Middle Market Digest: This Week in Southwest
Here’s a look at this week's trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.
BY THE NUMBERS
SAN DIEGO—The retail market in San Diego is on an upswing, with four continuous quarters of declining vacancy and occupancy growth. Since the second half of 2016, the market has seen more that 500,000 square feet of occupancy gains. The region’s overall retail vacancy rate shed another 10 basis points since the close of 2017 to an even 4% at midyear 2018. San Diego’s retail vacancy has fallen 40 basis points since a year ago and is now 320 basis points below its peak of 7.2% recorded eight and a half years ago at the end of the last recession—since that period, tenants have now absorbed a whopping 2.1 million square feet across the county on a net basis. Oceanside and Carlsbad were the best performing submarkets, gaining 56,000 square feet and 16,000 square feet, respectively, in the second quarter. La Mesa/Lemon Grove was also a top performing market with 15,000 square feet. Lease rates have followed with the countywide average asking rent for retail space was $2.32 per square foot per month on a triple net basis as of midyear 2018, a 4% increase from year-end 2017.
(SOURCE: CUSHMAN & WAKEFIELD)
NEW & NOTABLE
IRVINE, CA—Greenlaw Partners has hired Baker Morphy, a 15-year commercial real estate veteran, to source, manage and lease new real estate investments for the company. Morphy will continue to build and maintain his deep broker relationships as well as work alongside the firm’s institutional and private capital partners. Before joining Greenlaw Partners, Morphy was Director of Acquisitions for Invesco Real Estate where he handled all product types in the Western United States. Morphy also previously worked as an investment sales broker with JLL and as an associate with Trammell Crow. Over the last decade, Greenlaw has executed on acquisitions and dispositions in excess of approximately $4 billion dollars in partnerships with a variety of sophisticated real estate owners, brokers and lenders.
LOS ANGELES—CBRE has hired retail-leasing specialist Derrick Moore at its Downtown Los Angeles office. Moore, who is rejoining CBRE as senior vice president, spent the past five years at Avison Young. Prior to that, he was with CBRE, where he was recognized as one of the firm’s top retail leasing brokers. During his more than 20 years as a real estate professional, Moore has completed in excess of 2.5 million square feet of retail lease transactions in the Los Angeles region. Moore has partnered with numerous national and local tenants, developers, landlords, retailers, restaurateurs, and other retail professionals. Before joining Avison Young in 2012, Derrick began his career with CBRE in their downtown LA office where he formed the Urban Retail Properties group.
PHOENIX—HFF has expanded its investment advisory team with the addition of managing director Patrick Dempsey in its Phoenix office. Dempsey will focus on retail investment advisory and capital markets transactions in Phoenix and the southwestern United States. In his 30-plus year career, he has completed more than 30 million square feet in transactions valued in excess of $4.7 billion. Dempsey joins HFF from Lee & Associates where he was a principal and member of the top performing investment sales team since 1996. Prior thereto, he worked at Grubb & Ellis Commercial Brokerage and began his career with Pacific Southwest Realty Services. Dempsey is an active member of the International Council of Shopping Centers, is a licensed Arizona real estate broker and has earned the National Association of Realtor’s CCIM designation. Dempsey has a Bachelor of Arts in Marketing from the University of Arizona.
DEALTRACKER
NEWPORT BEACH, CA—A seven-story, 90,715-square-foot office building located at 1500 Quail Street in Newport Beach, CA, has traded hands for $32.1 million. Paul Jones, Kevin Shannon, Blake Bokosky, Brunson Howard, Rick Stumm and Brandon White of NKF Capital Markets represented the seller, New York Life. The buyer, a joint venture between Lincoln Property Company and an institutional advisor, was self-represented. Built in 1983 and renovated in 2017, 1500 Quail is situated on nearly five acres and is 91% leased to 17 tenants including Northwestern Mutual, Ticor Title, Alera Group, and BB&T.
