Middle Market Digest: This Week in Southwest
Here’s a look at this week's trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.
BY THE NUMBERS
RIVERSIDE—Retail demand is robust in the Riverside market, thanks to low unemployment. Vacancy rates for retail have declined for eighth straight year. The Riverside-San Bernardino metro represents California’s fastest growing economy, having added 260,000 jobs over the past five years. This sustained span of diverse employment gains has supported the addition of nearly 200,000 residents during the same period, boosting local demand for housing and conveniently-located shopping centers. In response, retailers have been in expansion mode while consumer spending continues to escalate. Grocers and personal service-related companies, namely fitness centers and smaller gyms, have been notably active of late, occupying roughly 1 million square feet of combined space in 2017. As retailers continue to scramble for space amid strong economic growth, vacancy will hold at a cycle- low level, prompting rent gains. These market conditions warrant increased development. A rise in retail completions occurs in 2018, yet deliveries are sparse within the Inland Empire’s largest cities, including San Bernardino, Fontana and Rancho Cucamonga. Instead, roughly half of this year’s deliveries are in Rialto, outlying Hesperia and the Coachella Valley. Overall, at least 70 percent of this year’s new supply is pre-leased, heightening retailer demand for existing space.
(SOURCE: MARCUS & MILLICHAP)
NEW & NOTABLE
SAN DIEGO— CBRE has hired Matt LoPiccolo as a first VP in San Diego, California. LoPiccolo joins CBRE from Marcus & Millichap, where he sold more than $350 million retail assets and handled more than one million square-feet of retail transactions since 2011, ranging from single-tenant net-leased assets to credit-anchored shopping centers. LoPiccolo held the highest market share at Marcus & Millichap within grocery anchored transactions in California. In his current role at CBRE, LoPiccolo will focus primarily on shopping center investment sales within the $1 million to 25 million range. He will be representing all classes of clients ranging from private client, private equity, developers, lenders and corporate.
LOS ANGELES—Cara Leonard has joined CBRE Hotels as a SVP. Based in the firm’s Beverly Hills office, she will focus on debt and structured finance in the hotel sector throughout the United States. Leonard is an accomplished hospitality professional with nearly 20 years of experience in hotel finance across all major asset classes and markets throughout the U.S. She has played a key role in real estate capital markets transactions totaling over $4 billion, including senior and subordinate debt, and preferred and common equity. Leonard will coordinate with existing CBRE Hotels and Debt & Structured Finance team members in arranging financing for large institutional and middle market hotels and resorts. She is joined at CBRE by senior production analyst, Charlie Ryan.
LOS ANGELES—JLL has added experts Bryan Lewitt, as managing director, Chris Isola as EVP, Evan Lewitt and Kellie Hill as senior associates and Julia Dardick as client services specialist to its Southwest healthcare services team. As a leading healthcare brokerage team in Southern California, they provide leasing, investment sales and real estate strategies to hospitals, sub-acute facilities, senior housing developments, medical groups healthcare systems and owners of healthcare real estate in Los Angeles, Orange, San Bernardino and Riverside Counties. Bryan Lewitt and his team are the latest additions to the firm’s expanding Southwest healthcare services practice.
NEWPORT BEACH, CA—The Woodmont Co. has hired 30-year retail real estate veteran Emily Iseminger as SVP of brokerage services. Iseminger will specialize in working with retailers and restaurants on their real estate needs. Iseminger comes to The Woodmont Company from Emily Iseminger Inc., which she founded in 1999. Throughout her career, she has represented the country’s premier retail and restaurant brands overseeing leasing and development from conception to completion including traffic studies, pre construction, zoning, variance, parcel map applications, planning of development sites and layout of shop space.
Los Angeles—Steven Hillgren has joined the Los Angeles office of Kearny Real Estate Company as VP. In the role, he is responsible for new acquisitions and project management in Southern California. Steven brings almost a decade of real estate lending experience to Kearny, a vertically integrated real estate operating company specializing in the acquisition development, asset management and property management of commercial real estate assets in Southern California. Prior to joining Kearny, Steven was VP at Wells Fargo in Los Angeles where he originated and managed a portfolio in excess of $1 billion. Previously he sourced and underwrote commercial real estate loans for Sunwest Bank, a regional, middle-market business bank based in Irvine, CA. He is a member of the Southern California chapter of NAIOP where he serves on the Young Professionals Group Leadership Committee.
DEALTRACKER
LOS ANGELES—A prime development site on Sunset Boulevard in Los Angeles has sold to SHP Capital LLC, a private investment company, for $8 million. CBRE’s Laurie Lustig-Bower, Timothy Bower and Kamran Paydar and PWR Property Group Inc.’s Nick Aprahamian represented the seller, Sunset Management LLC, a local investor. The property, located at 7979 W. Sunset Boulevard on the northeast corner of Laurel Ave., is a high-visibility 0.27-acre mixed-use development site with 180 feet of frontage along the Sunset Strip. The property, which featured a now-closed gas and service station, allows for the potential to develop ground-floor retail with multifamily units above.
