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
LOS ANGELES— The South Bay area of Los Angeles has seen the most dramatic rent growth in the Greater L.A. market. Asking rents continue to increase in all submarkets in the L.A. Basin but the South Bay submarket has seen the most rent growth at 48.4% in the last five years. Asking rents are also the highest in the South Bay when compared to the rest of the county by about $0.08 to $0.10 per square foot, monthly. The South Bay’s proximity to the L.A. and Long Beach Ports, LAX, as well as its five freeways and the Alameda corridor, make the South Bay a highly desired market to be in. Recent leases are rising above $0.95 NNN per square foot. Rents are expected to continue to increase throughout the next 18 month at the same quarterly growth rate of 2% to 3%.
(SOURCE: JLL)
NEW & NOTABLE
LOS ANGELES—InvenTrust Property Management LLC has named Robert Mettel as director of leasing. Mettel has more than 30 years of real estate experience, having most recently served as senior leasing consultant at Robertson Properties in Los Angeles. In this new role, he will be responsible for leasing InvenTrust’s open-air centers in the Southern California and Denver area markets, and he will be based in Southern California. Prior to his role at Robertson Properties, Mettel held executive and senior leasing positions with SEG Advisors, Combined Properties and Westrust. He has a BA in Urban Planning from the University of California, San Diego, and is a Member of the International Council of Shopping Centers.
PASADENA— The Pasadena office of Lee & Associates has hired veteran retail expert Dan Bacani to its broker team. Bacani joins Lee & Associates Pasadena as a principal and shareholder and specializes in the sales and leasing of retail, restaurant, office and downtown mixed-use properties in the San Gabriel Valley. He joins the firms from NAI Capital’s Pasadena office. His previous clients include Siebel Systems, Qualcomm and Seebeyond.
BEVERLY HILLS, CA—Bolour Associates, Inc. has added three new professionals to its growing team. The newly appointed team includes Hiren Naik, who will serve as production and due diligence manager; Steve Martin, who will serve as senior analyst; and Mishal Patel, who will serve as loan originator. The additions were prompted by the firm’s rapid expansion of its lending and development platforms. Naik, will be responsible for overseeing the company’s loan production strategy. He manages loan production, due diligence and the closing processes. He also oversees the ongoing management of the company’s extensive loan holdings. Martin will provide underwriting, deal structuring and analytical support for the firm’s new deals and its existing portfolio. Patel will manage broker relationships, lead generation and sales for BOLOUR’s expanding lending platform.
PHOENIX—Alliance Residential Company has promoted Bradley Cribbins to president and CEO of Alliance’s management division. With 25 years of industry experience, Cribbins joined the Alliance family in July 2007 as managing director of Asset Management for the Broadstone portfolio. He was later promoted to SVP of operations, overseeing the Southwest and Mountain regions, and in 2012 was named EVP/COO of the management division. In 2016, he became President/Chief Operating Officer and is now taking a well-deserved step to President/Chief Executive Officer of the management team. Prior to joining Alliance, Cribbins was the Vice President of Operations for a leading regional owner/manager in the Pacific Northwest. He also held a key leadership role in two start-up ventures providing technology services to the industry.
DEALTRACKER
LOS ANGELES—A new construction single-tenant corporate Starbucks with a drive-thru located in Los Angeles, less than one mile from the University of Southern California campus has traded hands for $3.5 million, or a 3.82% cap rate. Hanley Investment Group EVP Bill Asher and Jeremy McChesney and VP Jeff Lefko represented the seller and buyer in the transaction. The seller was a private developer based in Phoenix, Arizona. The buyer was a private investor based in Los Angeles. Built in 2017, the 1,486-square-foot Starbucks building with a drive-thru is situated on a .27-acre parcel at the northeast corner of Western Avenue and Jefferson Boulevard at 1789 W. Jefferson Boulevard in Los Angeles. The single-tenant corporate Starbucks has over 19 years remaining on the primary lease term on a rare 20-year absolute NNN lease with 10-percent rental increases every five years.
