Major development projects broke ground in the Southwest market this week. The projects included a master planned home community in Indio and another was a mixed-use complex in San Diego. Additionally, Salt Development delivered its long awaited 493-unit apartment complex in Salt Lake City, UT. In addition to the new developments, the week was busy with acquisition deals, clearly picking back up again after the summer lull. There were significant transactions in all asset classes. Here’s a look at this week’s trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.
BY THE NUMBERS
The Phoenix Skyline market has experienced an increase in vacancy during the second quarter, up to 21%. Despite the high vacancy, rental rates in the market increased 4.1%; however, the increases are driven by renovations rather than new demand. The increase in rental rates is driving investor demand, which is up 30.7% year-over-year. Also surprisingly, considering the high vacancy, the construction pipeline is strong.
The Phoenix housing market strengthened despite a slight dip in homeownership in the first quarter of 2017. In the quarter, the region’s homeownership rate fell from 63 percent to 62.3 percent and continues to trail the national level, yet is still 120 basis points higher than the same period one year ago.
NEW & NOTABLE
SCOTTSDALE, AZ—Caliber has launched a $100 Million real estate fund, the Caliber Diversified Opportunity Fund II. The Fund will invest in “middle market” U.S. commercial real estate assets that can deliver attractive risk-adjusted return through a combination of current income and capital appreciation, following a similar strategy of the Company’s previous commercial fund, which was closed one year early, over-subscribed. Available to accredited investors directly or by recommendation from Registered Investment Advisors (RIAs), the Fund provides a level of direct access to off-market projects rarely seen in the industry. Combining opportunistic strategies to purchase assets below market with in-house real estate services, Caliber leverages its business model to build substantial value in assets with management transformation, ground-up development or effective remodeling, and intelligent financings. Investing from a set of core principles, Fund Management may pursue a diverse mix of asset classes including apartments, office, hotels, self-storage and other commercial properties without sacrificing performance
LOS ANGELES—Industrial tenants are remaining in their spaces. Three Los Angeles County industrial users have renewed their leases in transactions that total $8 million. CBRE’s Steve Young and John Privett represented the tenant, ALS West Coast Logistics, and the landlord, Prologis, represented themselves in the transaction. The lease transactions included a 139,857 square-foot Prologis Commerce Business Park is located at 5500 E. Slauson Avenue in Commerce, and two properties in Santa Fe Springs at 12202 Slauson Avenue Springs and 12425-12411 Los Nietos. The square footage at the three sites totals 320,000.
HEMET, CA—Vista Gardens, a 140-unit apartment complex in Hemet, California, has traded hands for $15.5 million. Marcus & Millichap’s Reza Ghaffari represented the seller and procured the buyer, both were California-based LLCs. Located on six acres along East Fruitvale Avenue, the apartment complex is within eight miles of Diamond Valley Lake and five miles of The Country Club at Soboba Springs and Mt. San Jacinto College. California State Routes 74 and 79 are also nearby. Vista Gardens features 28 one-bedroom apartments and 112 two-bedroom apartments. Unit interiors include dishwashers, private balconies or patios with storage space and granite countertops in select units.
LOS ANGELES—The Gardens, a retail property located in Hawaiian Gardens, CA, has traded hands between AU Zone Investments #2 and unnamed buyer for $22 million. CBRE’s Alex Kozakov and Patrick Wade represented the seller, and Newmark Grubb Knight Frank represented the buyer. Shaun Moothart, Bruce Francis, Dana Summers, Doug Birrell and Bob Ybarra at CBRE Debt & Structured Finance arranged the non-recourse financing on behalf of the buyer. Located at 12101-12171 Carson Street, the property totals 57,985 square feet, and is 96.1% occupied. The center’s major tenants include 99 Cents Only, Wing Stop and Subway. The property sits in a busy infill location, within blocks of the Gardens Casino, Tri-City Regional Medical Center, Los Cerritos Mall, and the 605 Freeway.
PHOENIX—Henley USA has acquired two large apartment communities totaling 481 units in suburban Phoenix, Arizona. Henley Modern Residential, a new partnership between Henley USA and Modern Residential, acquired both properties. Sunrise Management, a local professional property management company, will manage both communities. The details of the sale were not disclosed.
