Brixmor Property Group Buys Brea Gateway for $85M

Brixmor Property Group has acquired the Brea Gateway Center for $85.7 million. The seller was not disclosed, but industry sources show that PNC sold the property.

Located at 101-407 W. Imperial Highway in Brea, California, the shopping center is 13 parcels on 12.5 acres, and has visibility from the highly trafficked road. The property is co-anchored by a Ralphs and Rite Aid, and was 98% leased at the time of the sale. Other tenants include HomeGoods, Cost Plus World Market, Mattress Firm, Taco Bell and Panda Express.

JLL managing directors Gleb Lvovich, Bryan Ley and Geoff Tranchina and senior director Daniel Tyner represented the seller in the deal. According to Tranchina, it is rare for a property of this caliber to trade hands in Orange County. The Downtown Brea area where the property is located 134,290 residents with an average annual household income of $91,069 within a three-mile radius.

There is reason to be bullish on the retail sector. By the end of last year, retail sale activity for retail properties with prices greater than $10 million in the Western U.S. has been $5.5 billion, with 27% or nearly $1.5 billion of that in the months of September and October combined. This is because there was a relatively quick shakeout of poor retail performers in 2020, and because the retail survivors have proven their sustained strength.

The Southern California market in particular is bouncing back. The holiday shopping season was a good sign of that. A pre-holiday report from CBRE found that holiday spending would increase 8.4% in 2021 to $800 billion, a new record. Southern California is expected to benefit from the surge in retail sales. Brick-and-mortar sales specifically will grow 8% to a 10-year high.

Leasing activity is also improving. Net absorption of retail space last quarter totaled 30.2 million square feet and hit the highest level since Q4 2017. Nearly all of the gains in net absorption were driven by strong demand for general retail and neighborhood space, according to NAR. Vacancy declined by 10 basis points to 4.7% as of December 9, while new retail supply hit a new low in Q3 2021 of 2.9 msf. Most of the new retail space under construction is focused on general retail.