Asher: Grocery Outlet, which recently took over a former Fresh and Easy lease and renovated its store, has 16 years remaining on its corporate guaranteed lease with fixed increases every five years. Dollar Tree has occupied its space at the property for 10 years and recently exercised its five-year option, showing its commitment to the location.

Upland Village is situated just two blocks from the Mountain Ave. I-10 freeway entrance and exit, the major east-west freeway connecting San Bernardino County to Los Angeles County, and less than two miles from the Claremont Colleges, a distinguished group of five undergraduate and two graduate colleges with 7,700 students and 3,600 faculty and staff.

The property also benefits from a high-traffic, signalized intersection. There are more than 45,000 cars per day at the signalized intersection of Mountain Ave. and 8^th St., a prominent location in Upland shared by numerous credit retailers. Tenants at this intersection include the Home Depot, Kohl's, Hobby Lobby, Marshalls, Staples, Michaels, CVS/pharmacy, BevMo! and Party City.

GlobeSt.com: What makes this sale unique?

Asher: In previous market cycles, Upland Village would have been in consideration for institutional investors to pursue. In the last two years, we've seen the criteria of institutional buyers become more focused and selective in pursuing grocery-anchored shopping centers in more core markets in Southern California. Due to the lack of supply and compressed yields closer to the coast, we've noticed an increased demand from private investors, 1031 exchange buyers and syndication groups pursuing assets like Upland Village outside of the markets of Los Angeles and Orange counties.

GlobeSt.com: How else are institutional investors changing their strategies in the grocery-anchored retail sector?

Asher: Rather than their strategies changing, institutional investors have just become more focused on specific geography and the strong real estate fundamentals that they pursue. Top 25 MSAs, specifically more coastal in California, combined with name-brand, national-credit grocers (i.e., Kroger, Trader Joe's, Sprouts, Whole Foods, Safeway) with defined store sales is the target. Complement that with Internet-resistant, daily-needs retailers within the balance of the center, and that is why yields for this type of product remain at record lows. Additionally, with the supply of quality available product still scarce in this sector of retail, investor demand continues to put pressure on keeping values steady with minimal effect by recent interest-rate increases in the last three months.

CORONA DEL MAR, CA—In the last two years, we've seen the criteria of institutional buyers become more focused and selective in pursuing grocery-anchored shopping centers in more core markets in Southern California, Hanley Investment Group Real Estate Advisors EVP Bill Asher tells GlobeSt.com. The firm, a locally based, nationally-recognized real estate brokerage and advisory firm specializing in retail property sales, recently completed the sale of Upland Village, a 60,857-square-foot grocery-anchored shopping center in Upland, CA, for $17.2 million, which represented a cap rate of 5.83%—a record low cap rate for a stabilized grocery-anchored shopping center in the Inland Empire.

Grocery Outlet and Dollar Tree anchor the neighborhood retail center. Other tenants in the center include Panda Express, The Flame Broiler, Wingstop, Yogurtime, Petrilli's Pizza, The Crusty Tart Bakery, Avon Beauty and Advantage Staffing.

HIG's president Ed Hanley and Asher, along with the seller's exclusive advisor Joe Miller, a VP at Voit Real Estate Services of Anaheim, CA., represented the Orange County-based seller Outpost Village LLC in the sale. The buyer, a southern California-based private investor, was represented by Peter Loh of RE/MAX Realty 100 of Diamond Bar, CA, and Paul Yang of RE/MAX Vantage of Eastvale, CA.
we spoke with Asher exclusively about what makes this sale unique and how institutional investors are changing their strategies in the grocery-anchored shopping-center sector.

GlobeSt.com: What's special about this particular property?

Asher: Grocery Outlet, which recently took over a former Fresh and Easy lease and renovated its store, has 16 years remaining on its corporate guaranteed lease with fixed increases every five years. Dollar Tree has occupied its space at the property for 10 years and recently exercised its five-year option, showing its commitment to the location.

Upland Village is situated just two blocks from the Mountain Ave. I-10 freeway entrance and exit, the major east-west freeway connecting San Bernardino County to Los Angeles County, and less than two miles from the Claremont Colleges, a distinguished group of five undergraduate and two graduate colleges with 7,700 students and 3,600 faculty and staff.

The property also benefits from a high-traffic, signalized intersection. There are more than 45,000 cars per day at the signalized intersection of Mountain Ave. and 8^th St., a prominent location in Upland shared by numerous credit retailers. Tenants at this intersection include the Home Depot, Kohl's, Hobby Lobby, Marshalls, Staples, Michaels, CVS/pharmacy, BevMo! and Party City.