The Los Angeles Metro Market was the #1 market for retail deals in the United States in 2013 with a total deal volume of approximately $3.576 billion barely edging out second place finisher Chicago with a total deal volume of $3.546 billion. Manhattan was third with approximately $3.453 billion, Dallas fourth with $1.845 billion, and Houston was fifth with $1.616 billion.
Nationally, sales of significant retail properties totaled $60.8b in 2013, up 8% from 2012. Sales of strip centers and single-tenant properties jumped 26% with activity for regional malls failing to meet the surge of recapitalizations of 2012 and holding back larger volume gains in the retail sector.
A remarkable rebound in prices occurred for retail properties in 2013 as investors re-embraced the sector in 2013. The Moodys/RCA CPPI for retail is expected to post a 23% increase for the year, well above any other property type.
2013 was a year investors moved further out the risk spectrum and started to pursue properties and markets that have lagged in the recovery. Volume in the Non-Major Metros grew 23% while activity in the 6 Major Metros declined 14%. Prices for unanchored centers surged 27% on opportunistic buying. Las Vegas, Atlanta, Tampa, and Sacramento were the top markets in terms of volume or price gains.
Portfolio transactions are proliferating, evidencing investors’ growing appetite and access to capital.
Five years since the financial crisis that caused $72.1b of loan defaults in the retail sector, a third of that total remains outstanding. However lenders are making steady progress reducing distress levels, and while distressed sales will continue for some time, distress is no longer a significant factor weighing on the marketplace.
Individual property sales declined slightly in 2013, including a 30% yoy decline in Q4.
LOS ANGELES METRO MARKET SALES
25 Largest Retail Deals in Los Angeles Metro in 2013
|Property Name/City||Sale Price||Square Feet||Price/Square Foot||Cap Rate||Cap Rate|
|Antelope Valley Mall|
|Westfield West Covina|
|Hollywood & Highland Center|
|South Bay Galleria|
|Peninsula Shopping Center|
|Los Altos Market Center|
|Courtyard at the Commons|
|Diamond Hills Plaza|
|Mountain Gate Plaza|
Rancho Palos Verdes
|Hollywood Walk of Fame|
|Plaza De La Canada Shopping Center|
|Shops on Lake Avenue|
|Sepulveda Eagle Center|
|Lancaster Commerce Center|
WOW! At over $7,000 per square foot for a retail building on Rodeo Drive in Beverly Hills, the Lladro Building clearly sets the high water mark for price per square foot in the Los Angeles Metro. A distant second was the Emporio Armani building at 9533 Brighton Way which sold for a mere $2,197 per square foot. However, this is a nice gain for the seller, who bought the property in November 2010 for $25.5 million, or $1,398 per square foot. The Lladro deal at $120 million almost single handedly covered the gap between the L.A. Metro Market ($3.576 billion) and the Manhattan Market ($3.453 billion) for deal volume in 2013.
Cap rates ranged from 5.8% to 6.8% on the properties where cap rates were available. Price per square foot ranged from $110 (Lancaster Commerce Center) to $817 (Hollywood Walk of Fame) for the non-Beverly Hills deals. Not surprisingly, the lowest price per square foot deals were in the Antelope Valley, a much less densely populated portion of Los Angeles County, while two of the higher price per square foot deals were in Hollywood, the Hollywood Walk of Fame ($817) and Hollywood & Highland Center ($672).
For further details on any one of the 25 deals, please send me an e-mail using the “Contact Me Directly” tab at the top of this page.