California Centers

SEP 2018

California Centers Magazine serves retailers, developers, shopping center owners, investment sales brokers and tenant representation firms throughout the state of California.

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September 2018 | California Centers Magazine 35 C C to 990 sales the following year. Over the same period, from August 2017 to August 2018, sales volume was $5.9 billion compared to the previous peri- od's total of $7.48 billion. The average cap rate increased over the same peri- od. From August 2017 to August 2018, the average cap rate was 5.61 percent, which was up from 5.53 percent in the previous year. Although we anticipate transaction velocity to pick-up, we see the trends of decreasing sales volume and softening cap rates continuing throughout the remainder of the year. SCB: Are grocery-anchored shopping centers still the top retail investment of choice; trading at premiums? ASHER: Daily needs shopping is not as threatened as was perceived last year — internet sales are enhancing sales for daily needs retailers, and not threatening them. Most shoppers still want to pick certain grocery items per- sonally. However, some items they are pre-ordering which they pick up after shopping for non-preordered items. Competition for grocery-anchored investment product continues to be high, with pricing remaining consis- tent due to the low supply of quality inventory and high demand from in- stitutional buyers seeking grocery-an- chored investments in major MSAs. In California, coastal Los Angeles, Orange County and San Diego remain the geography of choice. This lack of softening on pricing reflects investor sentiment that there is less risk in this area of retail. Institutional buyers will sometimes stretch to markets outside of those areas based on the circum- stances, but not typically. HANLEY: Pricing for grocery-an- chored centers with reported sales volumes in core markets ranges from the high 4 percent cap to the low to mid 5 percent cap range with insti- tutional investors typically being the buyer profile. Grocery-anchored cen- ters in Inland Southern California — Riverside and San Bernardino coun- ties — have seen fewer institutional buyers transact, accounting for less than 20 percent of grocery- anchored center sales in 2018. Private investors are typically the buyer there. Values have ranged in the high 5 percent cap to low 6 percent cap range. SCB: Are single-tenant net-leased in- vestments still hot? HANLEY: This category continues to possess the largest transaction veloc- ity and the highest number of poten- tial buyers seeking a flight to quality. These buyers especially want proper- ties with new construction, long-term leases, internet-resistant, corporate guaranteed tenants in good loca- tions. We anticipate a steady volume of transactions in the third and fourth FLAGSHIP RETAIL LOCATION MONUMENTAL RETAIL IDENTITY • ± 32,690 SF divisible • 360 Feet of Linear Frontage to the Prized Intersection at Ventura and Sepulveda Blvd. • 1.2 Million SF of Office/Retail • At the 405 & 101 Freeways in Sherman Oaks, California With Possible Freeway Signage • ± 1,200-32,000 SF Restaurant & Retail Space Todd Nathanson (818) 501-2212 x101 todd@illicre.com DRE #00923797 Kyle Fishburn (818) 501-2212 x109 kyle@illicre.com DRE #01909843 Matthew May (818) 528-3999 matthew@mra.la DRE #00912472 EXCLUSIVE LEASING AGENTS Sherman Oaks 32,690 SF Divisible

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