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PALM DESERT, CA-Lakha Properties of Bellevue, WA has acquired the 105,157-sf Desert Springs Marketplace neighborhood shopping center for $37.3 million, according to brokers from Faris Lee Investments and Grubb & Ellis who negotiated the deal. The deal for the fully occupied center also included a 10,000-sf retail pad expansion currently under development.

Situated on 12.4 acres, the center is located at the northwest corner of Cook Street and Country Club Drive. It is anchored by Ralphs, Rite Aid and Morton’s.

The seller was Irvine-based Sanderson J. Ray-Desert Spring Partners, which was represented by Richard Walter, president of Faris Lee Investments, along with Michelle Schierberl and Ryan Schierberl of the Newport Beach office of Grubb & Ellis. The brokerage team from the two companies also represented the buyer.

According to Walter, the property garnered 15 offers. He says that the property has upside potential from the value-add nature of the 10,000-sf retail pad that was under development at the time of the sale.

Because of the property’s location near the JW Marriot and the Desert Willow Resort, a new high-end boutique hotel, the strategy for marketing the property focused on educating potential buyers on how the center could be upgraded and retenanted in the future with high-end boutique stores.

“Because there wasn’t a tenant secured for the undeveloped pad, we valued the pad at current market rental rates if the space were to be occupied, and extended the buyer a rent guarantee based on future tenancy,” Walter notes. Built in 1994, the property is two miles south of Interstate 10 and 3.5 miles north of Highway 111.

Walter adds that the Palm Desert and Coachella Valley retail market “is very strong, with increasing rental rates and vacancies under 5% for neighborhood centers,.” He says that the strength of the retail market suggests that the undeveloped pad space will be leased quickly.

Desert Springs Marketplace is surrounded by two resorts: JW Marriott’s Desert Springs Resort and the new Desert Willow Resort. Vacant land to the west of the site is being developed by the City of Palm Desert to serve as a grand entrance to the Desert Willow Golf Community, which is home to the Intrawest Timeshare Resort and the future home of Starwood Hotel’s timeshare project, plus a high-end boutique hotel.

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