed at the airport – and some local officials’ quest to close it – it’s clear that several more daily flights are not exactly high on Santa Monica’s wish list.


The question now: Will tech execs want to rush from the Third Street Promenade and drive the 45 minutes to Burbank? They may figure that LAX, which is more of a hassle but only about 20 minutes away, is more compelling.


Oh, and Surf Air’s subscription rate bumped up to $1,650, which is an easy-tocalculate 65 percent increase.


Maybe Surf Air will still find its audience. But it may not be the tech community that was so enthusiastic a year ago. • • •


What number is so shockingly puny you’d think we were talking about Matt Kemp’s home run total? It’s 31. That’s the number of producers who scored a California tax credit for film projects in the annual lottery last week. That’s 31 for the whole year.


That’s 31 of 380 who applied. That figures out to a little more than 8 percent.


Eight percent? In the past, we noted that only about 20 percent of those who applied actually got a tax credit, and we thought 20 percent was too low.


Several aspects of the film tax credit program need to be updated. For one, producers should be able to sell their tax credits to a third party. (Now, only small-budget, independent films have salable credits.) That would lure more outside producers to California, among other benefits.


But the main need is to expand the credit program, which is capped at $100 million. It should be quadrupled or quintupled, but even doubling it would be a help.


Remember, this program is not a drain on the state’s treasury. That’s because credits basically are taxes that are not paid in the future for economic activity that will occur soon. And that economic activity creates other taxes that are paid.


The worst part: Producers who don’t get the credits – as in the 92 percent who lost out in the lottery last week – are likely to go to othe

Pomona Defense Plant Site is Getting New Manufacturers

The maker of Con-Tact adhesive paper shelf liners, Little Twig baby bath products and other household items will move to a manufacturing and warehouse building being built on the site of a defunct defense industry plant in Pomona.


Kittrich Corp. — which also manufactures pens, highlighters and other school supplies — will make the new 240,000-square-foot building its headquarters when it relocates from La Mirada by the end of the year.


It will be in the largest building erected in the San Gabriel Valley since the 2010 construction of a manufacturing plant for Huy Fong Foods Inc. in Irwindale, said Craig Furniss of Seventh Street Development in Long Beach. Seventh Street also built the Huy Fong plant, where the popular Sriracha hot sauce is made.


The Kittrich building will rise on the site of a General Dynamics Corp. missile plant that closed in 1996. General Dynamics was once Pomona’s largest employer, but it started laying off workers in the late 1980s as the Cold War ended. By the time the defense contractor left Pomona in 1994, about 7,000 jobs had been eliminated.


Recent demand for new warehouse and distribution centers in the region put the old General Dynamics site in play. Seventh Street bought land there from the federal government and is erecting industrial buildings for sale or lease in what it calls Mission-71 Business Park for its location at Mission Boulevard and California 71.


Other occupants of the business park include industrial sling manufacturing company Lift-It, boiler maker Dawson Co. and Filipino food products distributor Martin Purefoods Corp. There is a shortage of industrial space in the area, real estate brokers said.


“No new construction in the past three years has created a significant lack of product, making the San Gabriel Valley industrial market one of the tightest markets in the entire L.A. region,” broker Lynn Knox of CBRE said.


The General Dynamics site is one of many that local governments and developers are laboring to redevelop, Los Angeles real estate attorney Andrew Kirsh said.


“In Southern California, the defense industry prospered over nearly the entire 20th century,” said Kirsh, who represents a home builder at the former El Toro Marine Corps Air Station now known as the Orange County Great Park. Such obsolete properties offer both headaches and potential rewards.


“They take up a lot of land and can become eyesores,” he said, “but are also a great opportunity for developers to invigorate the local economy.”

Press, Corporate, Real Estate
The Internet Brings Unintended Consequences to a Changing Retail Market

What effects has the Internet had on the brick-and-mortar retail market? This question has been discussed, written about, analyzed and debated thousands of times over the past several years. During this time, it has become rather routine for consumers to purchase all sorts of goods on the Internet. From clothing to household items and office supplies, it’s clear there is a generational shift that is affecting one’s buying habits. As a result, vacancies are up and demand is down as fewer transactions are occurring in the physical stores.


