Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.
Issue link: https://westernrealestatebusiness.epubxp.com/i/566807
www.REBusinessOnline.com Western Real Estate Business • September 2015 • 57 peat the past that has led many land- lords to seek out only the best of the best, now that the tables have turned and many have that option. "After riding out the Great Recession and the shambles it made of the So- Cal commercial real estate market, land- lords and investors want security and peace of mind," he says. "Long-term, triple-net leases with corporate guar- antees ofer stability. Landlords are confdent these businesses — large, established companies — are highly unlikely to go out of business or close a location for mediocre performance. And even if they do, guaranteed leas- es provide peace of mind that land- lords will still get their money." The demand for top-notch space is so fevered, even with the pullback from some traditional retailers, that space in the few newly developed centers is oftentimes taken ofine before the project even debuts. Mat- thews points to Federal Realty's The Point, a 115,000-square-foot shopping, dining and entertainment center in El Segundo, California, as one example [see related article in this issue]. "The Point is the increasingly rare new construction retail project that leased up immediately and achieved astronomical rents due to an improv- ing retail market, combined with al- most no available inventory," he says. Fueled by consumer demand, West- feld is opened The Village at Westfeld Topanga at the end of September. An- chored by Costco, REI, Crate & Barrel, 24 Hour Fitness and Burke Williams Spa, the Village will also be home to more than 15 eateries of all sizes and a number of regional lifestyle ten- ants. When it opens this month, The Village, when combined with world- class Westfeld Topanga and adjacent Promenade, will be home to over 300 tenants. Also fueled by demand is DJM Capital Partners' Pacifc City in Hun- tington Beach that is opening this month. The mixed-use project, located along Pacifc Coast Highway, features 191,000 square feet of retail space. Re- tailers embrace the area's coastal life- style, and a unique local market, Lot 579, highlights the center's food retail oferings. Everything is for Sale — for the Right Price A landlord's market naturally trans- lates into a seller's market — at least some of the time, according to the ex- perts — if money is no object. "On the investment-sales side, be- cause market conditions are so favor- able, most landlords are unwilling to sell," Matthews continues. "In the event they do sell, the prices are astro- nomical, so most of the historical buy- ers of these properties are unwilling to conform to the new market pricing." Jereme Snyder, executive vice presi- dent of Colliers International in Irvine, California, says cap rate compression is also afecting retail's investment sales. "New supply is not keeping up with increasing demand due, in part, by capital searching for yield," he says. "Small strip centers, for exam- ple, are experiencing cap compression because buyers will now accept more risk for higher relative yields. It's in- teresting to note that the cap rates of these smaller shopping properties are Rivera Though many retailers are reducing their footprints, Smart & Final is increasing its square footage with the introduction of Smart & Final Extra!, a one-stop shopping destination that is about 9,000 square feet larger than the company's traditional stores. A new location recently opened inside Reliable Co.'s shopping center on 4th Street in Ontario.