LOS ANGELES—Paragon Commercial Group remains bullish on the retail market in California. The firm has partnered once again with Canyon Catalyst Fund to acquire retail properties in California. The second fund from the joint venture will invest $60 million to $100 million in daily needs retail product. Paragon has opened a second office in Northern California to expand its reach.

“We are really focused on target markets, specifically urban infill markets, and we are focused on daily trips driven retail. That used to be known as grocery anchored retail, but the grocery industry has evolved as has our definition of grocery,” Jim Dillavou, of Paragon Commercial Group, tells GlobeSt.com. “It is stuff that people need to go to that they need to look and touch and feel.  Our strategy is daily trips driven, and that could mean a grocery store, or other chains, like Target and Walmart, which have grocery components and which we also consider to be daily trips drivers. All of the retail that we are investing in is a synergy of retailers that we believe is durable and insulated against online sales.” Dillavou adds that the firm avoids power centers, which typically don’t have a daily needs component and have large box spaces.

For the second fund, Paragon will continue to play in the California market, but has opened a second office in Northern California—led by Patrick McGaughey, director of investments in Northern California, to expand its geographic reach. “We are putting an emphasis on being just as successful in Northern California over the next 12 to 24 months as we were in Southern California over the last 12 to 24 months,” says Dillavou. “California is a huge market, and we believe that retail is such a localized product type. We believe that just being on a different street corner or having a different access point can make all of the difference in the world. It is so incredible localized. We believe that you need to be active in the markets that you are looking in, and it is not something that can be done from a desktop or from faraway.”

Although Dillavou really believes in the California market and is focused on infill locations, he says that it is the tenants that are really important to his strategy. “More than anything, we are tenant driven and we are going to follow good tenants, and by good we mean having credit and driving trips,” he adds. “We follow tenants in markets that they go to, and we are investing in their credits. We really want to be with good tenants more than anything else, so it is definitely a combination of good real estate and good tenants.”

Paragon Commercial and Canyon fully invested in their first fund less than two years ago.