Retail Market Shows Promise As Buyer Interest Grows

Two neighborhood shopping centers for sale in Moorpark and Valencia show promise from potential buyers as investor activity strengthens in the retail market. Moorpark Marketplace, a 336,055-square-foot center, is being marketed for $43 million, while Tesoro Village, a 74,415-square-foot Valencia center, is being marketed for $31.5 million. The sales are being managed by Hanley Investment Group, an Irvine-based commercial real estate brokerage firm. The properties are among three centers that went up for sale last month, the third center located in Chino Hills. The listings of the properties follow a recent burst of sales activity for the company. In two months, Hanley Investment Group sold seven shopping centers, mostly in Southern California, totaling more than $40 million and more than 250,000 square feet. Edward Hanley, the company’s president, said interest has already started to build around the Moorpark and Valencia centers. “Buyer interest is from all over the West Coast and all over the country,” Hanley said, adding that there is even some interest from potential buyers in Canada and Asia. Hanley said the sellers of the property have not yet determined when the buyers will be selected. At the time Moorpark Marketplace went up for sale, it was 97-percent occupied, and its tenants included Kohl’s, Smart & Final Extra, TJ Maxx, Michaels, Famous Footwear, Baja Fresh, Denny’s, Del Taco, GNC, It’s A Grind, Jamba Juice, Panda Express and Verizon Wireless. Tesoro Village was also 97-percent occupied, and its tenants included Albertsons, Bank of America, Great Clips, H&R Block, Pick Up Sticks, RedBrick Pizza, Starbucks Coffee and The UPS Store. No tenants will be affected by the ownership change since they have long-term leases, Hanley said. Increased activity Hanley said the boosted sales of shopping centers by his business appear to stem from increased activity by investors. “The retail fundamentals haven’t changed, meaning rates haven’t increased and vacancies haven’t decreased in the Valley areas or Southern California,” Hanley said. “However, there’s been a little more investor activity. It’s a combination of investors trying to time the bottom of the market and also a lack of alternative investment (opportunities).” Meanwhile, retail leasing levels are making slow recovery on a national level, real estate research firm CoStar Group announced in July. Most retail markets recorded positive absorption for the second quarter of this year, and continued overall growth is expected for retail space leasings in the coming quarters. The U.S. retail vacancy rate declined from 7.6 percent to 7.5 percent during the second quarter, and the availability rate – which includes space marketed as available for lease but not yet vacant – increased from 9.9 percent to 10 percent, the group reported. Encino-based illi Commercial Real Estate has also seen boosted retail activity with eight leases signed last month in the San Fernando Valley region, representing twice as many leases as signed during August 2009. Santa Clarita property One of the most recent leases was of a 9,500-square-foot property in Santa Clarita. “We’ve taken over space recently from another brokerage firm that sat on vacancy for well over two years, and we were able to lease it within the first 60 days,” said Todd Nathanson, president of the Encino company that specializes in retail properties. Another recent deal included one for a 31,050-square-foot property in Studio City with national retailer Paper Source. The deal, which had minimal lease concessions, represented the first time in two years that the company had seen rates over $4 a foot, Nathanson said. “There’s been a sharp increase in the leasing activity and in confidence,” Nathanson said. “I think prices have dropped to a point where it’s attractive to investors. … There’s the opportunists that are out there. There are owners of properties that are out there selling at numbers that are far less than they were three or four years ago.” Nathanson said increased retail activity for his company could also be related to fact that his team started focusing more on existing retailers looking to relocate rather than those looking to expand.