Shopping Center Business is the leading monthly business magazine for the retail real estate industry.
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CALIFORNIA 58 • SHOPPING CENTER BUSINESS • August 2016 OUT WITH THE OLD Across the board, restaurant space in Southern California is commanding ele- vated rents. "Restaurant spaces still com- mand a premium in terms of rent — I don't think we have a restaurant space that, if it's not leased already, won't lease almost im- mediately," says Rick Rivera. "There are so many new restaurant concepts that are out there." Emerging restaurant concepts continue to be in demand in both urban and subur- ban settings. While these tenants typically prefer to remain closer to the hip, urban centers, Spilky notes that they are more open to moving into traditional, suburban centers as prices continue to escalate for infill space. "We're just finishing out the leasing of restaurant spaces at Del Sur Town Cen- ter in San Diego. That's a 210,000-square- foot, ground- up, Target-anchored proj- ect," says Spilky of Location Matters Inc. "We were hired to sort of bring in some cooler, new restaurants that you really wouldn't ever see in that style of project." Locations Matters is also bringing a mix of unique restaurant tenants to urban, infill projects in San Diego. "We're work- ing with a lot of different urban retail proj- ects in San Diego," continues Spilky. "One specific urban retail project that happens to be in an urban center is in Hillcrest in San Diego, and that's owned by Regency Centers and called The Hub." The Hub, comprising 148,739 square feet on University Avenue in San Diego, utilizes a mix of outdoor plazas featuring murals and a collection of unique shops, boutiques and restaurants. "They recent- ly developed it, and invested about $4.5 million in totally upgrading the signage and facades and landscaping," says Spilky. "We brought in cooler, more unique restaurants to the trade area." Capital Real Estate Ventures also sees the promise in restaurants, with its recent acquisition of a portfolio of 22 quick-ser- vice restaurants in Southern California. "We re-negotiated new 15-year leases with the tenants and we've been selling these properties for sub-four cap rates, so we're exceeding our projections by about 75 ba- sis points," says Randy Rivera. Beyond restaurants, tenants providing services — like fitness boutiques and mas- sage parlors — are growing at an exponen- tial rate across the region. "We're doing a lot of medical uses," says Rick Rivera. "Not just your urgent care centers, but all kinds of fitness and massage places — any- thing geared towards a service that you cannot get on the Internet." RETAILERS EXPAND — AT A COST A drop in vacancy is continuing to pose an issue for retailers seeking to expand in Southern California markets, as compe- tition is constantly increasing and prices are escalating to previously unseen levels. "The vacancy rate for Southern Cal- ifornia is around 5.1 or 5.2 percent cur- rently, so the market is in relatively good shape," says J.C. Casillas, vice president of research, marketing and communications Retail - Commercial - Industrial Gaither Loewenstein Economic Development & Planning Manager 760-255-5177 gloewenstein@barstowca.og Fuel Cells Waste Reduction Organics Pollution Controls Wind Power Green Technologies Hydroponic Farming Logistics Film Industry Tourism Warehousing Manufacturing Barstow, has room for your company as well as room to grow. Barstow, can supply talented, diverse, educated and trainable hard working employees. Incentives from the city, county and state. A strategic location on interstates 15/40, half-way between the Los Angeles Harbor and Las Vegas. Nearby the So. CA Logistics Airport, and U.S. Customs and Foreign Trade Zone. Surplus demand for furniture, sporting goods and hobbies, home furnishing, health and personal care, electronics and appliances. Come see what Barstow is all about! Opportunity Knocking for… Retail Retail Retail