LOS ANGELES—Three 99 Cents Only stores, located in Walnut Park, Huntington Park, and Hawthorne in the Greater Los Angeles area, have traded hands for a total of $12.4 million. M & M Investments purchased the Walnut Park store, and the locations in Huntington Park and Hawthorne were both acquired by Aria Venture Capital, LLC. CBRE’s Alex Kozakov, Patrick Wade, and Matthew Greenberg represented the sellers, HKJ Gold, Inc. and AU Zone Investments #2, LP, on all three deals. The Walnut Park property, located at 2566 East Florence Avenue, totals 7,943 square feet. The building in Huntington Park is located at 6124 Pacific Boulevard and encompasses 15,000 square feet. The property in Hawthorne also totals approximately 15,000 square feet and is located at 13023 Hawthorne Boulevard. In all three locations 10-year triple-net leases are in place.
LAS VEGAS—JLL Income Property Trust purchased Montecito Marketplace, a 190,000 square-foot high-volume grocery-anchored neighborhood shopping center located in Las Vegas, Nevada, for $63 million. The property is fully leased, and is anchored by a high-volume Smith’s Grocery and TJ Maxx with the balance made up of national and regional necessity-based restaurants, banks and personal service tenants. The purchase price was approximately $63 million. Las Vegas has benefitted from steady population growth due to its high quality of life, lower housing costs and favorable tax benefits. The residential housing market has grown by 15% since 2000, and median new home prices have increased by six percent to $312,000. Among metropolitan areas with over one million residents, Las Vegas had the nation’s fourth-fastest growing population in 2016, and, according to Esri, is projected to grow at double the U.S. rate through 2022.
FONTANA, CA—Southridge Plaza, a 119,359-square-foot grocery/drug-anchored retail center in Fontana has traded hands for $20.7 million. Faris Lee Investments’ Donald MacLellan, senior managing partner, Nicholas Coo, senior managing director, and Joseph Chichester, director, represented the seller, Fortress Investment Group, a private equity fund, as well as the San Diego-based buyer, Fontana Southridge Partners, LP. Southridge Plaza has experienced significant leasing activity over the last few years including the anchor tenant, Rio Ranch Market. The center is nearly 100% occupied by a well-rounded tenant mix of daily needs retailers.
SALT LAKE CITY—SALT Development has completed the development of 4th West Apartments, Downtown Salt Lake City’s newest ultra-luxury multifamily community. 4th West Apartments, featuring of 493 multifamily units, is ideally located at 255 North 400 West adjacent to two light rail systems and one block from the Vivant NBA Arena. All units feature 1G, NEST controls, gas ranges, up-graded stainless appliances, washers and dryers, built in closets, large decks and Anderson Windows. 4th West Apartments features 73 studio units, 256 one-bedroom/one bathroom units and 164 two-bedroom/two bathroom units with rents starting at $1,374.
INDIO, CA—Family Development and Presidio Residential Capital have received unanimous approval from the Indio City Council to build Virada, an environmentally responsible 660-acre master-planned community with 1,300 houses, townhomes, condos and apartments in northern Indio. Virada will include 284 acres of open space and public parkland, a clubhouse and pool and a two-and-a-half-acre commercial center strategically located to be within a five-minute walk for all residents. The community is connected by a loop road with wide sidewalks and paths for bikes and neighborhood electrical vehicles. A dedicated solar field is expected to generate enough electricity to serve the community’s streetlights and other power needs.
SAN DIEGO—Park & Market, a 562,000-square-foot mixed-use development for San Diego’s East Village neighborhood, broke ground on the project in a public ceremony. Designed by global architecture and design leader Carrier Johnson + CULTURE, the $275 million development combines residential, office, retail and a University of California-San Diego campus extension, at a site just five blocks from Petco Park baseball stadium. Carrier Johnson + CULTURE’s design for Park & Market development integrates a vibrant mix of public and private uses, including a 34-story residential tower, destination retail venues at street-level, restaurant space, 66,000 square feet designated for use by UC-San Diego, and below-grade parking for 560 cars. The project also includes work to preserve the historic Remmen Building located on the site, as well as a themed public plaza celebrating the neighborhood and its history.