Other consequences have also emerged as a result of this increase in online shopping. First, shopping centers have become less about a place to make routine purchases and more about a meaningful experience where members of a community can spend several hours on a weekend or afternoon. Landlords are expanding their basic services by providing value-added features that are not easily duplicated online. For instance, shopping centers now provide consumers with personalized services like farmers markets, concerts and holiday-themed events. Centers have quickly become mini-oases, catering to all members of the family with waterfalls, light shows and cartoon characters. The retail tenants that are in demand are those that cannot easily be replicated through a computer transaction, such as movie theaters, restaurants or ones that provide products that consumers do not typically purchase via the Internet, including those found in grocery stores, drugstores and high-end retail locations.


Yes, retail is most definitely experiencing a bifurcated market. Cap rates are compressing for properties that are either anchored by a national grocery store or drugstore, or are viewed as a destination centerpiece for a community. Conversely, retail centers that do not offer unique services or have historically relied on retailers whose products are now more often purchased online are experiencing less demand and thus, higher cap rates.


Although the Internet has predictably affected the retail real estate market, it has perhaps unexpectedly increased the demand for industrial real estate. During the recent recession, industrial properties suffered greatly due to the rapid decline in economic activity. Recently, however, retailers that account for a large percentage of their business online are requiring large distribution centers and warehouses in order to rapidly distribute their products to consumers. As such, the market for infill industrial properties is extremely tight, with occupancy rates at record highs and cap rates on the steady decline.


The Internet does not necessarily mean doom and gloom for the real estate market. Granted, it has made it pretty convenient for people to buy the latest best-seller while sitting on the couch in their pajamas. Those landlords evolving and willing to make the necessary expenditures, however, are witnessing growth and a valuation increase in their properties across the retail and industrial sectors.

Press, Real Estate
Expert: Maybe Too Much Apt. Development

LOS ANGELES-Following the day-long RealShare LA event, GlobeSt.com headed over to the Sklar Kirsh LLP Reception and joined approximately 35 industry folks at Chef David Myers’ newest restaurant, Hinoki & The Bird. Partner Andrew Kirsh, who had moderated the development panel at RealShare L.A., gave us a few more thoughts on the market, his panel, and more about the new law firm and its “unique vantage point.”


According to Kirsh, “The asset classes where we see the most demand are multifamily, mixed-use and creative office, especially projects that are concentrated around transit-oriented districts, as evidenced by my panel today,” says Kirsh.


Development is in full force.” Kirsh tells us that there is sufficient capital to build is demand from the consumer to purchase or lease the real estate that is being built. In fact, he says, “several of the panelists voiced their concern that there may be too much development in the multifamily space, which is unbelievable to hear since just a couple years ago there was literally no development occurring.”


The RealShare conference series is produced by ALM’s Real Estate Media Group, which also publishes GlobeSt.com and Real Estate Forum.


When we asked more about how things are going with his new law firm, which he founded with corporate transactional attorney Jeff Sklar in February, he tells us that the firm is focusing solely on real estate and corporate transactions. “We have an intimate vantage point as to what deals are getting done,” he says. He explains that, “We have about 50% of our client base doing deals in California, but the other 50% are Development is in full force says, Andrew Kirsh (l), pictured here with Jeff Sklar. Approximately 35 industry folks gathered at Chef David Myers’ newest restaurant, Hinoki & The Birdoing deals throughout the US, including Arizona, Nevada, Texas, Florida and even Iowa. Because there is so much demand in the coastal regions, in order to get better cap rates, our clients are purchasing real estate outside of California.”


In addition to multifamily, here in Los Angeles, he says, the creative office market, which caters to tech companies, is extremely active. “We have closed several deals recently where institutional capital joint ventured with local operators to purchase value added deals in the office sector,” he says. “With the influx of ‘Silicon Beach’ tenants into the market place, we are seeing a sea change in the type of office product that is currently in demand with the creative office sector.”


