Inland Empire Retail Pricing Hits New Record

Developer GPI Cos. has sold its latest retail project in the Inland Empire for a record-breaking price. Sycamore Hills Plaza, a 78,000-square-foot retail center co-anchored by Whole Foods 365 and CVS, traded hands for $49 million, according to industry sources unrelated to the deal. That is record sales price for a retail asset in the Inland Empire. In the last year, the Inland Empire retail market has experience substantial growth, leading Southern California in rent growth with several new retailers migrating to the market.

“This is part of a master planned community with 325 new home sites, many of which are already under construction. This was the commercial component of the property,” Lee Wagman, partner of GPI Cos., tells GlobeSt.com. “The center was well conceived and ended up being well leased. The anchor tenants that we have in place and the fact that this was a fully leased property created an institutional-quality asset and that was validated in our marketing.”

This is a unique retail asset in the Inland Empire, and the property’s strong tenancy—which includes Starbucks, Orangetheory Fitness, Supercuts Hair Salon, Kona Cleaners, Union Bank, the UPS Store, AT&T, Corky’s Kitchen and Bakery—and location helped to drive the record pricing. This was GPI Cos.’ first retail development in the Inland Empire, but the firm was confident in the location. “We are core L.A. developers, and this was a project in a market that we are not deeply familiar with. The dynamics were strong in terms of the location and demographics. Once we were able to secure a lease commitment with Whole Foods and CVS, we had expectations that we would be able to deliver,” says Wagman. “In today’s world where retail is largely out of favor, delivering an asset like this that is well designed, well anchored and fully leased was something that we are very proud of.”

The location certainly was a key to the success of the project. The center is located on the border of Claremont and Upland, sitting on the border between Los Angeles County and San Bernardino County. “The county line literally runs through the property,” adds Wagman. “This was a complicated entitlement process, but the demographics of this particular location are very strong. The fact that it sits on the 210 at a great interchange was also clearly an ingredient to our success.”

GPI had strong interest in the sale from a range of capital sources. “We saw mostly core buyers, or buyers looking for assets with stable and predictable cash flow with high-quality credit and opportunity for future growth,” says Wagman. “There were a lot of opportunity funds, high net worth family offices and pension funds active in the bidding process.”

Philip Voorhees, vice chairman at CBRE, represented the seller in the deal.