LONG BEACH, CA—Neighborhood grocery-anchored retail centers have become the most popular retail niche for institutional investors, and markets like Long Beach, with diverse suburbs, demographics and growing demand, are key investment markets. The Knolls shopping center in the Bixby Knolls neighborhood recently traded hands in a transaction that drew major attention from institutional buyers. Red Mountain Group sold the 52,000-square-foot Trader Joe's-anchored property for $29.1 million. While the buyer's name was not disclosed, sources unrelated to the deal told GlobeSt.com that Retail Opportunity Investment Corp. purchased the asset.
“The grocery-anchored centers in any core market are the most popular product class for institutional investors because they feel that there is a lot of security with the grocer and the daily needs aspect,” Bill Bauman, EVP at Savills Studley, tells GlobeSt.com. “These are probably the most sought-after asset class, and the pricing in Long Beach is no different than any other core market.” Bauman represented the seller in the transaction, along with Kyle Miller, senior managing director, of Savills Studley.
Red Mountain Group purchased the property, a former Ralph's-anchored center, from Kroger and redeveloped the asset. “They turned it into a more traditional shopping center layout,” adds Bauman. “I think there intent was to sell the property and capitalize on the opportunity.” The sales team handled the leasing during the remodel as well, which included relocating a popular Trader Joe's from Atlantic Ave. into the center, which ultimately helped to drive investor interest. The other tenants include Pet Food Express, Crunch Fitness, Verizon, and Chipotle.
Although the 52,000-square-foot, $29 million deal was small for an institutional investor, Bauman said that most of the interest came from institutional buyers. “We got significant amount of interest from the institutional community, REITs, pension fund advisors; that type of profile,” he says. “This is on the smaller side for an institutional deal, but because of the extraordinary performance of Trader Joe's and the fact that it was a grocery anchored shopping center, we expected institutional investors. The core location of it in Long Beach also attracted a lot of attention. This was a unique opportunity in Long Beach across from the Bixby Knolls area. There was a lot of appeal to this property.”
Downtown Long Beach has been experiencing a renaissance that has resulted in some increased pricing and spill over demand into nearby Long Beach suburbs, but Bauman says that isn't the case here. He believes the popularity of this deal underscores the demand for this product type among institutional clients. “A lot of the development in Long Beach is in the Downtown area and a lot more mixed-use type of development, and that is really a function of the scarcity or land and the demand for residential,” he explains. “This particular center is more of a suburban design, so it doesn't really fall into that theme. I do think that it is indicative of the interest that the retailers have in Long Beach. It is a very attractive demographic.”
LONG BEACH, CA—Neighborhood grocery-anchored retail centers have become the most popular retail niche for institutional investors, and markets like Long Beach, with diverse suburbs, demographics and growing demand, are key investment markets. The Knolls shopping center in the Bixby Knolls neighborhood recently traded hands in a transaction that drew major attention from institutional buyers. Red Mountain Group sold the 52,000-square-foot Trader Joe's-anchored property for $29.1 million. While the buyer's name was not disclosed, sources unrelated to the deal told GlobeSt.com that Retail Opportunity Investment Corp. purchased the asset.
“The grocery-anchored centers in any core market are the most popular product class for institutional investors because they feel that there is a lot of security with the grocer and the daily needs aspect,” Bill Bauman, EVP at Savills Studley, tells GlobeSt.com. “These are probably the most sought-after asset class, and the pricing in Long Beach is no different than any other core market.” Bauman represented the seller in the transaction, along with Kyle Miller, senior managing director, of Savills Studley.
Red Mountain Group purchased the property, a former Ralph's-anchored center, from
Although the 52,000-square-foot, $29 million deal was small for an institutional investor, Bauman said that most of the interest came from institutional buyers. “We got significant amount of interest from the institutional community, REITs, pension fund advisors; that type of profile,” he says. “This is on the smaller side for an institutional deal, but because of the extraordinary performance of Trader Joe's and the fact that it was a grocery anchored shopping center, we expected institutional investors. The core location of it in Long Beach also attracted a lot of attention. This was a unique opportunity in Long Beach across from the Bixby Knolls area. There was a lot of appeal to this property.”
Downtown Long Beach has been experiencing a renaissance that has resulted in some increased pricing and spill over demand into nearby Long Beach suburbs, but Bauman says that isn't the case here. He believes the popularity of this deal underscores the demand for this product type among institutional clients. “A lot of the development in Long Beach is in the Downtown area and a lot more mixed-use type of development, and that is really a function of the scarcity or land and the demand for residential,” he explains. “This particular center is more of a suburban design, so it doesn't really fall into that theme. I do think that it is indicative of the interest that the retailers have in Long Beach. It is a very attractive demographic.”
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