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 37 C C quarters of 2018. Single-tenant net- leased pricing $5 million and under remains the most consistent with the smallest separation between asking and final sales price due to the cate- gory having the largest buyer pool. However, the depth of formal offers submitted from this buyer pool has started to shrink. Average listings are generating five total offers or less compared to five to 10 or more total offers 18 to 24 months ago. ASHER: Single-tenant net-leased priced $5 million and higher have seen similar results but experiencing longer marketing periods and timing to procure a buyer due to sellers' 'rear- view mirror' pricing expectations, ris- ing interest rates and the fact that most buyers need financing to transact. All- cash buyers still exist depending on certain 1031 exchange requirements. Institutional buyers are approximate- ly 30 to 50-plus basis points higher on pricing compared to private investors. The separation between asking and final sales price has widened in this category. SCB: The retail industry agrees the market is changing. Where's the mar- ket headed? HANLEY: There still remains a sep- aration between buyers and sellers on pricing overall, but that gap is narrowing based on properties be- ing more accurately priced reflective of changing market conditions. Buy- ers have been more cautious in their purchasing decisions in the last 12 to 18 months and, in many cases, sales cycles are taking longer compared to previous years. It is important to be strategic in properly pricing assets for sale moving ahead to appropriately engage prospective buyer interest in this year's transitioning market. ASHER: As the illustrious coach John Wooden said, 'Failure is not fatal, but failure to change might be.' This year, one of the most important aspects of the market has been the recognition from the industry that the market is changing. It's been challenging com- ing to terms that peak pricing is be- hind us, but tepid buyer demand this year has clearly demonstrated a new normal. Overall, historical values still remain at all-time highs for cer- tain retail product types, such as core grocery-anchored, single-tenant net- leased and multi-tenant pads, even compared to top of the market pricing in 2006-2007. However, it will be vital that assets are priced in accordance with the transitioning market if we're to see transaction velocity increase moving forward. CC 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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