Acting on behalf of Weingarten Realty, Lucescu Realty has arranged the disposition of Jess Ranch Marketplace, an approximately 700,000-square-foot community shopping center in Apple Valley in Southern California’s Inland Empire region. A privately held Newport Beach, Calif.-based investment, development and management company purchased the asset for $89 million.
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Located at the intersection of Bear Valley Road and Apple Valley Road, Jess Ranch boasts a dominant market position and a lease level of more than 98 percent. The property features a host of anchors, including Burlington, 24 Hour Fitness, Cinemark, Best Buy, Bed Bath & Beyond, PetSmart, Rite Aid and Big 5 Sporting Goods. “Grocery, lifestyle, entertainment and general merchandise all in one center was a significant draw,” Mark Lucescu, president of Lucescu Realty, told Commercial Property Executive. Additional anchors Target, Winco Foods, Staples and 99 Cents Only Stores were not part of the transaction; however, the stores boost the asset’s gross leasable area to a total of roughly 1.1 million square feet.
Lucescu Realty fielded more than a few expressions of interest in Jess Ranch. “We had a good, solid response from a full spectrum of buyers, from family office, individual, institutional and even a few foreign entities,” Lucescu said. “Strong gross sales went a long way in the buyer interest. Even if a tenant has a chain-wide failure, if this location were a strong location, a competitor would fill the void; gross sales and health ratios are better than tenant credit. Total GLA was a big factor as well, as you can’t build 750,000 square feet anywhere. And if you could, you would have to have enough void in the market to lease to 750,000 square feet of tenants.” Further evidence of the property’s strength came to the fore during escrow, when a 15,000-square-foot vacancy materialized but was fully claimed in short order by two businesses. At Jess Ranch, Lucescu added, “Tenants are all doing well for the most part.”
The disposition of Jess Ranch comes five years after Weingarten gained full control of the center and 10 years after the completion of the property’s third and final phase. Parting with the asset was not originally part of the REIT’s business plan; however, as executives noted in the second quarter 2019 earnings report, selling a large center with several big box retailers in a tertiary market can be challenging, so the company seized the opportunity to sell at what was ultimately a price above net asset value.
The Inland Empire’s profile as a desirable suburban Los Angeles locale for investing in retail has risen over the years and continues on the upswing. “[The Inland Empire market] is becoming more acceptable for most investor classes as densities fill in. There are still risk-adjusted returns when compared with coastal locations,” Lucescu said.