LOS ANGELES—Macy’s Inc. has sold the five-acre land site beneath the Shops on Lake Avenue in Pasadena to an unnamed private investor. The land site is a rare fee-simple ground lease and shadow anchored by the department store chain. Although this is an unrelated transaction, it comes on the heels of Macy’s closing several stores throughout the US last year. The terms of the transaction were not disclosed.
The Shops on Lake Avenue is 131,153 square feet of retail space and a roster of national credit tenants. As a result, it attracted strong interest from potential investors. “The transaction exemplifies the strong interest of investors to purchase and retain retail investment property in strong markets and in the high-performing retail districts of Southern California,” Carlos Lopez, EVP of Hanley Investment Group, tells GlobeSt.com. Lopez and senior associate Lee Csenar represented the seller in the transaction, while the buyer represented itself.
It is rare to find a land site on a fee-simple ground lease, like this, and a rare opportunity to buy well-located acreage in Pasadena. The lease term has 61 years remaining, and it includes two 10-year extension options. “The property’s income stream had stipulated increases during the term, while there were stipulated increases during the term of the lease, there were not significant adjustments in the lease until over 40 years in the future,” adds Lopez. The brokerage team received 20 total offers within 30 days before ultimately narrowing it down to three to four final bidders.
While the retail market is evolving, well-located retail assets, like this, are attracting strong interest. “Overall, the prime location along South Lake and the inherent nature of purchasing a ground lease created strong buyer interest,” says Lopez. “High-quality urban locations in great cities and shopping districts like Pasadena, Hollywood, Downtown Los Angeles and Santa Monica continue to attract investors from Southern California, as well as from across the nation and the global investment community.”