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Wednesday, Jul 24, 2024
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San Diego’s Retail Market Draws L.A. Investor

REAL ESTATE: Decron Buys Mira Mesa Center Amid Retail Boom

SAN DIEGO – A Los Angeles real estate investment firm has reentered the San Diego retail property market, buying a Mira Mesa shopping center for $99 million.

Decron Properties at one point owned 14 commercial centers but sold most of them following the Great Recession.

Company President David Nagel said that the last time the firm invested in retail real estate was in 2006, but he said the overall market and the retail market in San Diego, in particular, has shown strong growth following the pandemic.

David Nagel
CEO
Decron Properties

Decron in May bought Mira Mesa Market West, 10604 Westview Parkway, from Stockbridge Capital Group.

“Retail, which was a very unhealthy asset class coming out of the Great Recession of 2008, has repaired itself, and we see that in the occupancy numbers, or shall we say the vacancy numbers,” Nagel said. “Most centers are over 90% occupied. Retailers that had struggled with online platforms have now figured it out, and those that couldn’t figure it out have failed.”

CBRE reported that the vacancy rate for San Diego County retail property ended the first quarter of 2024 at 4.6% where it had been for the past three consecutive quarters, but below the 10-year average of 5.4%.

Downtown San Diego ended the quarter with the highest vacancy rate at 10.5% and Central San Diego had the lowest at 2.8%.

Overall retail sales grew by nearly 7% in 2023, the largest annual increase since 2020, according to CBRE.

A Prospering Location

Built in 2000, the 238,747-square-foot Mira Mesa Market West is anchored by The Home Depot, Smart & Final, and CVS, each of which ranked within the top 10% of their chains in sales, according to Decron.

Other tenants include Dave’s Hot Chicken, Starbucks, Jersey Mike’s, Verizon Wireless, PNC, and Lazy Dog restaurant.

Nagel said that Decron previously sold many of the shopping centers that the company owned because the tenants include big-box retailers that failed.

Shopping centers like Mira Mesa Market West are prospering because they have a supermarket and pharmacy as anchors that attract shoppers for multiple visits daily and weekly, Naslund said.

“That Mira Mesa marketplace continues to be the No. 1 place to shop in that immediate area,” Naslund said. “This is an excellent center in an excellent location in one of my favorite cities in America, San Diego.”

Decron Properties in December spent $125.5 million to buy Margo at The Society, a Mission Valley complex with 240 apartments. The company also owns an apartment complex in Carlsbad that it bought in 2015 for $112 million.

Nagel said that he wants to buy more retail and residential property in San Diego County.

Investors See ‘Generational Opportunity’

In far smaller transactions than the sale of Mira Mesa Market West, a Del Mar shopping center – Polo Plaza – sold for $18.5 million and an Escondido shopping center – Citrus Strip Center – sold for $6.2 million.

Brixton Capital, based in Solana Beach, bought the 63,629-square-foot Polo Plaza, 3702 and 3790 Villa De La Valle, from Lincoln Property Company, based in Dallas, and ASB Investment Management, based in Washington, DC.

“Polo Plaza represents a generational opportunity to purchase a value-add, iconic property in the affluent coastal region of Del Mar,” said Dan Sutherland, Brixton managing director of investments.

“It’s located just off Interstate 5, adjacent to a top-performing business district and close to the heart of San Diego’s leading technology and life science companies,” Sutherland said.

Tenants include Berkshire Hathaway, Coldwell Banker Commercial, and Market Restaurant + Bar.

Rick Reeder of Newmark represented the sellers and Brixton Capital represented itself.

In the Escondido sale of Citrus Strip Center, 2315-2341 East Valley Parkway, the Eiad and Vera H Family Trust bought the property from Cavalier Investments, LLC, based in Colorado.

The shopping center sold within in a month of being listed and drew three offers, said Nick Totah, senior vice president with the Totah Group of Marcus & Millichap, which brokered the deal.

Nick Totah
Vice President
Totah Group of Marcus & Millichap

Tenants include US Bank, Shell and Dutch Bros Coffee with a Vons supermarket next door.

Totah and Ross Sanchez, senior investment associate with the Totah Group, in March brokered the more than $3.9 million sale of Centre City Plaza, a 14,260-square-foot Escondido shopping center at 410 West Felicita Ave.

Totah said that high interest rates have slowed the sale of retail property this year, just as they have slowed the sale of single-family homes, but he’s confident that the market remains strong.

“It’s continuing to pick up steam,” Totah said. “Retail’s going to continue to grow. There’s a lot of national retailers that have very strong plans for growth.”

Decron Properties
FOUNDED: 1955
HEADQUARTERS: Los Angeles
PRESIDENT/CEO: David Nagel
BUSINESS: real estate investment
NUMBER OF EMPLOYEES: 300+
WEBSITE: www.decron.com
CONTACT: 213-516-2661
NOTABLE: Decron Properties was founded by Jack M. Nagel, a Polish-born Holocaust survivor who arrived in New York with no more than the shirt on his back. Decron has more than 10,000 apartments in three states and 1 million square feet of retail and office space.

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