Buying and selling of shopping centers in and around Orange County continues to be strong, especially for upscale ones, according to Faris Lee Investments.
“We’re not seeing any signs of a letdown,” said Richard Walter, president of the Irvine-based brokerage, which focuses on retail deals. “People are still willing to pay a high price for quality (retail) products.”
The brokerage has been busy this summer with a number of local deals with eye catching capitalization rates and per-square-foot sales prices.
The most recent deal: the $29.4 million sale of Marbella Plaza, a 70,844-square-foot shopping center just off the San Diego (I-5) Freeway in San Juan Capistrano. It’s anchored by a Farmer’s Market grocery store, which caters to wealthier shoppers.
Mission Viejo-based Richmont Corp., which pools investors on buys, bought the shopping center. Marbella Plaza LP of San Juan Capistrano was the seller. Faris Lee represented both parties.
The transaction set two local records for a grocery-anchored neighborhood center, according to Faris Lee figures. It sold at the lowest cap rate, 5.75%, as well as the highest price per square foot, $415.
Similar shopping centers with a Whole Foods or Vons sell at cap rates closer to 6%, Walter said.
Marbella Plaza priced high because of location and affluent customers. The price held up even though the center’s second largest tenant left during the escrow process.
The Marbella Plaza sale continues a trend of top dollar deals that Faris Lee has worked on. In March, it helped broker the $39 million sale of a section of the Shops at Aliso Viejo,at $830 per square foot, an OC record.
More centers are coming up for sale as property owners are looking to make good money while they can, said Jeff Conover, Faris Lee director.
The company recently handled the $15.5 million sale of a 41,000-square-foot LA Fitness in Irvine. The deal was notable for having the highest price per square foot ($376) for a single-tenant gym in the U.S., and the lowest cap rate (6.75%).
Also, a $12.7 million sale of the Lincoln Rose Shopping Center in Venice recently closed at a 2.61% cap rate. Leases for all of the strip center’s tenants will be coming up in the next few years, which should allow for higher rents, Walter said.
Grubb Gets MetroCenter
San Francisco-based RREEF Funds LLC is making some changes at Costa Mesa’s MetroCenter at South Coast, a year after buying the three-building complex in 2005’s largest office deal.
It recently selected the Newport Beach office of Grubb & Ellis Co. to lease up MetroCenter, the 750,000-square-foot office complex on Anton Boulevard.
Grubb & Ellis’ Greg May and Oliver Fleener are marketing the buildings.
About 75,000 square feet of the space is empty in the three 12-story towers, with another 50,000 square feet coming up for lease in the next few months, according to May.
Rents run around $2.85 per square foot.
RREEF, a pension fund investing unit of Germany’s Deutsche Bank AG, bought MetroCenter from Stockbridge Capital Partners early last year, in a $261 million deal.
The office complex was part of a 2.5 million-square-foot California portfolio that Stockbridge sold to RREEF.
Bixby in Redlands
Newport Beach-based developer Bixby Land Co. has started construction on a 412,000-square-foot manufacturing and distribution building in Redlands.
The project is part of the company’s 227-acre Bixby Business Center. The new warehouse will be built on a 21.5-acre plot of land. The building is divisible four ways and is set to be marketed for lease by Colliers International.
The development comes as Bixby just sold four under-construction buildings at the industrial park, totaling about 125,200 square feet. The buyers and sales prices for the transactions weren’t disclosed. A fifth building under construction totaling 147,000 square feet still is available for lease.
“Even before construction was finished, the buildings were in escrow, demonstrating the depth of demand in this market,” said Bill Halford, Bixby’s chief executive. “We expect the demand for industrial product to remain high.”
Expect to see a noticeable drop in the number of homes for sale in Orange County as more sellers opt to pull their homes off the market.
The number of homes listed for sale dropped for the first time this year, to 15,767 homes from 16,007 two weeks ago, according to data from the Aliso Viejo-based office of Re-Max Real Estate Services.
Of those homes currently on the market, 27.5% are vacant.
In August, there were 3,121 homes pulled off the market by disgruntled sellers, compared to 1,262 in August 2005, according to Re-Max data.
More sellers appear to be choosing to pull their homes off the market, especially now as the traditionally slow fall market begins.
“Buyers in today’s market simply are not willing to overpay for a home,” said Re-Max President Steven Thomas, in a recent report. “There is just far too much competition.”
