NewMark Merrill CEO Talks Wildfires, Permitting Headaches
Wildfires and Rebuilding
Sandy Sigal, CEO of NewMark Merrill, 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 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.
New Opportunities
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.
NewMark Merrill Hadler Community Partners
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.
Challenges Ahead
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.
Permitting Headaches
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.
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Conclusion
Sigal emphasized the importance of being creative in the face of challenges and adapting to changing circumstances. He expressed optimism about the future, citing the company’s strong leasing activity and its ability to navigate the complexities of the permitting process.
FAQs
Q: What is NewMark Merrill’s strategy for rebuilding in the aftermath of the wildfires?
A: The company is focusing on developing in underinvested markets and building relationships with city and community leaders.
Q: How does NewMark Merrill plan to adapt to the changing retail landscape?
A: The company is exploring new opportunities in markets such as the South Bay and Orange County and is focusing on building a strong team to navigate the complexities of the permitting process.
Q: What are the biggest challenges facing NewMark Merrill in the current market?
A: The company is facing challenges related to permitting, high interest rates, and uncertainty around the presidential and local elections.
