Tenants continue driving the market taking advantage of SBA financing options to go from leasing to owning. The latest example is 3 Day Suit Broker, a retailer of men’s suits which recently purchased a building on De Soto Avenue in Woodland Hills from the Schaub family. The clothing retailer, which previously rented in Simi Valley, acquired the 14,637 square foot property for $3.5 million or $240 per square foot. “We’re continuing to see more tenants making the move, exchanging their lease for the purchase of a building,” said Jeff Albee, senior vice president with Collier’s International Encino Office, who was the listing agent on the property. Albee said 3 Day Suit Brokers received SBA financing through City National Bank to secure the deal. New Retail Tenant Sprouts Farmers Market will be a new tenant at Granada Village, a 224,783-square-foot shopping center in Granada Hills. The company, represented by Ryan Sullivan of Western Retail Advisors, leased a 25,000-square-foot space and signed a 10-year lease with Regency Centers, a national developer, owner and operator of shopping centers including Granada Village. Sprouts Farmers Market will be moving into the space previously occupied by Ralphs and is slated to open in Fall 2011. The addition of the market will trigger a $16 million shopping center remodel and repositioning effort of the entire center, according to Regency Centers. Granada Village is currently anchored by TJ Maxx, Stein Mart, and Rite Aid and features several national retailers including Sally Beauty Supply, The UPS Store, H&R Block, Burger King and RadioShack. Scott Burns of Wilson Commercial Real Estate, which represented the owner Regency Centers in the transaction, said Sprouts Farmers Market will be a positive addition to the tenant mix at Granada Village. From Condos to Rentals Following the trend in the current soft condo market, the brand new 97-unit Magnolia Nest condominiums in Valley Village were recently sold for about $27 million and will be repositioned as an upscale rental property. “As long as the condo market is soft and velocity is low you’re going to have an environment where it’s more profitable to rent [units] than to sell them,” said William Everitt, vice president at Investment Real Estate Associates (IREA), who has seen several condo properties convert to rentals this year. Everitt represented both the seller, Magnolia Nest, LLC and the buyer, Brooktree Realty Investors, LLC. The property which was on the market for less than two weeks was sold through a short sale transaction that received more than 25 offers. “Typically we’d see something like five offers on a deal like that, but there was a lot of investor interest,” Everitt said. The move to convert the condos to rentals makes sense in this economy, he explained. Condo sales have dropped significantly in recent years and dumping 97 units all at once in the market today would probably require 18 months to 2 years to get them sold. “As an exit strategy for investors, four, five or ten years down the road, they can convert these units back to condos and sell them once the market recovers,” he said. The 127,812 square feet property built in 2010 includes an exercise and weight room, a spa, BBQ area and putting green. In another example, a new 7-unit condominium site in Sherman Oaks that was recently sold for $2.5 million, will likely be converted to rentals. The buyer will likely rent them out while the markets recover, and then sell them as condos, said Paul Darrow, investment specialist in Marcus & Millichap’s Los Angeles office, who listed the property on behalf of the seller, a financial institution. The building at 13712 Valleyheart Drive was sold as a bank REO. Darrow said construction on the property was halted by the original developer approximately 10 months ago leaving an estimated $500,000 in additional work for the new buyer. The deal, which received more than 21 offers, also garnered a lot of investor interest. Big Lease Mygrant Glass Company, Inc. a Hayward, Calif.-based distributer of automotive glass products, recently leased a 43,700-square-foot industrial building in San Fernando. Built in 1986, the free-standing building is located within Parkside Industrial Center, and features 24-foot ceiling, four dock-high doors and a fenced yard. John DeGrinis, executive vice president of Colliers International’s Encino office, represented the tenant in the transaction, along with Patrick DuRoss, associate vice president, and Jeff Abraham, associate. Douglas Wax of Industrial Park Associates represented the landlord, Oxnard-based San Fernando Associates LLC, a real estate investment firm. Q3 Results The National Association of Realtors’ recent survey indicated that in the third quarter half of the metropolitan areas in the U.S. saw modest home price increases from a year ago, while the other half showed price declines. The national median existing single-family price was little changed at $177,900 in the third quarter, down 0.2 percent from $178,200 in the third quarter of 2009. Total state existing home sales, including single-family and condo, fell 25.3 percent to a seasonally adjusted annual rate of 4.16 million in the third quarter. The surge of 5.57 million in the second quarter was driven by the home buyer tax credit. Staff Reporter Andrea Alegria can be reached at (818) 316-3124 or by e-mail at [email protected]
A Tenant’s Market Drives Companies’ Move to Buy
