The Irvine Company has filled its biggest vacant local shopping center space, after signing the largest retail lease in the area in several years.
A 163,000-square-foot space vacated by Lowe’s at the Market Place shopping center around the end of 2018 will next year have a new tenant: the first Mathis Brothers Furniture store in Orange County.
The company, one of the country’s largest independent furniture retailers, is setting up shop on the Irvine side of the 165-acre shopping complex running along Jamboree Road; its nearly 150 stores straddle Irvine and Tustin.
The closest location to OC for the family-owned furniture store has been Ontario, where it has a 500,000-square-foot showroom and distribution center.
The Oklahoma-based company has 17 U.S. locations.
“We have been in talks with the Irvine Co. for five years in hopes of finding the right location, and the Market Place is perfect,” spokesman Rit Mathis told the Business Journal. “We’ve never been part of a center with so much magnetism.”
Lowe’s announced the Irvine closure late last year, as part of a restructuring effort that resulted in about 20 stores shuttering across the country. A location at the Commons at Aliso Viejo also closed as part of that move; a plan for that space hasn’t been disclosed.
Mathis said the Irvine site will see several million dollars’ worth of infrastructure work and tenant improvements, and will open next spring. Some early-stage work at the property was underway last week.
Amenities unique to the OC location include a full bar inside the store, while an 8,000-square-foot atrium that was once a Lowe’s garden center will showcase outdoor furniture.
The Market Place deal is the largest retail lease in nearly five years by square footage, according to data from real estate market tracker CoStar Group Inc.
Furniture Hub
Mathis’ lease includes options to stay 20 years in the space, and the company “hopes to stay even longer,” he said.
“We are bullish about Orange County,” Mathis said. “It is an underserved market with great demographics.”
The Market Place is the closest larger-sized shopping center to a bulk of the new home development taking place in North Irvine, including developments like Irvine Co.’s Orchard Hills and FivePoint Communities’ Great Park Neighborhoods.
With these housing projects in full swing, the area’s home furnishings sector should experience high demand, according to Mathis officials.
It isn’t the only furniture player that’s bullish about the region.
Mathis’ announcement comes on the heels of a similar one by At Home Group Inc., which will open its first California location in Foothill Ranch this year, along with several more in the Southern California region.
The OC location is a nearly 85,000-square-foot space at the Foothill Ranch Towne Center, located not far from Lake Forest’s selection of new home communities.
Other At Home California locations planned going forward are part of the company’s goal to add more than 400 locations in the next few years.
“The West Coast presents a significant opportunity to extend our footprint as we continue on our multi-year expansion journey,” At Home Chief Executive Lee Bird said in a statement.
Furniture stores seem to be bucking national retail trends by picking up on strong housing growth in certain regions, and capitalizing on vacancies left behind by other beleaguered retailers.
Walter Pagel, senior vice president of retail in the Newport Beach office of brokerage firm CBRE Group Inc., recently told CoStar that home improvement stores are faring better than many of their retail counterparts, and may seem more attractive to landlords.
OC’s retail market counted an occupancy rate approaching 95%, and monthly rents in the $2.15 per square foot range, according to area brokerage data. Both figures are improvements over year-ago levels.
Those trends can be seen in OC’s collection of large malls and shopping centers, which, despite a few notable vacancies from the likes of Sears and other department stores, are growing.
The 37 largest malls and other retail centers tracked by the Business Journal list posted close to $8.6 billion in sales in the 2018 year ended June 30, up 3.4%,
South Coast Plaza, the area’s top mall had $1.8 billion in taxable sales last year, up 3.2% year-over-year. The center is still figuring out plans to backfill its former Sears location, a nearly 240,000-squarre-foot space that closed near the end of last year.
The Market Place was third on the Business Journal’s 2018 list of shopping centers with an estimated $600 million in sales, up 2.4%.
The three largest shopping centers in the Irvine Co.’s portfolio, including Fashion Island and the Irvine Spectrum, had about $1.8 billion in cumulative sales.