COVINA, CA—A two-tenant retail building occupied by Ross Dress For Less and Stars Gymnastics at 404-410 N. Azusa Avenue in Covina, California, has traded hands for $6.36 million. The 39,159-square-foot building is part of the Covina Shopping Center, a community shopping center situated at the intersection of N. Azusa Avenue and W. San Bernardino Road. The shopping center includes other notable tenants Smart & Final Extra! and CVS/Pharmacy. Hanley Investment Group‘s EVP Bill Asher and President Ed Hanley, along with Vice President Jeff Lefko, represented the seller, a family partnership based in Orange County, California. The buyer, Cecelia, LLC from Los Angeles, was represented by Moon Lim of Marcus & Millichap in Los Angeles.
SCOTTSDALE, AZ—Triumph Real Estate Investment Fund has purchased Glendale Northwest Center, for $5.4 million. Glendale Northwest Center, a 16,706 square foot shopping center located at 18255 N. 83rd Avenue, Glendale Arizona is currently leased at 87.50%. Notable tenants include Go Wireless, First Watch and One Stop Nutrition. Triumph Real Estate Investment Fund purchased Glendale Northwest Center from Karob Glendale NW A&B LLC. Jon Rosenberg, Keri Davies and Jason Reddington with Levrose Commercial Real Estate/TCN Worldwide negotiated the deal on behalf of the Buyer, while Ryan Schubert and Michael Hackett of Cushman and Wakefield negotiated the deal on behalf of the seller. Danielle Davis of Levrose Commercial Real Estate/TCN Worldwide will handle the leasing of the last vacancy at the center, and MODE Commercial Property Management has been selected to manage the property.
IRVINE, CA—The Bascom Group has acquired Sleepy Hollow Apartments, a 25-unit infill apartment community located in Anaheim Hills, California, for $7.5 million. The firm secured acquisition financing with Manufacturers Bank. The sale was brokered by Scott Parker and Spencer Heichman of Triqor Group. James D’Argenio and Chang Liu sourced and managed the transaction for Bascom. Built in 1964, Sleepy Hollow is a 25-unit single-story community offering a unique, low-density living experience in a highly desirable infill location. The unit mix consists of two and three-bedroom units averaging over 1,000 square feet. Sleepy Hollow is nestled in Anaheim Hills, adjacent to Villa Park, with single-family home values ranging from $1 million to $2 million within one mile. Sleepy Hollow’s proximity to critical transportation thoroughfares offers convenient access to major employment and recreation centers. With original interior finishes and ample amenity space, the Property presents an exciting opportunity to reposition the asset.
PEORIA, AZ—Denaro Medical Center, a 32,911-square foot net-leased in Peoria, AZ, has traded hands for $9.7 million. Jamie Medress, Mark Ruble and Alan B. Laulainen, investment specialists in Marcus & Millichap’s Phoenix office, had the exclusive listing to market the property on behalf of the seller, a limited liability company. Denaro Medical Center is located at 10180 W Happy Valley Rd in Peoria, AZ.
PHOENIX—Marcus & Millichap’s net-lease investment team led by executive directors Jamie Medress and Mark Ruble has closed six net-leased medial office assets in Arizona this year. The total value of the sales is $27.1 million. The six properties include: NextCare Urgent Care, 4,520 square feet in Goodyear; Northwest Healthcare at Riverside Plaza, 6,850 square feet in Tucson; HonorHealth, 24,363 square feet in Peoria; Northwest Emergency Center, ground lease, 11,500 square feet in Marana; HonorHealth, 6,732 square feet in Phoenix; and Northwest Emergency Center, 11,500 square feet, Tucson. Farhan Kabani, a SVP capital markets with MMCC, arranged acquisition financing for the sale of HonorHealth in Phoenix. Todd Blonsley provided additional representation in the Northwest Healthcare at Riverside Plaza transaction, Brian Parmacek assisted in the sale of Northwest Emergency Center, Marana and John Susank provided representation in the Northwest Emergency Center sale. Sarbinoff is the firm’s broker of record in Arizona.
