While single-tenant and multi-tenant retail properties are in high demand, there aren't a lot of opportunities for investors in Southern California. Quality assets in the L.A. area rarely come to market, and when they do, pricing is competitive. In fact, this year, we have seen record-breaking cap rates on single-tenant retail properties. As a result, some investors are leaving Southern California to find more opportunities and better yields.

“Unfortunately, in today's market in Los Angeles, there are very few quality single-tenant retail assets that come on the market and when they do, they are in very high demand,” Jeremy McChesney, EVP of Hanley Investment Group Real Estate Advisors, tells GlobeSt.com.

As a result of the limited opportunities, some investors are buying outside of Southern California, but McChesney says that only some investors are willing to leave the Southern California market. “Speaking in large generalities, there are two types of private single-tenant investors that we are seeing; one that wants 'smog in their dirt,' meaning they won't buy anything but Los Angeles, or Coastal California, single-tenant retail assets. They are willing to pay “the freight” to be there,” McChesney says. “There are other investors who feel that a comparable Walgreens or 7-Eleven, or whatever quality tenant, in Southern California is just as good as one that is of similar quality located in Virginia or elsewhere outside California.”