SANTA ANA, CA—One of Orange County's oldest cities, Santa Ana's Downtown area is emerging as a hip, desirable location for creative new business and young entrepreneurs, CBRE's EVP Philip Voorhees tells GlobeSt.com. As we recently reported, CBRE's national retail investment group–West team has completed the sale of McCalla Centre, a 110,620-square-foot neighborhood shopping center here, to a San Diego-based private real estate investment-fund manager for $31.8 million. We spoke with Voorhees about the Santa Ana retail market, how development is looking for the region and what investors are seeking here.

GlobeSt.com: How would you characterize the retail investment market in Santa Ana?  
Voorhees: All buyer types continue to favor retail properties in the coastal counties and in areas with high population density and high barriers to entry. Santa Ana is one of Orange County's oldest cities. Its Downtown area is emerging as hip, desirable location for creative new business and young entrepreneurs. For-sale retail inventory is near historic lows in Santa Ana, and like many "urban" locations in SoCal, investor sentiment for Santa Ana is positive.
GlobeSt.com: What does retail development look like for this region?

Voorhees: Santa Ana is located at the geographic center of Orange County, and Orange County's real estate fundamentals remain very strong, particularly for retail. Higher household incomes, lack of land for development, and strong tenant demand are just a few favorable factors for Orange County. Land inclusive, the "replacement cost" for high-quality retail in Orange County generally exceeds $325 per square foot. In most Orange County locations, the rent tenants can afford would support new development. The aforementioned lack of development land necessitates redevelopment in Orange County's infill markets. Retail shop rents ranging from $3 per square foot to $5 per square foot per month at most new projects, combined with the current low interest-rate/low cap-rate environment, are producing some exceptional pricing per square foot.
GlobeSt.com: What new types of tenants are entering the market?

Voorhees: For retail anchor tenants, Smart & Final, Whole Foods, Gelson's, Sprouts and Orchard Supply Hardware are among the most aggressive tenants. I understand CVS is also aggressively on the hunt, and PetSmart is set to open a number of new locations. The smaller format gyms like Crunch Fitness, Planet Fitness and Gold's Gym are all active, and LA Fitness and 24-Hour Fitness could do additional Orange County locations as well. Last, but not least, a hot category is the higher-end fast-casual dining concept. Urban Plates, Mendocino Farms and California Fish Grill are highly regarded and pursing new locations. Pacific Dental, Gentle Dental and urgent-care tenants are also expanding—a much wider and deeper selection of tenants than what we've seen in some time. "Mom and pop" tenants are gaining momentum, too.  
GlobeSt.com: What are investors in this market looking for, and how hard it is to find?

Voorhees:Investors continue to seek spendable cash-flow yield from secure, dependable, tangible assets. The global economy remains in a historically low-interest-rate environment. With the stock market near record highs, and cash producing essentially no yield, all cash or modestly leveraged retail investments produce leveraged cash-on-cash yields two, three or four times greater than the 10-Year Treasury yield. This is an exceptional market for sellers and also for buyers with a conservative, longer-term investment horizon.