SAN DIEGO—Medicus Property Group has secured a $44 million loan for four medical office buildings in Southern California. David Hamilton, VP in the San Diego office of Pacific Southwest Realty Services, secured the funding on behalf of the borrower, and the loan was funded by one of PSRS’ relationship debt funds out of San Francisco. The financing was structured as a re-finance of three of the borrower’s existing properties in tandem with the acquisition financing for the “El Camino” in Encinitas. The high-leverage, non-recourse loan had a floating interest rate and a flexible pre-payment structure, which includes a $3.2 million reserve that the borrower can access for capital expenditures, tenant improvements, and leasing commissions.
PHOENIX—Capital Real Estate has acquired The Prescott on Thomas, located at 1645 E. Thomas Road in Phoenix, from New York-based AMFP III Cabana on Thomas LLC, an entity formed by Abacus Capital Group LLC, for $33.35 million. Executive managing director Jim Crews from the Cushman & Wakefield Phoenix office represented the seller. Built in phases from 1964 – 1979, The Prescott on Thomas is a 382-unit, garden-style community, which offers studio, one- and two-bedroom floor plan options averaging 534 square feet. Each unit includes full-size appliances, oversized closets, wood flooring and a private patio or balcony. The gated community offers residents four pools with cabana furniture, four laundry rooms, electric car charging stations and an updated fitness room.
SCOTTSDALE, AZ— Calgary-based Triumph Real Estate Investment Fund has acquired Bell Park Plaza for $7.23 million from Hanley V Properties. The 33,480 square-foot shopping center is located at the northeast corner of 43rd Avenue and Bell Road. Greg Abbott of CBRE represented the seller on the transaction. The location had a 93% occupancy rate upon closing, and Danielle Davis of LevRose Commercial Real Estate/TCN Worldwide will handle the leasing of the last vacancy at the center, with MODE Commercial Property Management managing the property.
LAS VEGAS—Scott Monroe, SVP/managing director and Jordan Johnson, VP of NorthMarq Capital’s Las Vegas office arranged the $28.6 million refinance of Aviata Luxury Apartments, a 456-unit multifamily property located at 2121 East Warm Springs Road in Las Vegas, Nevada. The transaction was structured with a 15-year term with 5-years interest only followed by a 30-year amortization schedule. NorthMarq arranged financing for the borrower through its correspondent relationship with a life insurance company.
LOS ANGELES—A newly developed 512,490-square-foot state of the art industrial facility in Torrance, California has sold for $102.5 million. Chicago-based Bridge Development Partners LLC sold the new facility to a global private real estate investor. Jeff Chiate, Jeffrey Cole, Ed Hernandez, and Mike Adey of Cushman & Wakefield’s Capital Markets services in Orange County represented both parties in the transaction. The property formerly long-served as headquarters for Farmer Brothers Coffee, which relocated its headquarters to Northlake, Texas last year. Bridge Development recently completed a redevelopment of the 20.37-acre property following its procurement in 2016.
CHANDLER, AZ—Alta Steelyard Lofts, a core class-A mid-rise, 301-unit multifamily property located Chandler, Arizona, traded hands for $69.25 million, which represents $230,066 per unit. Completed in 2016 on the former site of a steel fabrication facility, Alta Steelyard Lofts is located at 155 East Frye Road near Arizona Avenue in Chandler. Steve Gebing, senior managing director, IPA, and Cliff David, IPA, represented the seller, Wood Partners, and procured the buyer, Olympus Property.
LOS ANGELES—A 52-unit apartment complex on Reseda Boulevard in Tarzana, CA, has traded hands for $11.25 million. CBRE’s Laurie Lustig-Bower and Kadie Presley Wilson represented the buyer in the transaction, Xenon Investment Corp. / Mehta Family. Located at 6251-6267 Reseda Boulevard, the property, known as Reseda Gardens, was built in 1960 and is comprised of one-, two- and three-bedroom apartment units. This value-add investment, which had been owned by the same family for more than 20 years, received 18 offers. The site sits in proximity to the 101 freeway, Ventura Boulevard and local grocery stores such as Whole Foods, Gelson’s Market and Vons.
PHOENIX, May 16, 2018 –SanTan Village Marketplace, a premier destination center located in Gilbert, AZ, has traded hands for $51.4 million. Michael Hackett and Ryan Schubert of Cushman & Wakefield Phoenix represented the seller. An entity formed by CP Retail Inc. of Santa Monica purchased the property. Constructed in 2006, SanTan Village Marketplace is a 285,581-square-foot regional power center spanning 25.67 acres. The property is currently 97.2% leased to a diverse tenant roster, and over 93% of the center is leased to national/credit tenants including Jo-Ann Fabrics, Bed Bath & Beyond, Marshalls, DSW, Office Max and Old Navy, to name a few.