NEWPORT BEACH, CA—A five-story, class-A office building totaling approximately 105,000 square feet located in Cerritos, CA, has traded hands for an undisclosed price. Kevin Shannon, Paul Jones, Ken White, Blake Bokosky and Brandon White of NKF Capital Markets represented the seller, an affiliate of Transpacific Development Company. The buyer, West Coast Capital Partners, was in a 1031 exchange and was self-represented. Built in 2009, the property is situated on approximately 3.5 acres and is 91% occupied by five tenants. 12800 Center Court features unique architecture with an iconic dome as its centerpiece, high-end contemporary finishes, efficient floor plates and ample surface parking. It is also well located within Cerritos Towne Center, a 125-acre mixed-use development consisting of office, hotel, the Cerritos Center for the Performing Arts, retail stores, and over a dozen restaurants including Starbucks, Wood Ranch BBQ, Macaroni Grill, and Mimi’s Café.
LOS ANGELES—A 10,040 square foot development site in Culver City has traded hands for $7 million. NAI Capital EVP Fariba Kavian and VP Sam Monempour with NAI Capital’s West Los Angeles office along with Arthur Arejian, president of Vanguard Investments. completed the sale of Fariba and Sam represented the seller, Napa Industries. The buyer was California Landmark Group. The property is zoned LAR5 and located at 3812-3818 Dunn Drive, adjacent to the city of Culver City within the Westside of Los Angeles. The property is centrally located, one block from Sony Pictures Plaza and walking distance of Columbia Pictures and City Hall. A myriad of shopping and entertaining amenities surround this very densely populated and affluent area.
LOS ANGELES— Lion Real Estate Group has secured $35 million in financing for EastView Apartments, a newly completed, 121-unit, class-A apartment property adjacent to Downtown Los Angeles, California. HFF worked on behalf of the borrower to secure the 12-year fixed-rate loan with an insurance company. The loan, which funded immediately upon receipt of the temporary certificate of occupancy, includes five years of interest only payments and multiple future funding mechanisms. The rate was locked for three months prior to funding with a spread in the low 100’s. EastView Apartments is located at 327 N. Boylston Street just outside DTLA, Silverlake and Echo Park. The property comprises a mix of contemporary studio, one- and two-bedroom units ranging from 555 to 1,267 square feet. EastView Apartments offers residents unobstructed views of the city skyline; a fifth-floor sky deck with firepit, grills and dining tables; co-working lounge with refreshment bar and large-screen TV; swimming pool with hot tub and lounge; state-of-the-art fitness center; secured parking; bike share program; and electric car charging stations. The property is currently leasing up quickly due to the location, quality of construction and high-end amenities being offered at a significant discount to other recently constructed buildings in downtown. The HFF debt placement team representing the borrower included managing director Marc Schillinger and associate Peter Berges.
SAN DIEGO—Pathfinder Partners has acquired the $18.3 million acquisition of Verona Park Apartments, a 119-unit multifamily community located in the Denver metro area at 12000 East Kansas Drive, Aurora, Colo. Built in 1972, the community is situated on 8.9 acres and includes seven two-story residential buildings comprised of 62 one-bedroom/one-bathroom units and 57 two-bedroom/one-bathroom units averaging 881 square feet. The community offers a variety of amenities including a heated indoor pool, resident clubhouse, business center, 24-hour fitness center, children’s playground area, BBQ area with covered picnic seating, on-site laundry facility and parking. Pathfinder plans to implement a comprehensive interior renovation program and perform upgrades to the landscape, hardscape and common area amenities.
BUILDING BLOCKS
PASADENA—C.W. Driver Companies has broken ground on Crown Valley Park Community Building, a 30,000-square-foot, three-story building in Laguna Niguel, California. The $25 million project marks the final phase of a three-tier improvement plan for Crown Valley Community Park, with full completion anticipated for Spring 2020. The new facility will include offices, a multi-purpose room for up to 300 people, a kitchen, classrooms and other spaces designated for art, technology, dance and fitness. Adding to the building’s appeal is a rooftop patio overlooking the adjacent community pool. Integrated design firm LPA Inc. worked alongside C.W. Driver Companies to create a facility for the City of Laguna Niguel that is cost effective, reflects a timeless design and improves operational efficiencies. The city aims to deliver a best-in-class recreational facility where residents can gather and experience a wide range of community events and activities.
BEAUMONT, CA— Pardee Homes Inland Empire’s Altis, a 55+ lifestyle community development in Beaumont, CA, is on schedule for a fall delivery. When completed, Altis will be comprised of 704 homes with anticipated pricing to start from the mid $400,000. The homes will range in size from 1,473 to 3,094 square feet, the single-story homes are offered with two to three bedrooms, two to three and a half baths, two-bay garages, and storage.