HomeMy WebLinkAbout07 SELECTION OF A REAL ESTATE BROKER FOR MARKETING AND SOLICITATION SERVICES FOR THE SOUTH HANGAR SIMEETING DATE: SEPTEMBER 15, 2026
TO: ALDO E. SCHINDLER, CITY MANAGER
FROM: BRIAN MONCRIEF, DEPUTY CITY MANAGER – REAL PROPERTY
SUBJECT: SELECTION OF A REAL ESTATE BROKER FOR MARKETING AND
SOLICITATION SERVICES FOR THE SOUTH HANGAR SITE
SUMMARY:
Request for selection of a real estate broker to provide marketing and solicitation services
for the South Hangar and portions of the surrounding leased property, totaling
approximately 32 acres, within Neighborhood D (Planning Areas 8, 13 & 14) of the Tustin
Legacy Specific Plan.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1.Authorize the City Manager to negotiate and execute a Listing Agreement with
CBRE, Inc., subject to non-substantive additions or modifications as may be deemed
necessary and/or recommended by the City Attorney.
FISCAL IMPACT:
There will be no direct fiscal impact given that commission to a real estate broker is paid
by the prospective sublessee upon execution of a sublease. The following commission
structure has been negotiated with the recommended broker, CBRE, and is consistent with
industry standards.
Sublease: 3.0% of the total sublease payments for Years 1-5
1.5% of the total sublease payments for Years 6-10
0.75% of the total sublease payments for Years 11-15
0.37% of the total sublease payments for Years 16-20
*Commission to be capped at first 20 years of sublease payments.
CORRELATION TO THE STRATEGIC PLAN:
Execution of a Listing Agreement for real estate brokerage services contributes to the
fulfillment of the City's Strategic Plan Goal A: Economic and Neighborhood Development.
AGENDA REPORT Agenda Item _______
Reviewed:
City Manager _______
Finance Director _______
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City Council Agenda Report
Selection of Real Estate Broker
September 15, 2026
Page 2
Specifically, this item implements Strategy 1, which is to develop critical phases of Tustin
Legacy.
BACKGROUND AND DISCUSSION:
The South Hangar site totals approximately 32 acres and is identified as Assessor's Parcel
Number 430-371-32. The South Hangar is owned by the United States Navy and is leased
and managed by the City pending completion of environmental remediation activities.
Accordingly, any transaction resulting from the competitive offering would likely be structured
as a sublease between the City and a prospective user.
The South Hangar is currently utilized on a limited basis for airship storage and maintenance
operations, the function it was built for in 1942. Existing structural and life-safety conditions
limit its operational capability, with prior consultant evaluation identifying improvement
scenarios ranging from approximately $22.6 million for baseline stabilization to $271 million
for broader adaptive reuse.
On July 21, 2026, upon the recommendation of City staff, the City Council authorized
staff to engage a specialized commercial broker to prepare and release a competitive
offering for the South Hangar and portions of the surrounding leased property (Site)
pursuant to the procedures established by the City Council in Resolution No. 25-10,
consistent with the staff recommendation and direction given by the City Council on June
2, 2026.
CBRE is being recommended as the broker to prepare and release a competitive offering
for the South Hangar site because of their direct experience with historic, federally owned
aircraft hangars, including the rehabilitation and ongoing management of Hangars 1 and 2
at Moffett Federal Airfield, which involved coordination with the Navy and NASA,
environmental remediation, and federal historic preservation compliance, as well as the
repositioning of the Spruce Goose hangar in Playa Vista.
The CBRE team that would lead the South Hangar effort also has experience as
exclusive listing agent for the U.S. General Services Administration on the disposition of
the 1,054,233 square foot Chet Holifield Federal Building in Laguna Niguel, which closed
in June 2026 for $207.9 million following distribution of 268 offering memoranda and
receipt of 11 offers. The assigned team includes twelve additional professionals covering
land, leasing, public and government institutions, capital outreach, project and
construction management, property management, market research, financial
modeling, debt and finance, and property marketing.
Following the negotiation and execution of a Listing Agreement, CBRE will assist the City
as follows over the next several months before the competitive offering is issued:
Identify strengths and weaknesses of the property;
Research and recommendations on prospective users, operators, developers and/or
tenants to pursue;
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City Council Agenda Report
Selection of Real Estate Broker
September 15, 2026
Page 3
Develop selection criteria for the selection process;
Prepare sample underwriting, graphics, market research with comparable analysis on
the subject property/City/region market for inclusion in the offering and prepare a
Broker's Opinion of Value;
Evaluate project feasibility and suggest potential solutions to achieve desired
transaction and development goals of the City;
Provide appropriate software to enable initial document disclosure, execution,
submittals, and questions, including access to the digital preservation assets prepared
for the South Hangar; and,
Prepare, distribute, and administer the competitive offering for the subject property in
accordance with the City's vision and City standard terms and conditions.
Following release of the competitive offering, CBRE will assist the City by reviewing
proposals, evaluating the financial and operational feasibility of proposed concepts,
negotiating best and final terms, and assisting with recommending a preferred party for City
Council consideration. Consistent with the milestones presented to the City Council on July
21, 2026, staff anticipates finalizing and releasing the competitive offering by December
2026, evaluating submitted proposals in the first quarter of 2027, and returning to the City
Council in the second quarter of 2027 with recommendations regarding potential next steps.
_______________________________ ________________________________
Brian Moncrief Jason Loya
Deputy City Manager – Real Property Senior Management Analyst
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