BALDWIN PARK, CA—A 6,777-square-foot new construction multi-tenant retail pad building occupied by The Coffee Bean & Tea Leaf (with drive-thru), Chipotle, Jersey Mike’s Subs and WaBa Grill at 13916 Garvey Avenue in Baldwin Park, CA, has traded hands. The sale price was $8.3 million, representing $1,225 per square foot and a cap rate of 4.30%. Hanley Investment Group‘s EVP Bill Asher and VP Lee Csenar represented the seller, a private developer based in Orange County, CA. The buyer, a private investor, was represented by Dennis Earls of Secured Properties, both based in Los Angeles, Calif. Built in late 2017, the freeway-adjacent retail building is situated on 1.29 acres on a pad that is shadow-anchored by LA Fitness at the signalized intersection of Garvey Avenue and Vineland Avenue. The property is located at the on/offramp to Interstate 10 freeway with average daily traffic counts of 220,000 cars per day and has an 80-foot freeway pylon sign.
MESA, AZ—Riverview Place, a 155-unit multifamily property located in Mesa, AZ, has traded hands for $14.5 million. Cliff David, senior managing director in Marcus & Millichap’s Phoenix office, alongside Steve Gebing, senior managing director of Marcus & Millichap’s Institutional Property Advisors division, had the exclusive listing to market the property on behalf of the private seller. The buyer, Tides Equities, was also secured by David and Gebing. One of the anchors to the Fiesta District is Banner Desert Medical Center and its integrated $320 million Cardon Children’s Medical Center. Featuring 5,131 employees, this medical facility offers a 1.5 million-square-foot campus and is located less than two miles from Riverview Place.
CITY OF INDUSTRY, CA—Austin Pang Gloves Mfg (USA) Corp., a manufacturer of gloves and personal protective equipment that is based in Hong Kong, has purchased the newly constructed, 72,271-square-foot building in CT Industry Center, located at 17343 Freedom Way in the City of Industry. Senior VP Jeffrey Hubbard of Lee & Associates Central LA represented Austin Pang Gloves in the $13.4 million transaction. Tony Phu of Colliers International and Stu Milligan of Cushman & Wakefield represented the seller, CT Realty. Based in Hong Kong, Austin Pang Gloves Mfg (USA) Corp.—doing business as Johnson Wilshire Inc. in the US— has six locations throughout the U.S. The company supplies safety products and specializes in hand, eye, head, and foot protection, as well as hi-viz and protective garments.
BUILDING BLOCKS
LOS ANGELES—The $180 million Manhattan Village project has reached another key milestone with the completion of interior renovation of the existing center which includes all new flooring, skylights including an expanded clerestory that create a bright, airy canvas to showcase retailers; a new concierge in the center court and new touch screen directories to improve the shopper experience; new luxe seating areas; upgraded technology with work/charging stations; a new center court fountain and statement lighting; new restrooms; and enhanced landscaping throughout the center. Manhattan Village is a 44-acre, 573,000-square-foot indoor/outdoor mixed-use dining and retail experience located in the affluent South Bay city of Manhattan Beach, California. Also completed were new facades for Ralph’s, CVS, Super Sports; relocation and new stores for Coffee Bean & Tea Leaf, See’s Candies and Union Bank in the Community Center of the property, located adjacent to the enclosed mall. Facets of the redevelopment currently underway include construction of the four-story Northeast Parking Deck adjacent to the expanding Macy’s; construction of a new California Pizza Kitchen; the relocation of Wells Fargo to make way for a signature restaurant at the property’s main entrance; and the demolition of the former Coffee Bean & Tea Leaf and See’s Candies to make way for the south Village Shops and parking deck.
BEVERLY HILLS, CA—ESI Ventures has completed the renovation and refinance of Hotel Adeline in Scottsdale, Arizona, marking their first venture into the hospitality space. After concluding a $13 million renovation to the property, located at 5101 N Scottsdale Road, the firm successfully refinanced its development loan and transitioned to a bridge loan totaling $33.2 million. ESI Ventures reopened the doors of its boutique hotel in Old Town Scottsdale after a well-received and successful renovation featuring a sleek updated contemporary design with a bohemian twist. The 213-room hotel features new accents throughout including an eclectic mix of textures, comfortable furniture groupings of leather and wooden pieces atop geometric patterned rugs, sleek metallic fixtures and carefully curated Arizona influenced artwork. Additional details include modern wood furniture with a retro flair, built-in live edge work desks, walk-in rainfall showers, 50-inch LG Smart TVs and complimentary Wi-Fi access throughout the hotel. Additional improvements are scheduled for the near future, allowed for by the new bridge loan’s lowered interest rate. The refinance of the 4.5-acre property was brokered by George Smith Partners, a real estate capital advisory group.