SAN JUAN CAPISTRANO, CA-The recent $29.4-million sale of the 71,000-sf Marbella Plaza ranked among the highest prices per sf ever paid for a market-anchored neighborhood retail center in Orange County and also represented one of the lowest cap rates, according to Irvine-based Faris Lee Investments. The upscale retail center at 31103-31113 Rancho Viejo Rd. sold to a 1031 exchange buyer, Orange County-based Richmont Corp., at a cap rate of 5.75% and a price per sf of $415.

Despite the high price and low cap rate, the transaction presented Faris Lee with some "marketing challenges" that could have undermined the sale, according to Rich Walter, president of Faris Lee. The property is not anchored by a national grocery tenant, occupies a mid-block location and lots its second largest tenant when the tenant vacated the center during escrow.

In addition, interest rates were rising during the financing process.Walter says that Faris Lee emphasized the strength of the South Orange County market and demonstrated to prospective buyers that Marbella Plaza is the dominant specialty center in its trade area. The marketing approach also pointed out that the center offers high visibility and signage off Interstate 5, is near several of the most exclusive private residential developments in Orange County and is located across the street from the Marbella Golf & Country Club.

The property sold at 98% of asking price, according to Walter, who teamed with Faris Lee's Jeff Conover to broker the sale on behalf of seller, locally based Marbella Plaza LP. The buyer was represented by Dennis Vaccaro of Faris Lee.

Built in 1992 and situated on 7.31 acres, Marbella Plaza is anchored by the only Orange County location of Farmers Market, a grocery store targeting high-income consumers. Other tenants include Stillwater Bistro, White Horse Restaurant, Independence Bank and other service businesses.

Conover notes that the retail center serves one of Orange County's highest income areas, with average annual household income of more than $117,000 within a three-mile radius. Its location directly off Interstate 5, with approximately 240,000 cars passing the center daily, attracts customers from the greater south Orange County area, Conover adds.