Eastridge, Large San Jose Regional Mall, Trades for $135M
Acquisition financed with $98M loan from L.A. branch of Bank of China.
In a $135M deal that includes most of the 1.3M SF Eastridge Center and some parcels adjacent to it, a Houston-based affiliate of a real estate group headed by Jiashu Xu has acquired the high-profile San Jose regional mall and restaurant center.
The seller was GS Pacific ER, an affiliate of Pacific Retail Capital Partners and Silver Eagle Capital Partners, according to a report in SiliconValley.com.
Xu’s real estate group acquired all of the stores in the indoor mall that is the main section of the regional center, at 2190 and 2200 Eastridge Loop, as well as a parcel at 2010 Tully Road and some property adjacent to the mall, the report said.
The deal includes a $98M finance package from the Los Angeles branch of Bank of China.
Pacific Retail Capital Partners paid $225M in 2016 to buy Eastridge Center, with Bank of China’s Los Angeles branch providing a $150M mortgage. GS Pacific subsequently sold seven parcels next to the mall for about $42M.
Eastridge Center opened as an outdoor shopping center in 1971. In 2005, the center opened an interior mall, with a 2006 expansion growing the center to 105 acres with more than 145 stores and 1.3M SF of leasable space.
Improving tenant demand in 2023 held the market-wide retail vacancy rate to 4.6% in San Jose in 2023, slightly less than the 4.8% in 2022, according to a Q4 market report from Marcus & Millichap. The average retail asking rent in San Jose ticked up to $36.52 per square foot in Q4.
“This turnaround is being led by increasing tenant demand in the metro’s largest submarket by inventory, South San Jose. [Q1 2023] represented the strongest three-month span for net absorption in the area since early 2020, helping reduce the local amount of vacant retail space to below the year-end 2019 level,” the report said.
Leasing in South San Jose included several restaurants, fitness concepts and other retail services, positioned to meet the demand of a growing, higher-density local population. The number of apartments in and around the submarket has risen by 8 percent since 2019 as new households continue to form in the area, Marcus & Millichap said.
As in many major markets last year, deliveries from new construction were in retail were at historic low levels. The total of 105K SF in new supply delivered in 2023 was the lowest recorded since 2007. A 44K SF Restoration Hardware store is the largest project still under construction, the report said.