LOS ANGELES—A retail center in Seal Beach, CA has traded hands for $12 million in an off-market all-cash to a local 1031-exchange investor. Nathan Holthouser and James Lehigh of CBRE represented the buyer, Gary Sauter, in the transaction. The sellers, Rodi Properties LLC and Zoeter Place LLC, were represented by Sheri McCanless of NAI Capital. Located at 1190-1198 Pacific Coast Highway, this well-maintained property has a strong mix of medical and service-oriented tenants, such as OptumCare Medical Group, LabCorp, and The UPS Store. The site totals 22,464 rentable square feet with an occupancy of 96% at time of sale.
LOS ANGELES—Jamison has signed a long-term lease with entertainment advertising agency Create Advertising for 42,000 square feet at the historic Harbor Building located at 4201 Wilshire Boulevard in Los Angeles. Create Advertising, which has produced award-winning print, A/V, and digital campaigns for such films as Avengers: Infinity War, Life of the Party, I Feel Pretty and the TV miniseries The People vs. OJ Simpson, will move into the Harbor Building in the first quarter of 2019. Under terms of the lease, Jamison will build out the entire sixth floor to suit the needs of the agency under a mutually agreed to space plan, according to Jamison’s Jaime Lee. The high-end creative space will include private offices, meeting spaces and soundproofed editing rooms. In addition, Jamison is upgrading the common areas on the tenant’s floor, including the elevator lobby area and the restrooms. MISSION VIEJO—The Ensign Group has acquired an office building located in San Juan Capistrano, California, for an undisclosed price. The property consists of approximately 115,517 square feet of usable office space, and that the building is currently 92% occupied by third-party tenants. The company closed with cash drawn from its revolver and is currently working on favorable long-term, fixed-rate financing options that it expects to complete in the third quarter.
IRVINE, CA—Faris Lee Investments has completed the $10.75 million sale of Walnut Town & Country, a 22,322-square-foot multi-tenant retail center in Walnut, Calif. The center is 95% occupied and includes Jack in the Box, Subway, Wing Stop, Lollicup and Mathnasium. Senior managing director Shaun Riley of Faris Lee Investments represented the seller, an Oregon-based family trust, as well as the buyer, a Northern California-based family trust. Per CoStar records, at a 5.3% cap rate, this transaction closed with the lowest cap rate achieved for a San Gabriel Valley multi-tenant center over $10 million since 2014. Built in 1988 and situated on 1.27 acres at 1205-1243 North Grand Ave., the property is located at the signalized intersection of Amar Rd. and Grand Ave., which sees more than 67,000 vehicles per day. The property is not only across the street from Mt. SAC, it is also near Cal Poly Pomona which combined has in excess of 61,000 college students. Other area retailers, which contribute to a strong customer draw to the local area and Walnut Town & Country include Stater Bros, Kohl’s, Bed Bath & Beyond, Michael’s, and CVS, among others.
PHOENIX—A 100% occupied shopping center located at the northeast corner of 51st Avenue and Baseline Road in Laveen, an urban village located within metro Phoenix, has traded hands for $10.7 million. The nearly 34,575-square-foot retail property has a complimentary mix of tenants, including Jimmy John’s, Native Grill & Wings, Little Caesars Pizza, AT&T, AutoZone and Taco Bell, among others. Joseph R. Compagno and Andrew K. Fosberg with CBRE’s Phoenix office represented the seller, Kent, Washington-based investor as well as the buyer, a Newport Beach, California-based institutional capital buyer. New interest only bank financing was completed by Bruce Francis, vice chairman for CBRE Capital Markets and Western Region Manager for CBRE Debt & Structured Finance.
BUILDING BLOCKS
PHOENIX—Optima has released the final 20 one- and two-bedroom homes at its 7120 condominium tower, located at 7120 East Kierland Boulevard in North Scottsdale. The property is already more than 90%. Residents seeking the unique Optima Kierland lifestyle with the benefits of an extensive range of luxury amenities are already enjoying unmatched urban living in Optima Kierland’s exclusive high-rise condominium tower. Prices start in the high $300,000s, and range in size from approximately 720 to 2,383 square feet.