When asked about teaming up with Kirsh, Sklar tells GlobeSt.com that “Andrew and I saw this as a perfect opportunity to join forces. High-net-worth individuals, investment funds, family offices and emerging and large companies alike are finding it is now a good time to put their money to work, whether it is forming a new business, financing one, buying or selling real estate or other assets, or growing through merger-andacquisition activity. We knew we could put together a team to handle these complex corporate and real estate transactions at reasonable pricing. It is definitely an example of one and one equaling three.”


As GlobeSt.com previously reported, Kirsh was among the 40 rising stars Real Estate Forum editors selected from among more than 250 nominations. Read more in the October 2012 issue of Real Estate Forum.

Press, Corporate, Real Estate
Sklar, Kirsh Form Corporate and RE Law Firm

LOS ANGELES—Attorneys Jeffrey Sklar and Andrew Kirsh have founded Sklar Kirsh LLP, a Los Angeles-based law firm concentrating on corporate and real estate transactional law.


Based in Century City, Sklar Kirsh LLP opens its doors with a team of nine attorneys, including Shawn Haghighi, Stephen Halper, Mary Ruth Hughes, Blake Fix, Justin Gaynor and Navid Morè. The attorneys say in a statement that clients include local, regional and national businesses in alternative energy, automotive, banking, consumer products, digital media, entertainment, food and beverage, healthcare and technology.


Sklar formerly had his own firm Sklar Law PC. Kirsh most recently was a partner with Beverly Hills, Calif.-based Raines Feldman.


Kirsh chairs the new firm’s Real Estate Department, which represents developers, operators, syndicators, investors, funds and lenders in a wide range of matters including acquisitions, dispositions, equity investments, syndications, fund formation, development, leasing, financing, note purchases and foreclosures. Sklar Kirsh LLP’s real estate clients include institutions, family offices, and regional owners and operators across all asset classes of real estate, including multi-family, retail, office, industrial, and hospitality.

Press, Corporate, Real Estate
Lawyers launch transactional boutique

In hopes of tapping into the Los Angeles transactional market, attorneys Jeffrey A. Sklar and Andrew T. Kirsh recently opened Sklar Kirsh LLP, a Century City firm that has grown quickly to eight attorneys.


The men formed the new firm after Kirsh joined Sklar’s previous firm, Sklar Law PC from Beverly Hillsbased Raines Feldman LLP.


Sklar, a corporate attorney and Kirsh, a real estate transactional lawyer, said their books of business are “synergistic” and will effectively serve the Los Angeles business community.


“The goal of the firm is to really focus on the middle-market businessperson; that’s the predominant business force in Los Angeles,” Sklar said. “We are ideally positioned to provide services in that range.”


Kirsh said that while the corporate practice has historically relied on the real estate practice for a variety of reasons, regardless of a company’s industry, real estate requires more corporate help than ever before.


The real estate industry is a lot more sophisticated in how they structure deals from the corporate side, which really necessitated me to do a joint venture,” Kirsh said. “The industry is getting into various corporate matters, such as fund formation, syndication and joint ventures.


The attorneys said they are confident in being able to serve mid-market corporate clients because all of the attorneys on staff have a big-firm pedigree and can now offer lower rates than their colleagues at larger firms.


“Los Angeles is more of an entrepreneurial, middle market business climate, and while they demand sophisticated lawyers, they don’t have the budget to pay [big firm] legal fees,” Sklar said. “New York might have one model and Chicago another, but Los Angeles is an entrepreneurial path.


Kirsh said the firm plans to add a ninth lawyer soon. The attorneys said their practices are booming, requiring the additional help.


Despite significant growth early in the firm’s history, Sklar and Kirsh said they want to remain a transactionalbased firm, which they said is rare


“You don’t see that as much in the boutique firms,” Kirsh said. “You get small litigation shops and some small full-service shops, but we’re going to focus on transactions.”


“From the corporate side, it’s an exiting time to be in Los Angeles,” Sklar added. “We’re very positive about the prospects of our firm, and we are confident towards the business community in Los Angeles.”

Press, Corporate, Real Estate
Sklar Kirsh Fills Price Gap

LOS ANGELES-Corporate transactional attorney Jeff Sklar and Andrew Kirsh, former partner with Beverly Hills, CA-based firm Raines Feldman, have founded Sklar Kirsh LLP, a corporate and real estate transactional firm here. The firm aims to provide a full slate of corporate, securities, M&A, real estate and finance capabilities that combine sophisticated legal services and exceptional value.


