GlobeSt.com EXCLUSIVE: Retail Sale Hikes the Bar

CERRITOS, CA-An Orange County-based private investor who was completing a 1031 exchange has purchased the 76,439-sf South Street Center retail development for $42 million, one of the top prices per sf ever paid for a retail property in this market, according to Marcus & Millichap. The $574-per-sf deal closed at a cap rate of 5.2%, report Martin Cohan and Joshua Levy of the West Los Angeles office of Marcus & Millichap, who represented the seller, South Street Center LLC.The deal indicates the "high demand for well-located, high-quality retail assets in Southern California," says Levy. "Investors are accepting low cap rates, trading current yield for perceived safety and long-term returns." According to Cohan, the property attracted widespread interest from both private and institutional investors, generating multiple offers. The ultimate buyer was an Orange County-based private investor who was completing a 1031 exchange. The closing of the deal by a private investor illustrates what brokers have been saying for some time now--that well-capitalized private investors are winning many deals these days in competition with institutional bidders. South Street Center, located at the intersection of South Street and Gridley Road, "has a great location with Target Greatland serving as a shadow anchor," says Cohan. The 1.3-million-sf Los Cerritos Center Mall is adjacent to the property, which was constructed in 2003 and was 100% leased at the time of the sale. The South Street Center's 26 retailers include Payless Shoe Source, Supercuts, Game Stop, Panda Express, Quiznos, Baja Fresh, Jamba Juice, Red Brick Pizza, Kabuki, Home Town Buffet, Air Call Wireless, Cold Stone Creamery, Starbucks, Goldilocks and Island Pacific Supermarket. The seller had owned the property for about 18 months after purchasing it from the original developer.