Warner: Despite public perception, demand for retail is strong from investors looking for better yields than other asset classes. As I said, there is and will continue to be demand for well located retail assets and we pushed pricing based on telling the right story to the right buyer pool that had pent up demand for this asset class. With that said, we have seen upward pressure on cap rates in most Southern California markets due to increases in interest rates. San Diego has been somewhat insulated based on the continued demand to own in this market and the lack of supply.

GlobeSt.com: Why did you choose to sell the Walgreens on the property separately?

Warner: Since the center was not encumbered by one loan, my partner Caitlin Zirpolo and I made the recommendation to my seller that we market and sell the Walgreens separately because we believed we could target two different types of buyers and maximize value for my client. During our analysis, we determined that a Walgreens buyer would not have the capital or desire to buy a multi-tenant large shopping center and a shopping center buyer would not pay the low cap rate for the single-tenant Walgreens. While a lot of brokers understand the theory, the actual execution of a multiple sale disposition can be very difficult. In this case, we created a 10% premium for the seller by using this approach, which translates to real money (± $4M), so it was completely worth the challenging process. For buyers acquiring assets that are separately parceled, I would highly suggest placing debt on each parcel individually to positively impact the potential exit strategy and pricing.

GlobeSt.com: What does demand for non-grocery-anchored shopping centers say about trends in retail, especially considering competition with ecommerce? Are these riskier investments?

Warner: It's all about location, tenancy, and fundamentals. Value is very simple but people seem to somehow over complicate it. Properties that are restaurant or entertainment/gym oriented and well located with rents at or below market will continue to sell at a premium. In fact, I will not be surprised when certain non-grocery-anchored centers start selling at lower cap rates versus grocery anchored centers. The sale of Del Oro Marketplace at a 5.08% cap is proof that this trend is happening and I believe it will continue in core markets across the country.

GlobeSt.com: Where do you see activity and demand for these segment of the retail sector heading this year?

Warner: Cap rates have risen by over 10% in the past 12 months due to the increases in cost of capital. We continue to see cap rates rise along with interest rates. However, I do believe that both a well-located grocery and non-grocery-anchored center will fare better than the market due to the continued demand and lack of supply. Also, by being creative on how you maximize the sale of an asset you may even be able to out-perform the market or the top of the market. The strategy on Del Oro is proof that with creative marketing and exit flexibility, well-located assets can trade at a premium. This sale is more of an exception to the rule than the trend. It is the broker's job to be creative in order to deliver the exception versus the norm.