A dilapidated shopping center under the path of John Wayne Airport’s departing flights needed an upgrade.
That overhaul came in the form of a Costa Mesa retail center fostering social media engagements and catering to health and wellness themes.
Corona del Mar-based Space Investment Partners in 2019 took over ownership of the center, a 60,000-square-foot shopping center at Irvine Avenue and Mesa Drive in Costa Mesa. Then called the Back Bay Center, it’s been renamed The Ranch to reflect anchor tenant Irvine Ranch Market.
Space Investment’s plans to revitalize and update the aging center were both delayed and enhanced by the COVID-19 pandemic.
“We started construction, and then we had a lot of tenants complain about the pandemic,” Ryan Gallagher, Space Investment’s managing partner and co-founder, told the Business Journal.
“We anticipated some tenants turning over, but the pandemic accelerated that quite a bit, so ultimately it worked out great. We got the tenants that we wanted, that fit the theme kind of perfectly.”
Big Investors in Mariners Mile
Gallagher in 2018 began Space Investment along with Mark Moshayedi, who was a co-founder and chief executive of Santa Ana-based STEC Inc.—now part of Western Digital Corp.
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 in 2019 by JLL for $2 billion.
Moshayedi and his brothers, Manouch Moshayedi of Mx3 Ventures and local investor Mike Moshayedi, 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.
Several of his real estate assets, initially bought under the MSM Global Ventures name, are now operated by Space Investment.
In 2019, it purchased Westport Plaza & Square, a 39,000-square-foot retail center along Costa Mesa’s busy 17th Street corridor, paying $18.4 million, or a little more than $470 per square foot.
Space Investment says it targets multi-family, industrial and well-located retail investments from $25 million to $250 million with value-add and core-plus return profiles.
Catering to Instagram Moments
Five years after being purchased, The Ranch is fully revamped. Space Investment markets The Ranch, originally built in 1980, as home to a unique batch of tenants that primarily caters to moms and young women but also appeals to fitness fanatics and foodies.
Coffee Dose, for example, gives its younger customers several opportunities to order caffeinated beverages, then snap selfies with their drinks for Instagram.
Then there’s New Mom School, a space for women with newborns to learn about motherhood.
Tiny Tooth Co. opened its doors at The Ranch, offering dentistry services to young children.
The first-ever Nike Training Club is a boutique fitness center that offers athlete-themed workout programs.
Visitors of The Ranch looking for a meal might be inclined to check out Verde, a restaurant that opened on Nov. 15. The two-floor concept will feature modern Mexican food for lunch and dinner on the top level and a speakeasy-themed bar on the ground floor.
The Irvine Ranch Market has been revamped to offer a wide selection of wines and spirits, in addition to produce, meats and other grocery items.
Other tenants at The Ranch include Facial Lounge, Coeur Pilates, Ranch Spirits, Rocket Science Fitness and Stranded Salon.
Gallagher said The Ranch’s demographic leans women.
Creating a Sense of Space at The Ranch
Space Investment Partners bought The Ranch, located at 2651-2675 Irvine Ave. in Costa Mesa, from Back Bay Center Ltd. in March 2019 for $24.5 million.
The plan, according to Gallagher, was to revamp a generic shopping center overlooking a golf course and Newport Beach’s Back Bay into a place that catered to an evolving economy.
“We’re seeing the work-from-home dynamic, although continuing to change and evolve, is not going away,” Gallagher told the Business Journal, adding the center is 100% leased.
“Normalized work week may be three or four days in the office, but there is some component outside the office. What that’s doing is making the coffee shop as the de facto conference room, and it’s also changing the way people are looking at retail and/or office.”
The center’s location near the convergence of Costa Mesa, Irvine and Newport Beach also factored into Space Investment’s plans.
“We realized it was really well located on the main thoroughfare, on the way home for everyone who works in the airport area,” Gallagher said.
The Space Investment Partners co-founder said Irvine Ranch Market was a local destination for grocery shopping, but the rest of the center started to show its age.
“It had more traditional retailers that, frankly, were becoming more and more antiquated over time. So, our vision was to redevelop this center,” Gallagher said. “We went after a health and wellness theme, and then we added in a restaurant and speakeasy bar, with a coffee shop.”
Gallagher added The Ranch is effectively a one-stop shop, a place where visitors could go to the gym, buy coffee, eat lunch, take yoga classes and do their grocery shopping.
“When you look at what’s happening in retail, you’re seeing a lot of the health and wellness tenants are moving out of the traditional medical high-rise and into centers like this because you’re more accessible for their clientele,” Gallagher said.
“Their clientele tends to have those established traffic patterns to use the center when they’re already there, versus having to go to a six-story office complex, where they have to go up an elevator and go there specifically as a destination and not in their routine shopping,” Gallagher continued.
Most of The Ranch’s stores are now open.
