By George Avalos
Contra Costa Times
Posted: 06/28/2010 03:57:29 PM PDT
Updated: 06/29/2010 08:04:37 AM PDT
Some retail sites in the East Bay, many of them long empty, are starting to entice buyers and tenants - but the price has to be right.
Buyers have snapped up retail properties in Pleasant Hill, Fairfield, Dublin and several other sites in the Bay Area recently.
Among the latest deals: A partnership controlled by Westfield Group bought an 88,000-square-foot building in Fairfield that had been occupied by Mervyn's and which is located next to the Westfield-owned Solano Shopping Mall. The Fairfield purchase closed June 23. Terms weren't disclosed.
A group led by Retail Opportunity Investments Corp. bought a 71,000-square-foot retail center in Pleasant Hill for $13.7 million. The center on Buskirk Avenue between Mahew Way and Coggins Drive is anchored by Office Depot and Basset Furniture. A Best Buy anchor store owned by a different group serves as another major store for the center.
The common theme in a number of the deals: In a lousy economy, buyers believe they are getting a great price for many retail properties.
"We were able to buy this at 60 percent of the replacement cost," Richard Schoebel, chief operating officer with Retail Opportunity, said of the Pleasant Hill site. "We also saw that it was a good location, a space that could be leased up and increase our return on investment."
A number of the sites that are being bought are deemed to have excellent locations, brokers said.
"Everybody is looking for a good deal," said Scott Kinsey, a broker whose specializes with property sales at Colliers International. "A lot of these retail sites fit the mold of the best of the best, Class A properties."
In other cases, investors were certain that they would be able to reduce their risks in a building purchase. Westfield, for example, bought a building that was next to its bustling regional mall in Fairfield.
What's more, before the purchase, Westfield also knew that Forever 21 would be renting 44,000 square feet in the two-story, 88,000-square-foot building that the Westfield-led Solano Mall Boxes LLC group bought.
Negotiations are under way already with another retailer to occupy the remaining 44,000 square feet on the first floor of the former Mervyn's store.
"We see this as a great opportunity for Fairfield," said Karl Dumas, an economic development official with the city of Fairfield. "This is the first Forever 21 store in the area. They should do very well at their new location."
Kohl's, Burlington Coat Factory and Forever 21 have all been aggressively taking over long-empty retail buildings in the Bay Area. Many of them were one-time Mervyn's stores.
Some former auto dealership sites are being snapped up by investors.
"I just had an auction for a former Vacaville Ford dealership, and we had 15 bidders show up," said Ray Devlin, a vice president with Grubb & Ellis, a commercial realty brokerage. "People are willing to spend money if they see good value."
The buyer of the ex-dealership property is a local investor who will focus on getting the empty retail building leased up.. .
The rising activity heartened brokers.
"Maybe this is an indication that things are bottoming out," Devlin said.
Contact George Avalos at 925-977-8477.