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 • 61 food concepts penetrating his market. They include Mendocino Farms, Lem- onade, Urban Plates and Jacks Urban Eats. Though the demand for new retail- ers may be a general trend, Harty is quick to note it can pose some chal- lenges that will need to be overcome before every landlord can welcome a newcomer with open arms. "The challenge with this trend is it is limited by few restraints," he says. "This trend is usually found in higher demographic markets with dispos- able income and consumers who have an educated palate for their shopping needs. Another challenge is the ten- ant pool for these unique retailers is rather shallow, meaning there is not a deep list of these unique retailers." Mixing It Up Some of the state's savviest retail players are mitigating their risks by jumping in on the mixed-use trend. While California is not experiencing a ton of ground-up retail development, the mixed-use product type that com- bines either multifamily or ofce (or both) with retail is doing quite well, according to our sources. Metro at Main, a mixed-use project in Corona, is one such project get- ting of the ground. It will include 868 luxury apartment units, in addition to 60,000 square feet of ground-foor retail. "It has been a long time since we have seen any signifcant new retail develop- ment," says Brad Umansky, president of Progressive Real Estate Partners in Rancho Cucamonga, California, which is serving as the proj- ect's retail leasing team. "Residential construction is oc- curring in select markets, high quality space is very much in demand, and the economy has improved signif- cantly in the past 24 months." Brad Deck, senior vice president of retail acquisitions and development at Shea Properties in Aliso Viejo, Cali- fornia, is also seeing this development trend — and for good reason, he be- lieves. "From the fnancial side, we are fo- cusing our eforts on mixed-use prop- erties — retail with for-sale housing or retail with apartments — in order to make the deal work," he says. "Our multifamily division and relationship with our sister company, Shea Homes, allows us to do either depending on need and logic." Shea broke ground on Alhambra Place, a mixed-use development just eight miles outside of Downtown Los Angeles, this past November. The in- fll project will include 140,000 square feet of retail and 260 luxury apart- ments. Umansky Though Donahue notes the industry is delivering substantially less retail inventory than it was pre-recession, Donahue Schriber's Rocklin Crossings added 525,000 square feet to the Sacramento area when it opened in Rocklin this fall. Though any kind of ground-up construction can be expensive in California, Umansky notes oppor- tunities do exist for those who know how to capi- talize on the latest development and retail trends. "Rents for new construction are absolute top dollar," he says. "They need to be able to make a project pencil. There is a limit to the number of re- tail space users that can aford these rents. There are defnitely some winners and losers in this process as in certain cases, new construction ex- pands a market, but in other cases new construc- tion comes as the expense of existing retail space. Owners of the existing retail space that are well fnanced, skilled and creative can turn lemons into lemonade." n