Investors See Oxnard as “Fantastic Retail Hub”

Retail investment is heating up in the Oxnard market, where investors are finding stabilized grocery-anchored retail opportunities. The recent sale of the Oxnard Vineyard's shopping center traded at a 5.4% cap rate, the lowest for a grocery-anchored retail center in Ventura County this year. Grocery-anchored centers have been popular as Internet-resistant retail investments, but brokers who worked on the deal, CBRE's Orbell Ovaness, Brad Baskin and Artin Sepanian, say that the Oxnard market's strong fundamentals and occupancy has made it an attractive market for investors. To find out more about the market and this record-breaking deal, we sat down with the brokers for an exclusive interview.

GlobeSt.com: Does this deal reveal increasing investor interest for retail deals in Oxnard?

Orbell Ovaness: Investor demand for grocery-anchored shopping centers continues to dominate in all areas of Southern California, including Oxnard, which is a fantastic retail hub.  Given its proximity to the ocean coupled with its affordability in both housing and retail, investor interest is sure to increase.

GlobeSt.com: What is driving investor demand in this market?

Ovaness: What is driving demand here is the fact that this area sits in coastal Southern California with dense and growing demographics. Yet rental rates are much more affordable in comparison to other coastal locations, thus allowing tenants to operate with lower rent-to-sales ratios, ultimately leading to less vacancies. Investors can take advantage of the opulence of an ocean locale all with an affordable price tag.

GlobeSt.com: Have cap rates in general been compressing, or is this asset an anomaly?

Artin Sepanian: This deal was an anomaly because of the anchor, Vallarta Supermarket. This grocer opened this location three years ago, and it quickly became one of their best stores. The strength of the anchor along with a long-term lease and below-market rent on the junior anchor space made this a particularly strong center.

GlobeSt.com: Do you expect cap rates in this market to compress even further?

Sepanian: Cap rates here have more to do with the actual center itself and the strength of the anchor and shop tenants than just the market itself. The centers that are similar to Oxnard Vineyards will be in high demand when they hit the market.  The tenant mix plays a large part in the success of the center.

GlobeSt.com: Are surrounding suburban markets also seeing an increase in investor attention? Which markets, and what do they have in common with Oxnard?

Brad Baskin: Today's focus is sustainability of tenants.  That is the top concern of any buyer looking for stabilized assets in this relatively unstable time for retail.  If the register has consistent activity trending in the right direction, there are buyers out there.  If the tenant is mediocre and sales are trending downward, the buyer pool switches to reposition-focused investors. We feel investor attention is more focused on tenancy and sales than specific markets.

GlobeSt.com: Where do you see the Oxnard retail market in the next 12 months?

Baskin: Retail is going through a transition and is hard to predict.  As long as population growth and residential and multifamily developments and absorption continue, the Oxnard retail market should continue to be strong.

Retail investment is heating up in the Oxnard market, where investors are finding stabilized grocery-anchored retail opportunities. The recent sale of the Oxnard Vineyard's shopping center traded at a 5.4% cap rate, the lowest for a grocery-anchored retail center in Ventura County this year. Grocery-anchored centers have been popular as Internet-resistant retail investments, but brokers who worked on the deal, CBRE's Orbell Ovaness, Brad Baskin and Artin Sepanian, say that the Oxnard market's strong fundamentals and occupancy has made it an attractive market for investors. To find out more about the market and this record-breaking deal, we sat down with the brokers for an exclusive interview.

GlobeSt.com: Does this deal reveal increasing investor interest for retail deals in Oxnard?

Orbell Ovaness: Investor demand for grocery-anchored shopping centers continues to dominate in all areas of Southern California, including Oxnard, which is a fantastic retail hub.  Given its proximity to the ocean coupled with its affordability in both housing and retail, investor interest is sure to increase.

GlobeSt.com: What is driving investor demand in this market?

Ovaness: What is driving demand here is the fact that this area sits in coastal Southern California with dense and growing demographics. Yet rental rates are much more affordable in comparison to other coastal locations, thus allowing tenants to operate with lower rent-to-sales ratios, ultimately leading to less vacancies. Investors can take advantage of the opulence of an ocean locale all with an affordable price tag.

GlobeSt.com: Have cap rates in general been compressing, or is this asset an anomaly?

Artin Sepanian: This deal was an anomaly because of the anchor, Vallarta Supermarket. This grocer opened this location three years ago, and it quickly became one of their best stores. The strength of the anchor along with a long-term lease and below-market rent on the junior anchor space made this a particularly strong center.

GlobeSt.com: Do you expect cap rates in this market to compress even further?

Sepanian: Cap rates here have more to do with the actual center itself and the strength of the anchor and shop tenants than just the market itself. The centers that are similar to Oxnard Vineyards will be in high demand when they hit the market.  The tenant mix plays a large part in the success of the center.

GlobeSt.com: Are surrounding suburban markets also seeing an increase in investor attention? Which markets, and what do they have in common with Oxnard?

Brad Baskin: Today's focus is sustainability of tenants.  That is the top concern of any buyer looking for stabilized assets in this relatively unstable time for retail.  If the register has consistent activity trending in the right direction, there are buyers out there.  If the tenant is mediocre and sales are trending downward, the buyer pool switches to reposition-focused investors. We feel investor attention is more focused on tenancy and sales than specific markets.

GlobeSt.com: Where do you see the Oxnard retail market in the next 12 months?

Baskin: Retail is going through a transition and is hard to predict.  As long as population growth and residential and multifamily developments and absorption continue, the Oxnard retail market should continue to be strong.