LOS ANGELES—Pacific Industrial has broke ground on Pacific Edge, a 425,000 square-foot industrial campus in Long Beach, CA. CBRE’s John Schumacher and Bret Quinlan are leading the marketing for the Pacific Edge project, located at 2300 Redondo Avenue. Pacific Edge will include three state-of-the-art industrial buildings ranging from 100,000-200,000 square feet. The project will feature modern and enhanced architecture, high-image corporate offices and high parking counts to accommodate a wide variety of users. The site is scheduled to be completed in spring of 2019. Situated on 20-acres at the corner of Redondo Avenue and Burnett Street in Long Beach just south of the 405 Freeway, Pacific Edge is strategically located less than 1 mile from the Long Beach Airport and less than 5 miles from the Ports of Long Beach and Los Angeles. Benefitting from a robust transportation infrastructure system, the project will serve both Los Angeles and Orange counties.
TEMECULA, CA—Lifescapes International, the landscape architectural firm responsible for iconic resort and casino landscapes such as the Bellagio and the Red Rock Casino Resort and Spa, has recently completed a landscape design for the $300 million expansion of the Pechanga Resort Casino, which makes it the largest Four-Diamond casino resort on the west coast. The project, which doubled the size of the resort by adding an additional 568 rooms and suites, includes the addition of five pools, a poolside dining area and swim-up bar, family pool with slide and beach entry, four whirlpool spas (one with a natural rock waterfall feature), a two-story standalone luxury spa, two new restaurants, and a green roof garden and Zen space that features native plant species, private patios, and Native American art installations atop a new 40,000 square-foot ballroom.
HOLLYWOOD—Wood Partners has started construction on a new property in Los Angeles. Located at 5750 Hollywood Boulevard, the new community is situated two blocks from the nearest Metro station, providing easy access to the employment centers, entertainment, nightlife and other amenities that Hollywood has to offer. Wood Partners once again delivers their signature best-in-class living elegance to this project, which follows the highly-successful opening of The 5550, just blocks away. Readily accessible to notable employers like Netflix, Viacom, TBS, CNN and NeueHouse, 5750 Hollywood connects residents with contemporary living, in a vibrant, dynamic neighborhood steps from Hollywood icons. The 161 unit building will feature state-of-the-art finishes and sought after amenities, including a roof deck, courtyards, and a full gym. The housing community at 5750 Hollywood Boulevard is scheduled to open in July 2020, with pre-leasing beginning in June 2020.
TUCSON—Willis Development has completed construction of Sage Desert, a brand new Assisted Living and Memory Care community in Northwest Tucson, Arizona. The community, which opened its doors to new residents mid-May, features a total of 106 units consisting of 86 assisted living units and 20 memory care units with an array of first class amenities including a grand lobby with multiple fireplaces, a Bistro, movie theater, sunrooms, state of the art fitness center, demonstration kitchen, pub, a sports lounge with multiple big screen TVs and pool table, beauty salon, spa with hydro massage therapy, and restaurant style dining. For residents who enjoy spending time outdoors, Sage Desert offers a private putting green, resident garden, and dog park. The superior location boasts scenic views overlooking the Sonoran Desert and beautiful Catalina Mountains. That in combination with remarkable demographics, has resulted in strong pre-leasing and continued welcoming of new residents.
Colorado Springs, CO—Soul Community Planet has completed its first SCP Hotel in Colorado Springs after a nine-month, $6 million renovation. The 98,000 square-foot, 176-room property, located at the base of the majestic Pikes Peak, is in its final stages of renovation. Guests can begin booking their reservations now. SCP Hotels represents a fresh holistic hospitality concept for both travelers and the surrounding community. Inside each SCP Hotel, guests will find opportunities to recharge their minds, refresh their bodies and re-center their souls, while connecting with fellow travelers and the community. SCP Hotels aims to help make the planet a better place through the extensive use of green materials, eco-friendly products, solar energy, sustainable practices and water conserving fixtures.