Freedomhouse Church in Orange County this month paid $18 million for a 46,287-square-foot retail center in Garden Grove.
The retail building, located at 10912 Katella Ave., is the former home of a Walmart Neighborhood Market.
Freedomhouse aims to turn the property, which has been vacant for years, into a new religious facility, which includes a worship center, an accredited bible college, a day care, a bookstore and coffee shop for patrons.
“It’s a creative reuse of a retail building,” listing broker Blaine Bush of Strategic Retail Advisors told the Business Journal.
The church aims to start retrofitting the existing building in the second half of this year. Officials hope to complete construction in the first quarter of next year.
The deal, the largest retail sale in Garden Grove over the past three years, works out to about $391 per square foot. That’s more than the average price per square foot for OC retail properties that sold in the first quarter this year: $370, according to a report by Kidder Mathews.
The seller is a private, Studio City-based individual investor operating under GL Katella LLC.
Abandoned Walmart
The 10912 Katella Ave. property, which sits on the border of Garden Grove and Anaheim, initially housed a Walmart. The location, however, was rendered obsolete some years back after the retail giant opened nearby stores to the north and south of the property, according to Bush.
The building’s 5-acre lot is less than 2 miles from Disneyland; it’s also about a 10-minute drive from the Santa Ana (5) Freeway.
Multifamily developers expressed interest in the site, which is currently zoned for retail.
The seller, however, was hoping for a swift transaction, which would not have been the case with a multifamily buyer since rezoning the lot for residential would have taken a few years, Bush said.
Third Campus
The site will be Freedomhouse’s third location overall; the church has campuses in Fullerton and Irvine.
Freedomhouse currently offers its bible college classes online and in-person at its Fullerton campus. Tuition for the three-year program costs nearly $1,000 per semester.
Supply of OC retail spaces like 10912 Katella Ave. is tight while demand for such products is high, according to Bush.
“Retail is thriving right now,” he said. “Vacancies are low, rental rates have remained stable—it’s a very competitive market.”
Vacancies across the sector in OC fell from 4.4% in the fourth quarter last year to 3.6% in the first quarter to its four-year low, according to data from CBRE Group Inc.
Low vacancies have helped rental rates remain strong. The average asking monthly lease rate per square foot reached $3.00 in the first quarter, CBRE reported. That’s the highest it’s has been since 2020, when the average asking lease rate was hovering just above $2.50.
