CORONA DEL MAR, CA—The supply of retail investment opportunities will increase this year as owners who waited to put their properties on the market rush to take advantage of what feels like a market at its peak, Hanley Investment Group Real Estate Advisors’ president Ed Hanley tells GlobeSt.com exclusively. He says those who have been holding back putting their retail properties up for sale are now beginning to see the window of opportunity close and will be enticed to sell in 2016.
“With the added supply of product and projected rise in interest rates, there will be downward pressure on pricing that will have an impact on transactions in 2016,” says Hanley. He feels that multiple offers on properties will likely no longer be the norm, and those sellers who do not appropriately price their assets or react quickly to what the market is offering may find themselves having to adjust pricing according to macroeconomic factors throughout the year. “Managing expectations will be the key to successfully closing transactions in 2016.”
Demonstrating this trend of increasing sales transactions, HIG has completed the sale of $73 million in retail properties in 30 days. The retail transactions include both single-tenant and multi-tenant retail properties in California as well as an out-of-state neighborhood grocery-anchored shopping center. The bevy of transactions included the sale of a prominent multi-tenant retail investment located within the ground floor of an oceanfront mixed-use development in Southern California, along with record cap-rate sales for a number of single-tenant properties.
In addition, HIG has another 15 retail properties valued at $105 million in escrow, plus a multitude of buyer requirements to fill, according to Hanley. “If January’s volume of activity is any indication to how the rest of the year will go, we believe it is going to be another record year in the retail investment sector.”
The firm has recently been active in retail sales transactions in various areas of California. In Los Angeles County, HIG SVP Carlos Lopez represented the seller in the sale of a 19,717-square-foot multi-tenant retail property situated at the base of an oceanfront luxury residential development at Ocean Avenue South in Santa Monica. Built in 2014, the retail property at 1705 and 1755 Ocean Avenue was sold in an off-market transaction for an undisclosed amount.Babak Ziai, founder of BrandView Capital Partners, represented the buyer, JPMorgan.
Also in L.A., HIG SVP Jeremy McChesney, along with Lopez and Hanley, represented the seller in the sale of a 100%-occupied 21,890-square-foot multi-tenant shopping center near Santa Monica Blvd. and Vermont Ave., adjacent to the Los Angeles City College campus. The two-story retail center was built in 1986 on .72 acres and features a rare parking lot, both in the front and back of the building. The purchase price was $10,965,000. Marc Pollock of Westside Retailrepresented the buyer, a private investor based in Los Angeles.
In addition, HIG SVP Patrick Kent and EVP Bill Asher represented the seller in the sale of a 15,525-square-foot single-tenant absolute NNN Walgreens in Huntington Park, CA. Located at6100 Pacific Blvd., the property was built in 2007 on a 47,916-square-foot lot at Pacific Blvd. and Randolph St. The purchase price was $11,850,000, which represented one of the lowest cap rates for a fee-simple Walgreens nationwide at 4.22%. Nigel Keep and Bill Kurfess of Kidder Mathews represented the buyer, a private investor based in Northern California.
In San Diego County, HIG EVP Eric Wohl represented the seller in the sale of a single-tenant absolute NNN Wendy’s sale-leaseback at 8749 Campo Rd. in La Mesa, CA. Built in 1984 on .84 acres, the 2,806-square-foot Wendy’s sold for $4,125,000, representing one of the lowest cap rates in the nation for a Wendy’s sale leaseback, according to Wohl. The sale featured a brand-new 20-year lease with increases every five years. Thomas Ahn of Integrity Capital represented the seller.
McChesney also represented the seller in the sale of a single-tenant corporate-leased O’Reilly Auto Parts store in Contra Costa County, CA. Built in 1981 on .78 acres, the 8,037-square-foot store is located at the corner of 100 E. Cypress Rd. in Oakley. The purchase price was $2,822,500. The buyer, a local private investor, was represented by Dan Diehl of Keller Williams.