Kirsh, an experienced commercial real estate transactional attorney, tells GlobeSt.com that while it was difficult to leave Raines Feldman, he and Sklar were noticing a demand in the market that wasn’t being met by the larger law firms. “The last year was a very, very active year, culminating with an extremely active fourth quarter. With that, we’ve noticed that our clients, a growing number of them, were demanding sophisticated legal services—more so now than ever, given a lot of change in laws and changing ways to structure deals. But with the rates of law firms increasing every year, our clients and real estate companies just simply can’t afford that size legal fees any more. They don’t want to sacrifice in their legal services, but they don’t want to be paying the large rates that the large firms are charging.”


Sklar’s clients come from around the country and range in size from individuals and start-ups to emerging and middle-market companies. His expertise covers a wide range of industries, including alternative energy, automotive, banking, consumer products, digital media, entertainment, food and beverage, healthcare, hospitality, logistics, private equity, professional services, public relations, real estate and technology.


Kirsh and Sklar decided to merge their practices, forming a premier transactional-based law firm filled with lawyers that come from nationally and internationally recognized law firms and who have the pedigree of the top 10 or 20 law schools that clients expect for much better value. “Our client base ranges from national institutions to regional family offices, local operators and syndicators and high-net-worth individuals,” says Kirsh. “We’re doing deals that large law firms would be doing, and we go up against large law firms in JV agreements all the time. These are transactions that have purchase prices of $10 million to $50 million—they’re not small deals. With that said, we’ll also be able to handle deals for under $10 million that larger firms would not be able to work on.”


Sklar Kirsh will focus on the middle-market real estate industry in L.A., Kirsh adds. “The large financial institutions, banks and the largest of private-equity firms are going to continue to use large international law firms, but the vast majority of real estate players in this community are middle market.”

Press, Real Estate
Large Institutions JV with Smaller Players

LOS ANGELES-At a time when there are more players chasing deals than there are deals to chase, a trend toward large institutions and private-equity firms partnering up with smaller or “middle-market” players is emerging, Andrew Kirsh, founding partner of newly formed corporate and transactional real estate law firm Sklar Kirsh LLP here, tells GlobeSt.com. Kirsh says most players in the L.A. real estate market are classified as middle market, but the deals they do are just as sophisticated as those done by the larger firms.


“Where these middle-market players are partnering up and JVing with those large institutions, they need someone to represent them—particularly when partnering up with large capital providers.”


That’s where Kirsh says he and partner Jeff Sklar come in with their new firm, which, as GlobeSt.com reported earlier today, focuses on the middle-market players. “The private-equity companies are flush with a lot of capital. They have a lot of dry powder and they have to push it out and invest, but they’re having trouble finding deals. They’re relying on local operators, experts in their asset class, to partner up with them. The institutions would provide a large majority of capital, and my clients are closer to the ground, able to find the deals and need their capital to take advantage of these opportunities.”


Kirsh says deals are hard to find for these private-equity groups, so they’re relying on partners with boots on the ground in their respective markets to find them. “There are a lot of private-equity companies sitting on a lot of cash who need to find deals and are aggressively pursuing those deals by partnering up with local operators. They are asking attorneys, CPAs and other contacts of theirs to make introductions to these more middle-market real estate operating companies.”


Kirsh adds that after not doing a great number of deals between 2008 and 2011, “this pent-up demand had to get released, and the investors of the private-equity companies are insisting that their money be allocated, but the private-equity companies don’t want to make a mistake and lose investors’ money. They’re being diligent in finding these local deals. They’re relying on a narrow subset within their specialty. They’re not looking for a general practitioner—they’re looking for a heart surgeon.”

  • “For several years, I have worked with Sklar Kirsh for my M&A and other corporate law needs.  They are practical and creative lawyers and have guided me through several major transactions with a steady hand and clear focus on my goals.”
    — Mark Mickelson, Managing Partner of Next Point Capital, Chairman of Art Brand Studios & Chairman of Next Point Bearing Group

This testimonial does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.