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Report regarding a resolution authorizing the City Manager to execute a second Sublease Agreement with Milk Tea Lab to extend the lease at 630 El Camino Real for five years, with an additional five year extension. (Mike Lappen, Economic Development Coordinator)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council adopt a resolution authorizing the City Manager to execute a second Sublease Agreement with Milk Tea Lab to extend the existing lease at 630 El Camino Real with Milk Tea Lab for another five years, with an additional five year extension.
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BACKGROUND/DISCUSSION
In July 2016, the City Council authorized the City Manager to executive a Sublease Agreement with Cool Tea Bar, LLC to operate the commercial space (Suite A) at 630 El Camino Real. In 2019, Milk Tea Lab assumed the Sublease and has continually operated at this location. The term of the original Sublease Agreement ends in September 2021 and permits the owners to extend the term for another five years. However, the owner wishes to continue operating at this location for another ten years and has requested that rather than agreeing to an automatic five year extension, that they enter into a new 10 year Sublease Agreement (an initial five years, with a five year extension).
Founded in 2016, Milk Tea Lab is a franchise with eight stores in the San Francisco Bay Area that focuses on the preparation of natural, fresh, and healthy teas and tea-based drinks. Milk Tea Lab proposes to continue to rent Suite A (1,600 square feet) at 630 El Camino Real. The initial term of the Sublease will be five years with one five-year option. The proposed base rent would start at $3,500 per month and would increase by three percent (3%) annually over the next five years. The rent could be renegotiated for the term of the five year extension.
The proposed starting base rent ($3,500/month) is lower than the existing rent ($3,800/month). The City's property manager, SC Properties, ha...
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