OC Retail Pricing Is at All-Time Highs
A retail property in Laguna Beach has set a new price-per-square-foot record for a grocery-anchored retail center in Orange County.
“The irreplaceable coastal location, strong tenant sales and scale in a market with limited opportunities,” Gleb Lvovich, a managing director at JLL that represented the seller in the deal, tells GlobeSt.com. “Properties like this don’t trade very often, and in fact, the last trade of this size in Laguna Beach for retail was this property over 20 years ago.” JLL managing director Bryan Ley and director Daniel Tyner also represented the seller.
The retail market has seen a sharp decrease in activity this cycle because of a consumer preference to buy goods online—which also led to the shuttering of several national brands—however Orange County has continued to see healthy demand from investors for retail product. “Orange County is one of the strongest retail markets in Southern California and the West Coast,” says Lvovich. “We have great incomes and density, which is exactly what retailers want. We’re seeing the most interest in grocery/drug-anchored shopping centers and strip/street retail.”
The demand is largely due to strong demographics. The Aliso Creek Shopping Center, for example, is surrounded by one of the most affluent communities in Southern California with average household incomes exceeding $198,900 within a one-mile radius of the property and an average housing value of $2.2 million. The property is also anchored by CVS Pharmacy and shadow-anchored by Gelson’s Market, Aliso Creek Shopping Center, further driving strong demand.
In fact, if Orange County has seen a decrease in activity, it is due to a lack of opportunities rather than a decrease in demand. “We may see a decline in activity simply because retail in Orange County is highly desirable and trades are limited,” says Lvovich. “Demand is strong since every investor wants to invest capital along the coasts in the US and the smile states with strong population growth.”
Lvovich expects the current strong pricing trends to continue as a result of the high demand. “We are seeing great pricing for the best opportunities and expect this to continue,” says Lvovich. “Cap rates and pricing, which is at all-time highs, are likely to remain flat.”