Appetite for Big Box Retail Remains Strong in Southern California
CORONA DEL MAR, CALIF. – (RealEstateRama) — Hanley Investment Group Real Estate Advisors, a nationally-recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that President Ed Hanley and Senior Vice President Kevin Fryman represented the buyer and seller in the sale of Seven Trees Shopping Center, a 150,338-square-foot Target-anchored shopping center in San Bernardino, Calif. The sale price was $8.57 million.
Hanley has had a relationship with both the buyer and seller for over 15 years and, as a result, was able to meet both their unique requirements through the purchase of this asset. The seller was a private investor based in Los Angeles, Calif. The buyer was Westland Real Estate Group in Long Beach, Calif.
Seven Trees Shopping Center is located on 13.79 acres at the northwest corner of E. Highland Avenue and Sterling Avenue in San Bernardino. The property, which was built in 1979-1986, was 85% occupied at the time of the sale.
According to Hanley, approximately 93% of Seven Trees Shopping Center’s current tenancy is leased to national or regional chains including Target, Baskin Robbins, County of San Bernardino, Payless ShoeSource, Sally Beauty Supply, and Waba Grill, which recently signed a 10-year lease.
“The property benefits from historically stable cash flow with 91% of the tenancy operating at the center since at least 2002,” said Fryman. “Target has been operating at the center since 1986.”
“Another benefit of the property is that each building in the center is separately parceled, Target, four pad buildings, and a 23,456-square-foot strip center,” said Hanley. “This allows the buyer the ability to sell the Target and four pad buildings as single-tenant investments, which are selling at historically low cap rates due to today’s high buyer demand.”
Fryman reports that the property sold at a price that was far below replacement cost. “At $57 per square foot, the buyer was willing to accept the risk of finding a replacement tenant for the Target building, if Target decides to leave the shopping center, and lease up the remaining 15% of the shopping center including a separately parceled 8,880-square-foot freestanding pad building,” said Fryman.
“The potential upside through raising below market rents and filling the 15% vacancy produced strong investor interest,” said Hanley. “We were able to procure an all-cash buyer who understands this market and the risk and rewards of this value-add opportunity. We expect that investors’ appetite for well-located big box retail in Southern California will remain strong in the coming months.”
About Hanley Investment Group
Hanley Investment Group Real Estate Advisors is a retail investment advisory firm with a $5 billion transaction track record nationwide, who works closely with individual investors, lending institutions, developers, and institutional property owners in every facet of the transaction to ensure that the highest value is achieved. For more information, visit www.hanleyinvestment.com.