Costa Mesa’s South Coast Home Furnishings Centre has been sold for more than $100 million, according to the developer, Irvine-based Birtcher Development & Investments LLC.
A private investor based in Costa Mesa, doing business as South Coast Home Furnishings Center LLC, bought the newly built outdoor shopping mall, which now is Orange County’s largest home furnishings center.
Birtcher Development and partner Buchanan Street Partners of Newport Beach were the sellers. The exact sales price was not disclosed.
The eight-building, 300,000-square-foot shopping center has been opening in phases since last Thanksgiving, although it officially celebrated its grand opening last week. The center is about a mile north of South Coast Plaza near Ikea and fronts the San Diego (I-405) Freeway.
South Coast Home Furnishings holds space for 30 showrooms and stores, as well as eateries. It’s about 93% leased, with some tenants yet to move in. The new owner is keeping Irvine’s Pacific West Management as the center’s property manager.
The sale represents a quick turnaround on the property for Birtcher Development, led by Chief Executive Brandon Birtcher.
Bought for $29M
Birtcher, a longtime local developer, bought the 20.5 acres of land for the project in summer 2005, for about $29 million. Bloomington, Ill.-based State Farm Insurance Cos. used to have a regional office and automobile claim center at the site, which was demolished.
The project broke ground in late 2005. Fullmer Construction of Ontario was the general contractor. Irvine-based Lee & Sakahara Architects designed it. The project cost an estimated $90 million.
The original plan was for the developer to hang on to the property for a longer period, but the rapid price appreciation seen in sales of OC commercial real estate during the past two years convinced Birtcher and Buchanan to change their tune.
“You have to react to your market constantly,” Birtcher said. “The buyers made us a compelling offer.”
Other developers building shopping centers in the area are taking a different approach.
Phoenix-based Vestar Development Co. and New Hyde Park, N.Y.-based Kimco Realty Corp., who worked together to build The District at Tustin Legacy, plan to hold on to the 1 million-square-foot shopping center for a long time, said Jeffrey Axtell, Vestar project manager.
Birtcher Development still has another 5 million square feet of office and industrial space under construction or in the works, primarily in Southern California and Portland, Ore. The developer was behind local office projects such as Irvine’s Lakeshore Towers and Santa Ana’s Xerox Centre.
South Coast Home Furnishings is Birtcher’s first big retail development in the area, although his family also built the 220,000-square-foot Laguna Design Center.
Tenants include Wickes Furniture, La-Z-Boy, NW Rugs, Creative Leather, Easy Life Furniture, Faucets Galore, Munro’s and C.S. Wo, a Hawaiian furniture company. It also has a food court.
The center still is looking to add a home theater store and an outdoor furniture and barbecue store.
Building a specialty shopping center appealed to Birtcher.
“Specialty retail has a place and a time,” he said. “You can’t build that sort of product all the time.”
Costa Mesa city officials were attracted by the idea of centralizing retailers in one area, not to mention drawing tenants from other parts of the county, including Fountain Valley and Huntington Beach.
The city already is looking to redevelop sites where tenants at South Coast Home Furnishings used to be based. A new CarMax Auto Superstore for Costa Mesa is slated to be built at the old Wickes Furniture site off Harbor Boulevard and Gisler Avenue.
Looming Question
If there’s a looming question for center’s new owners and tenants, it’s how well a mall targeting homebuyers will fare in the midst of a housing downturn.
“Home retailers are taking a bit of a beating. But in (this) case, the center is in a viable location,” said Philip Voorhees, senior vice president of retail investments for the Newport Beach-based office of CB Richard Ellis Group Inc.
