Shopping Center Business is the leading monthly business magazine for the retail real estate industry.
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CALIFORNIA 54 • SHOPPING CENTER BUSINESS • August 2016 "About 75 percent of the buyers nation- wide come from California, a majority of which are apartment sellers choosing to go outside California to pick up a better yield." Rick Rivera continues to note that sin- gle-tenant sales are largely driven by mul- tifamily in California. "The apartment market is really driving the single tenant sales because buyers in California are back to buying future rents, so they're buying on performance," he says. "When a seller actually sells his apartment building, he's selling at a three to four cap rate, allowing him to go buy a single tenant property at a three to four cap rate." Many California-based investors are taking the opportunity — while demand continues to escalate — to sell older cen- ters in order to acquire a larger, newer portfolio of properties, according to Ran- dy Rivera of Capital Real Estate Ventures. "We're seeing a tremendous amount of activity where property owners are trying to sell their smaller or older shopping centers that have made a profit in order to reposition their portfolios into larger, newer, better-located properties," notes Rivera. "They're doing this to take advan- tage of the low interest rates, so the people that are acquiring the older properties are typically the new buyers that are coming into the market. The smaller owners are now trading up to the larger centers." NEW DEVELOPMENT, REDEVELOPMENT CONTINUES Many centers across Southern California are in the process of rede- velopment, adding new service tenants, restau- rants and entertain- ment venues. "We're doing a major remodel of a shopping center in Inglewood, located at the corner of Imperial and Crenshaw," says Sandy Sigal, president and CEO of NewMark Merrill Cos. "It's about 275,000 square feet, with an additional of- fice building. The center has been around since the late 1950s. We're bringing in a Save-A-Lot grocery store, and a number of restaurants. We're also redoing the office building and bringing in a gym. That's a big project — it's about $14 or $15 million in construction value for a total value in the mid-60 range." NewMark Merrill is also adding movie theaters to several of its centers in hopes of hitting high experiential marks. "We just opened a movie theater and have several new retailers coming in at Janss Marketplace at Thousand Oaks," contin- ues Sigal. "That center is 450,000 square feet. We are also bringing in a brand new movie theater to our center in Oceanside, alongside a discount retailer." At Runway Playa Vista — the recent mixed-use development comprising 217,000 square feet of retail, 33,000 square feet of office space and 420 apartments in Playa Vista — the mix of tenants continues to expand with a new 21,000-square-foot Fred Segal set to join Whole Foods Mar- ket, Studio MDR and Yogaworks. Following the trend towards the coast, Pacific City, a 191,000-square-foot center located just across the Pacific Coast High- way from the ocean in Huntington Beach, California, is moving towards a full open- ing in the fall. Offerings at the property include care- fully curated retail — featuring tenants like Byer Properties Exceptional Advisory Service for Over 25 Years We are specialists in Market Entry, Expansion, Relocation, Acquisition and Disposition Keith Kleinman • Mark Esses 310.449.1989 www.californiarealtygroup.com ATTENTION RETAILERS & DEVELOPERS: Expanding or relocating throughout California? Partial list of Current and Past satisfied Clients The Bloc mixed-use development — located in downtown Los Angeles — was originally built as an urban mall in 1973. Courtesy of The Ratkovich Co.