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Friday, Jun 21, 2024

Recent Deals Show Strength in Retail Real Estate Sector

Two local retail real estate deals point up the continued strength of the sector in spite of the slowdown in retail sales recently. In the largest, Home Depot has inked a 20-year land lease for a new store to be built at the Moorpark Freeway Corporate Center. The 13-acre site will house a 145,000-square-foot Home Depot store at 1000 Patriot Drive. The lease is valued at $32 million. Home Depot plans to break ground this summer for a 2008 opening. A joint venture of M.W. Ossola & Associates and Nearon Enterprises LLC are developing the center. The developer was represented by Mike Tingus, president of Lee & Associates LA North/Ventura and Bill Bauman, vice president of Colliers Retail Properties Group. Home Depot was represented by Allen Young and Greg Whitney, brokers with CB Richard Ellis. Tingus is marketing the remaining 20 acres of land at the center, which will be developed for office and industrial use. Meanwhile, the city of Westlake Village may have put the kibosh on a Lowe’s-anchored shopping center, but that doesn’t mean retail real estate has no future in the city. TR Funding is set to break ground this quarter on a 10,000-square-foot speculative retail building at Westlake Boulevard and Hampshire Road in Westlake Village. The project, expected to cost $6.5 million, is located on about an acre of land. The building will be designed to house two, 5,000-square-foot tenants, one 10,000-square-foot tenant or a 20,000-square-foot tenant if a second story is added. According to a report recently released by Marcus & Millichap, retail investment is expected to continue to be strong through this year, with forecasts calling for an increase in retail construction, primarily the redevelopment of older assets. “New retail space is expected to be absorbed quickly, however, as retailers are likely to take advantage of the opportunity to expand in emerging areas,” the authors of the research wrote. The Marcus & Millichap report cited several factors for the enthusiasm over retail properties. First, job growth in the area, while slower than 2006, is expected to continue, and much of it is likely to occur in high-paying sectors providing customers with disposable income. “While a decline in cash-out refinancing is expected to result in a slowdown in retail sales growth this year, long-term demand drivers remain quite strong and will continue to support robust market fundamentals,” the report said. Among the submarkets highlighted in the Marcus & Millichap report is the San Fernando Valley, where one of the largest retail expansions, the redevelopment of Westfield’s Topanga center in Canoga Park has already taken place. The report is forecasting a continued increase in retail rental rates. Rents in the greater L.A. area are expected to rise by about an average 4.1 percent to $28.94 per square foot in 2007. Sale prices for retail centers are expected to stabilize, however, after several years of double-digit growth, the report said. In 2006, the median sale price for a single-tenant retail building reached $400 per square foot. Child Care Lease The Child Care Resource Center, a non-profit group that focuses on child care and early education, has inked a deal to expand its facilities. The group leased 78,783 square feet of space in one of the former WaMu campus buildings at 20001 Prairie Street in Chatsworth. The seven-year lease is valued at $12.6 million. Child Care Resource Center, which operates throughout the San Fernando Valley, currently houses its administration in two buildings in Van Nuys. The new space will expand its facilities by about a third. Rick Pearson, a broker with CRESA Partners, represented Child Care Resource Center in the deal. The landlord, Property Management Associates, was represented by Nancy Stark and Bennett Robinson, brokers with CB Richard Ellis. CRESA, by the way, has new offices. The brokerage relocated to 20950 Warner Center Lane, Suite B, in Woodland Hills. Phones and faxes remain the same. More Condominiums From the ‘they just keep coming’ department: A joint venture has purchased a 29,000-square-foot parcel in North Hollywood with plans to develop 58 condominiums on the site. C.O. Wood Development, Habitat Group Los Angeles and Brix Properties purchased the land at 4900 Vineland from Specter Development Co. Inc. Senior reporter Shelly Garcia can be reached at (818) 316-3123 or by e-mail at [email protected] .

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