Why Private Investors Are Drawn to Value-Add Retail

Flores: “Private family-office type groups historically have been very aggressive in the $1-million to $10-million space, but in the last 10 years, they have been taking down projects well north of $10M—some up to $50 million.”

FULLERTON, CA—The entrepreneurial nature of family offices, private-equity groups and high-net-worth individuals makes them less risk averse than institutional investors, but riskier ventures like value-add retail opportunities are now few and far between, CBRE broker Arthur Flores tells GlobeSt.com.

As we recently reported, Flores and Shaena Cushman represented seller Fiesta Distribution LLC, a local family office based out of Orange County, in the sale of a retail shopping center here to private investment company SCB Inc. for $24.5 million. Fiesta had purchased the center as a value-add opportunity in 2011 and immediately implemented a reposition strategy for it; through these upgrades, the seller was able to attract 24 Hour Fitness to the property and renew Best Buy’s lease for an additional 10 years, adding significant value, according to Flores.