Retail Deal Volume Drops 35%

This year, there has been a limited market for retail opportunities in San Diego, but investment capital continues to chase quality assets. The Broadway Plaza, a 356,335-square-foot 100% occupied retail community center in Chula Vista, was one of these rare opportunities. The property has traded hands for $58.8 million in a deal that garnered more than a dozen offers from investors. While transactions like the Broadway Plaza prove the strong demand, there has been a 35% drop in deal volume this year as a result of the limited availability of opportunities.

“Year-to-date retail investment activity in San Diego County has been extremely limited with just under $262 million in total volume, inclusive of Broadway Plaza.  That is a 35% drop in activity year-over-year,” Glenn Rudy, a senior managing director at Newmark Knight Frank, tells GlobeSt.com. “With only $300 million across seven offerings above $15 million on the market currently, quality retail product in San Diego County remains scarce. This trend is a consistent theme across the Western United States. Though capital remains abundant, the retail investment community is extremely disciplined in its deployment. Quality assets like Broadway Plaza with sound real estate fundamentals, creditworthiness and sales performance will remain the focus from investors starved for quality.”

Rudy represented the seller in the sale of Broadway Plaza, along with his NKF colleagues vice chairman Pete Bethea and senior managing director Rob Ippolito. Walmart and Costco anchor the asset, which traded hands between Kimco Realty and Protea Properties LLC. The strong tenant mix and size made it especially popular for investors. “Broadway Plaza was truly a rare investment opportunity in that it delivered all the priorities of today’s active retail investor—quality real estate, dynamic submarket, density, credit, tenant performance and durability,” explains Rudy. “The fact that both Walmart and Costco were included in the sale made it especially unique as most often these two industry-leading retailers are not a part of the collateral being offered for sale.  Moreover, all buildings within the project are contained on their own parcel thereby providing flexible long term strategies.”