CLEVELAND—Developers don’t plan on launching many new retail projects in the Cleveland area over the next few years, and a New York-based firm has decided that means now is the time to make a big investment in the market.
Hornig Capital Partners, LLC, along with its joint venture partner Hutensky Capital Partners of Hartford, CT, and New Jersey-based B&D Holdings, just acquired Golden Gate Shopping Center, a retail plaza in suburban Mayfield Heights, from Forest City Enterprises for $47 million. It was one of the largest single asset retail deals in the greater Cleveland market during the past 24 months.
Although Hornig Capital is based in New York and remains quite active in that market, Daren W. Hornig, managing partner at HCP, tells GlobeSt.com that they are looking for deals in many other markets including South Florida, Boston, Washington, DC and Chicago. But the partners were attracted to the Cleveland deal partly due to its size and the potential for big returns.
“I think the demographics of this area are very strong,” he says. “We’ve seen the rents tick up at this center and many of the others in the surrounding area, and since we also see little supply coming on the market, we think that will continue.”
Hornig spoke to several potential tenants for Golden Gate and they told him that “they cannot find any other suitable space in the market.”
Tenants currently occupy about 95% of Golden Gate and a number of well-known national tenants including Marshalls, PetSmart, Golf Galaxy, h.h. gregg, OfficeMax and Jo-Ann Fabrics anchor the property. Built in 1958, the 371,748-square-foot center was renovated in 1995.
“In the next 12 to 18 months you will see a similar but substantially improved Golden Gate,” Hornig says. In addition to upgrading the parking lot, façade and roof, several tenants will either downsize or move, and he has been negotiating leases for several new stores. “We’re going to be very hands-on.”
“We and our partner have owned Golden Gate for nearly five decades, so finding the right buyer and achieving the right terms were imperatives,” says Ed Chanatry, senior vice president of asset management at Forest City. “We’re certain the new owners will continue to make Golden Gate a strong eastside shopping destination.”