The Coachella Valley is rapidly becoming an entertainment and retail hub in Southern California. Like many desert communities, the Coachella Valley has been a popular resort and snowbird destination; however, the growth of the Coachella Music Festival, as well as a handful of other music festivals, in the last five years has fueled significant growth and tourism. Now, new hotels are arriving to the market and retail owners are investing capital to upgrade and reposition their properties for the new demand segment.

“The Coachella Valley is emerging as a significant Southern California entertainment hub,” Rich Walter, EVP of the investment properties group at SRS Real Estate Partners, tells GlobeSt.com. “The Valley has gained its most recent notoriety due to major music festivals that draw talent from around the globe. Since 2013 the attendance at Coachella Music Festival has grown significantly from 180,000 people to more than 250,000 in 2017. This music festival brings in over $110 million of revenue to the concert but brings even more economic benefit to the Valley's commercial and hospitality operators. Stagecoach is the largest country music festival in the world and attracted over 75,000 people to the Valley in 2018 alone. Desert Trip was another major festival attracting record crowds to the Valley.”

The music festivals have fueled commercial real estate activity. New hotel development is happening all along Highway 111 in the Coachella Valley and in major cities from Palm Springs to La Quinta. Retailers are also looking for ways to cater to the younger demographic coming into the market. “Property owners and investors are opening up small venues at their properties to attract all ages, not just seniors.  Many restaurants are “hubbed” together and offer various experiences and the properties offer smaller concert venues,” explains Walter.  “Property owners continue to expand on-site entertainment elements for young children so that their parents can locate complementary activities for them.  Retail space can and is being utilized to accommodate “drop in” childcare with numerous activities for the children while their parents enjoy the daily or evening entertainment.”

Investment activity has also increased as a result of the new activity. Walter recommends that investors looking to penetrate this market focus on retail that can service all markets with restaurant, theater and other entertainment-related tenants. “We have seen increased interest from various investors looking at property offerings in Coachella Valley.  While this area may have been known previously as a “seasonal” market attractive only to owners with experience in the “desert,” the phenomenal world-wide success of the Valley's music festivals, new cutting-edge hotels targeting young consumers and experience-oriented retail demands are drastically changing this perception,” he says. With the Valley's growing global and regional reputation and successful tenants, more investors are seeing these properties as solid investments that are meeting the needs of the local community and the broader amount of visiting consumers.

This activity is expected to continue to flourish in the market, especially has more notable celebrities attend and perform at these festivals. “The future of the retail market in Coachella Valley is good,” says Walter. “The continuing evolution of this market opens tremendous opportunity for current and future property owners. When working with properties featuring entertainment components it is important to set up a team that includes strong leasing and tenant representation practices along with investment sales expertise so that investors can get “real time” advisory from both tenant and value perspectives.  If considering repositioning, redevelopment or investment in this market an integrated advisory and marketing firm is critical to success.”