SAN ANTONIO-An AmREIT fund's recent acquisition of the 101,670-sf Olmos Creek Shopping Center made news because of the deal itself: an estimated payout of $115 per sf to $145 per sf for a piece of the city's retail. Local experts say the sticker price and the buyer point to a continued trend for outside players coming into the market to snap up retail properties.
If sources are correct, the Houston-based AmREIT paid $11.6 million to $14.7 million for the 14602-14610 Huebner Rd. property. The 10-year-old center was bought from Olmos Creek Partners of Uvalde, TX.
"There's huge competition for retail these days," explains Alan Grilliette, senior vice president in Transwestern Commercial Services' San Antonio office. "Our investment activity here is up considerably from the last several years."
San Antonio started to appear on radar screens of larger investment groups just in the past few years. Last summer, an affiliate of New York City-based Ashkenazy Acquisition Corp. picked up the 560,000-sf Rivercenter Mall. The year before, Inland Real Estate Inc. added 286,738-sf Huebner Oaks Center and the 55,0660sf Alison's Corner Shopping Center to its portfolio. More recently, AmREIT spent $27.8 million to acquire the 47,000-sf South Bank on the River Walk. An AmREIT spokeswoman says the search is continuing for additional assets in the city.
Grilliette and Phil Telisak, senior vice president in Dallas-based Weitzman Group's San Antonio office, say the heightened attention from the investment community will continue for the long term. Grilliette speculates the increased interest in San Antonio is because too many major markets, with compressed cap rates, are no longer viewed as sound investments. As a result, "they're looking into secondary markets," he says.
Telisak says San Antonio is edging onto national radar screens when it comes to retail investments due to the dynamics driving the interest. "There's terrific job growth here. We have a stable economy showing good population growth. That's a winning combination," he says.
When it comes to Olmos Creek deal itself, Telisak and Grilliette believe the AmREIT ended up with a strong holding, especially given the H-E-B anchor. "Grocery-anchored centers, particularly featuring the dominant grocer in town, will be attractive to investors," Telisak says. "They've always been the heart of value in our business. They're well-located and have good visibility."
As Grilliette points out, AmREIT's Olmos Creek is "a mid-size property and smaller than what some of these guys look for," but it's also solidly anchored. "HEB is strong in this market and grocery-anchored retail will be up the fairway for many buyers," he says, "so I'm sure this thing was heavily competed."
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