PALOS VERDES, CA-A private investor in a 1031 exchange has purchased the 78,815-sf Westmont Plaza at the southeast corner of Western Avenue and Westmont Drive from Costa Mesa-based Donahue Schriber Realty Group LP for $11.6 million, according to Irvine-based REZA Investment Group (RIG), which has issued a new report saying that prices for retail properties keep rising while the number of sales has tailed off in Southern California. President Reza Etedali of RIG says the Palos Verdes sale involved a highly motivated 1031 exchange buyer with a limited closing time. RIG represented the seller, with the buyer represented by TLC Investments. The retail center, which occupies 5.9 acres, is anchored by Smart & Final and includes other national tenants such as Coco's Bakery Restaurant, Helen Grace Chocolates, Hallmark, and Wells Fargo Bank.

Sales of retail properties in Southern California continue an "incredible run," Etedali says, with double-digit increases in cost per sf, while cap rates dropped more than one-half point in 2004 and the number of property sales dipped by 15%. Southern California reflects national trends, although cap rates here remain about one-half point lower than the national average, Etedali points out.

Despite the overall decline in the volume of sales in Southern California, the number of sales actually increased by 35% in Orange County and 9% in Los Angeles County in 2004, Etedali's new report says. He attributes this to the high demand for premium properties in premium locations, in addition to "aging owners finally taking profits." Los Angeles and Orange counties finished 2004 at nearly equal average prices per sf: $213.16 for Los Angeles and $214.54 for Orange County. That compared with an average cost per sf of $204.82 across Southern California, which represents a 12% increase overall in comparison to 2003.

For 2005, RIG foresees continued price increases but a slowing of the pace of sales. It says the seller's market will continue as institutional groups continue to place capital in the market and as inventory continues to tighten.