Retail Vacancy Will Decline in 2014

IRVINE, CA-With minimal new construction and increasing tenant demand, Hanley Investment Group’s president Edward Hanley expects to see retail vacancies tighten significantly this year. The firm concluded December 2013 with the sale of 10 retail properties for a total consideration of more than $315 million.

One of the firm’s most recent sales was the Shops @ the Mercury, located at 3800 Wilshire Blvd. in Los Angeles, which sold for $15.75 million to a private investor from Dallas. According to Carlos Lopez, president of HI Urban Retail Advisors, a division of Hanley Investment Group, the property “is one of a handful of high-profile retail buildings to transact to date in the city. The multiple offers generated from our marketing efforts are truly indicative of the nature of the intersection of Wilshire and Western in the heart of Koreatown, one of the few 24/7 districts in the City of Los Angeles.”

According to Hanley, the 2013 retail investment market “finished with more sales than even the most optimistic analysts predicted at the beginning of the year. The market continued to strengthen as the year went on despite the unsettled economic and political sectors. We saw a record-breaking number of closings at the end of the year as private investors sought to take advantage of low interest rates and the limited supply of quality assets. The institutional market was extremely active as well, with mergers, portfolio acquisitions and large deals totaling more than $4 billion.”

Hanley reports that 2014 retail investments will increase steadily as pent-up investor demand, which was not satisfied in 2013, continues to fuel activity. “As interest rates continue to rise, sellers will evaluate adjusting cap rates upward and give more consideration to selling assets they have held to this point. If the supply of product increases, the result will be an extraordinary year for transactions.”

He adds that if January’s activity of upcoming new listings and multitude of buyer requirements is any indication of how the rest of the year will go, “we know it’s going to be another great year.”

As reported in September 2013, HIG negotiated the sale of more than 122,000 square feet of retail space with the sale of Michaels Plaza and Stater Bros. Plaza in Riverside, CA. The transactions totaled more than $20 million.

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