Why Beacon Realty Is Continuing to Buy Retail Property

While some investors are shying away from the retail market, Beacon Realty Advisors is continuing to acquire new assets. The firm has purchased Jefferson Square in La Quinta in a joint venture partnership with Carolina Capital Real Estate Partners. While the sale price was not disclosed, Jefferson Square is a partially built open-air center on 10 acres.

“Beacon sees great potential in Jefferson Square. It is a diversified asset that presents a variety of opportunities for Beacon and third parties, whether it be for lease, sale, and/or redevelopment,” Omar Hussein, founder and principal at Beacon Realty Advisors, tells GlobeSt.com. “Situated at one of the highest trafficked intersections in the Coachella Valley, Jefferson is highly visible and conveniently located, offering the region a variety of retail, medical and non-retail services.

In addition, the firm sees development potential for the property for multiple real estate strategies. “The property, which was platted into 7 separate parcels under previous ownership, creates a unique offering for developers or buyers interested in acquiring either a single parcel or combining parcels, depending on their real estate needs,” adds Hussein.

The pandemic has destabilized the retail sector, and as a result, capital has largely eschewed retail opportunities. Beacon, however, was able to adjust to the new market quickly to take advantage of opportunities, like Jefferson Plaza. “As retail and mixed-use specialists, Beacon Realty Advisors is well equipped to respond to quick market changes,” says Hussein. “Although some institutional capital has been shifted towards more in demand product types such as Industrial or Life Science Investments, we believe in the long-term sustainability of well-located retail assets anchored by essential retail and service providers.”

The dynamics of Jefferson Plaza made the deal attractive, despite the market adjustment. “Jefferson Square is anchored by CVS pharmacy with over half of its small shop tenants classified as essential businesses, making up a very well-rounded tenant roster,” says Hussein. “Diversified mixed-use assets that incorporate essential retail in conjunction with residential product such as Multifamily or Senior Housing are still commanding very low cap rates in markets like Southern California.”

In addition, Hussein says that Beacon is able to identify value-creation opportunities in retail, even those not obvious to other investors. Retail has already undergone tremendous changes, helping to prepare the firm to recognize potential. “Retail is always changing and reinventing itself to meet consumer needs and wants,” says Hussein. “In general, each asset is unique, which makes real estate such an exciting industry to be in, especially during our current economic climate,” says Hussein. “The pandemic has had its most profound impact on certain segments of retail such as entertainment, fitness and full-service restaurants. However, we feel that following the pandemic, many of these tenants will once again be in high demand.”