Space Investment Partners, an Irvine-based real estate investment firm backed by the former boss of STEC Inc. and the former local head of commercial brokerage HFF, is doubling down on its retail investments in Costa Mesa.
The firm, launched last year, last week said it bought Westport Plaza & Square, a 39,000-square-foot retail center along the city’s busy 17th Street corridor.
Space paid $18.4 million, or a little more than $470 per square foot, for the property, which is along “a highly sought after street that’s undergoing a successful redevelopment,” said Space co-founder Ryan Gallagher.
Westport Plaza counts a collection of eateries, restaurants, and high-end clothing and furnishing boutiques. Tenants include Étoile on 17th, a women’s clothing store, Plums Café and Catering, the Common Thread clothing store, and Shunka Sushi. It was fully leased at the time of sale.
The center was built in 1975 and renovated twice since, most recently in 2018.
$52M in Costa Mesa
It’s the second shopping center buy in the city for Space Investment Partners this year.
In March, it bought Back Bay Center, a nearly 54,000-square-foot center along Irvine Boulevard, in the Back Bay area of Costa Mesa.
That property went for $24.2 million, or about $450 per square foot.
The new owners plan to invest several million dollars more in the center, about 3 miles from Westport Plaza.
Also this year, Space paid $9 million for an industrial building in the city. The latest deal brings the firm’s total reported local investments in Costa Mesa this year to nearly $52 million.
“We’ve had our eye on 17th Street for a while, and we think it is an area that will continue to appreciate over time,” said Gallagher of the company’s latest purchase.
The 17th Street area, which turns into Westcliff Drive where Costa Mesa and Newport Beach connect at Irvine Avenue, counts an eclectic mix of small and midsized shopping centers, including a few owned by Newport Beach’s Burnham Ward Properties and its affiliates, such as the Castaway Commons center (see story, page 1).
Newport to Costa Mesa
Prior to launching Space Investment Partners, Gallagher was a senior managing director and co-head of the Orange County office of commercial brokerage HFF, acquired earlier this year by JLL for $2 billion.
Mark Moshayedi was previously chief executive of Santa Ana-based storage device maker STEC—now part of Western Digital Corp.
He and his family members—brother Manouch Moshayedi runs Mx3 Ventures, and brother Mike Moshayedi also is an area investor—have built a large local real estate portfolio since selling STEC in 2013; Newport Beach’s Mariner’s Mile has been a focus for many of their deals.
Space Investment is looking to expand the reach of its investments; Mark Moshayedi and Gallagher said they continue to eye investments in high-growth markets that have ties to millennial or STEM demographics.
Moshayedi said last week that the new Costa Mesa center “is an extremely well-located property that we are buying for cash flow.”
“We really believe in the continued revitalization of 17th Street and have seen a significant number of new retail concepts up and down the street,” Moshayedi said.
Expect other large, non-retail deals to follow.
The company said it is targeting urban office and multifamily assets priced between $50 million and $200 million in Southern California, Seattle, and San Francisco.
“Our first year has been great. We have our systems in place, and we are sifting through a lot of properties to find the ones we really like,” Gallagher said.
Westport Plaza was sold by Wohl Investment Co., a Newport Beach-based private real estate management firm represented by CBRE Group Inc.’s Philip Voorhees, Jimmy Slusher and Sean Heitzler.
There’s been a swell of retail investment activity on the street since 2017, the brokerage team noted last week.
Two years ago, it sold the neighboring 17th Street Promenade and Newport 17th Plaza shopping centers for $24.3 million, or $734 per square foot; and $13.8 million, or $485 per square foot, respectively. Both were bought by local private investors.
“17th Street has been experiencing a renaissance of sorts,” CBRE’s Slusher told the Business Journal. “The area has strong tenancy with great restaurant and entertainment options, with rents that are attractive relative to other Orange County shopping centers.”