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CALIFORNIA 50 • SHOPPING CENTER BUSINESS • August 2016 Inc., Randy Rivera, echoed this sentiment regarding downtown San Diego. "Down- town urban districts, like downtown San Diego East Village and downtown L.A. are hot right now," begins Randy Rivera. "Places where people can work, live and play in the same area are growing. We're seeing a lot more people come from the suburbs to downtown and a lot of mixed- use properties are being developed. It's no longer only people working downtown that want to live downtown — many peo- ple are choosing to be right in the center of the action." Much like San Diego, communities sur- rounding Los Angeles are highly sought after by retailers and developers alike. "Infill locations that are in core or gen- trifying neighborhoods have the most appeal, especially in areas that are on a five-year lead-time going to become com- pletely different trade areas," says Carter Crouch, vice president of acquisitions at Dynamic Development Co. "Inglewood is one — prices on dirt there have gone up by over 150 percent over the last three years, which is extremely high compared to the metro area." Crouch continues that markets like Santa Monica are experiencing record highs. "Hollywood and Santa Monica are at record levels with more than $600- to $700-per-square-foot for land value," says Crouch. While the urban core and coastal re- gions continue to garner attention, up- and-coming neighborhoods are rising among the ranks as developers and retail- ers seek to escape the astronomical prices found in major cities. "If you can acquire a retail asset in Los Angeles or Orange County, this is highly coveted because it's all infill now," says Hook. "That's the most desired — but is it the hottest? It probably is not due to the lack of inventory. The market with the most volume would appear to be the Inland Empire — which is San Bernardino and Riverside counties. There is a lot of retail development driven by tenant de- mand occurring in that area because of the increased velocity of housing develop- ment and business expansion." IN DEMAND Whether you're seeking a top location in an urban or coastal setting, or looking for a slightly less expensive retail proper- ty in an up-and-coming neighborhood, demand for buyers is reaching record heights. "Buyer demand in California is very high," says Peterson of Passco. "Institu- tional capital and high net-worth private investors recognize that California is the place where they want to be. There's good potential for rent growth and value growth over the next five to 10 years." Peterson points to Southern Califor- nia's low cap rates as proof of the pud- ding. "Demand is illustrated by cap rates, and cap rates in California are lower than pretty much anywhere in the coun- try," says Peterson. "When you drop into markets like Las Vegas, Texas, and even Atlanta, cap rates move up 50 to 100 basis points from where they are in California." Foreign capital continues to domi- nate the California buyer's market for single-tenant, net lease retail properties. "Foreign investors have been the active 2050 MAIN STREET, SUITE 650 | IRVINE, CA 92614 | P: 949.442.1000 | WWW.PASSCO.COM IRVINE, CA | DENVER, CO | AUSTIN, TX | DALLAS, TX | ATLANTA, GA Ranked #1 "Best Places to Work" by the Orange County Business Journal, Passco Companies, LLC is a nationally recognized market leader in 1031 exchanges and the acquisition, development, and management of multifamily and other commercial properties throughout the U.S. W VISIT US AT ICSC WESTERN Shadow Anchored Shop Space | Multi-tenant Pads 1031 Exchanges | Arizona, Nevada & California WANTED