Inland Empire Shopping Center Trades at Sub-6% Cap Rate

UPLAND, CALIF. — Upland Village, a 60.9k sf, grocery-anchored shopping center in Upland, sold for $17.2 mil, or $282/sf. The transaction worked out to a cap rate of 5.83 percent, which we’re told is a record low cap rate for a stabilized grocery-anchored shopping center in the Inland Empire. Grocery Outlet and Dollar Tree anchor the neighborhood retail center.

Built in 1972 on 3.92 acres, Upland Village is located at 110, 130, 140 and 180 Mountain Ave, at the northeast corner of Mountain and West 8th Street. The neighborhood center was 100 percent occupied at the time of the sale. Grocery Outlet and Dollar Tree represent over 50 percent of the occupied square footage.

Ed Hanley and Bill Asher with Hanley Investment Group, along with Joe Miller at Voit Real Estate Services, represented the seller, Outpost Village LLC, based in Orange County. The buyer, a southern California-based private investor, was represented by Peter Loh of RE/MAX Realty 100 of Diamond Bar and Paul Yang of RE/MAX Vantage of Eastvale.

“Upland Village offered a 100 percent-occupied, grocery-anchored shopping center with a synergistic mix of national and regional tenants in a dense, infill Southern California location,” said Asher. “Approximately 71 percent of the current tenancy had occupied space at the shopping center since 2010 or before and 60 percent of the tenants had more than five years remaining on their current term.”

According to Asher, Grocery Outlet having a new long-term corporate guaranteed lease and Dollar Tree having occupied its space at the property for 10 years and recently exercising its five-year option, were key attributes to the asset that attracted a multitude of investors to the property.

“With interest rates increasing 50-75 basis points in the last three months, Upland Village could very well represent one of the last stabilized grocery-anchored shopping centers to sell for a sub-six percent cap in San Bernardino and Riverside counties,” commented Asher. “Interest rates are going to have a substantial impact on values moving ahead for anchored shopping centers priced at $10 mil and above in the Inland Empire. Unless there are compelling metrics such as reported high-volume store sales for anchor tenants within the shopping center, we anticipate values for the similar type of assets like Upland Village to transact at a six-percent cap and above moving ahead, if interest rates continue to stay at their current levels.”

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