South Coast Collection, a Costa Mesa shopping center also known as SoCo, has traded hands for $110 million to an investor new to OC: Baltimore-based Continental Realty Corp.
The price is slightly behind its prior, 2015 valuation of $120 million, but still marks a strong sale for the local retail sector amid changing consumer demand and climbing interest rates.
It’s the priciest retail sale for Orange County in the past year and is the second largest in the region since the start of the pandemic, trailing the $160 million sale of the Long Beach Exchange at the end of 2021.
SoCo spans roughly 300,000 square feet on 20 acres of land; it’s 97% leased to a mix of design, furniture and architecture tenants with a food-focused wing dubbed The OC Mix, previously home to Michelin-starred eatery Taco Maria. Owner Carlos Salgado shuttered the restaurant in July as he looks for a larger space elsewhere in the county.
Continental acquired the mall for about $367 per square foot from Los Angeles-based Rockwood Capital, marking the company’s first buy in the state.
No major renovations or tenant mix-ups are on the books for now as Continental focuses on leasing the remaining vacancies.
“The ecosystem that exists within the tenant base is unique and cannot be recreated,” Senior Vice President of Acquisitions Josh Dinstein told the Business Journal.
SoCo’s 60 tenants include Coco Republic, Pirch, Paul Mitchell the School, Moulin and Portola Coffee.
Continental is taking over the leasing and management from Burnham Ward, an affiliate of Newport Beach-based Burnham USA, a prior owner of SoCo.
It’s the fourth time the shopping center has traded hands since it was built in 2006 by Newport Beach developer Birtcher Development & Investment Co., which sold the property about a year later for about $100 million.
The buyer—a Costa Mesa-based entity operating as South Coast Home Furnishings Center LLC—defaulted on an $84 million loan, and Burnham Ward bought the property out of receivership for a reported $35 million.
The new owner spent millions to upgrade the property and changed its focus to a mix of design, home furnishings, fashion, restaurants, culinary offerings and other specialty retail.
The OC Mix—an indoor collection of boutique retailers and food offerings at the center—became a template of sorts for other redesigned malls in the area in the following years.
Burnham in 2015 sold its investment interest for $120 million but remained involved in the management of the asset. Burnham is no longer an investor, according to Continental, whose portfolio primarily consists of apartment complexes and retail centers on the East Coast from Maryland down to Florida.
Eastdil Secured LLC brokered the recent sale.
Continental considers the center’s location and consumer market to be key features in the decision to secure an Orange County asset in its portfolio.
The OC Mix food hall—which spans 15,000 square feet with approximately 20 restaurants and shops—is the biggest draw of the center, according to brokers, with eateries including Shuck Oyster Bar, a wine bar and cheese shop.
Additional dining options are being considered by the new owners, along with other designer companies and home retailers to the other portion of the center, according to Dinstein.
SoCo houses the local flagship stores for several of the retailers and restaurants, such as Coco Republic and Arc Food and Libations.
“When it comes to nontraditional tenants, they’re in shopping centers like SoCo,” Dinstein said. “It is important for us to continue to curate the tenant mix,” he added.
SoCo is OC’s 28th largest shopping center with estimated annual sales of $88 million for the 12 months ended June, according to Business Journal data.
Dinstein described SoCo as a destination shopping center, similar to the likes of Costa Mesa’s best-performing mall, South Coast Plaza. The acquisition is part of the company’s goals to expand to new markets such as Orange County.
“The center checks a lot of boxes for us in terms of fundamentals and demographics,” Dinstein added. “There’s also a strong reason for SoCo to exist given the uniqueness of the tenancy.”
“It’s the land and the location that makes SoCo a core property,” notes Glenn Rudy, a retail broker with Newmark’s Irvine office.
Continental is scouting additional local properties, drawn to Orange County’s high-income population and employment opportunities.
“We aspire to be a national player owning assets coast to coast,” Dinstein said.
Continental’s retail portfolio totals some 8 million square feet across multiple states with centers “performing well,” according to the firm.