The El Segundo-based Paragon Commercial Group is betting on Burbank with its $37 million acquisition of a retail strip at 635-699 Victory Boulevard. The deal, according to property records, amounts to about $274 per square foot.
Dubbed Airport Plaza, the complex encompasses four structures and a total of 135,039 square feet. It’s currently fully leased by six tenants, including anchors Hobby Lobby and Toys’R’Us. The tenants have 72,500-square-foot and 38,119-square-foot leases, respectively.
The sellers were Alton Jennings Trust, which has owned the land for more than 40 years, and Airport Plaza Inc., the leasehold owner, according to Savills Studley broker Bill Bauman.
Bauman and his colleague Kyle Miller represented both the buying and selling parties in the off-market transaction.
The structures were built in 1964 and renovated in 1983, Bauman said, but Hobby Lobby redeveloped its space in 2014 before it moved in. Other tenants include O’Reilly Auto Parts and Burger King.
“Paragon plans to redevelop the property over time as leases expire,” Bauman told The Real Deal, adding that the buyer will potentially court new tenants. Hobby Lobby’s lease goes until 2032, according to CoStar, but some of the other leases will end in as soon as five years, Bauman said.
“My guess is that if they could, they’d put a grocer in there,” he added.
Burbank is a tight market for retail with a 3.9 percent vacancy rate, according to CoStar. Just three blocks west of the Plaza is the 1 million-square-foot Empire Center, anchored by a Target, Lowe’s and Best Buy. And less than a mile east of the Plaza is the site of Cypress Equities’ major redevelopment of the Burbank Town Center shopping mall. The project calls for IKEA, located near but separate from the mall, to be turned into a seven-story, mixed-use complex with 1,000 apartments and 50,000 square feet of retail space.
The sellers’ motivation to let go now was simply timing, according to Bauman, who said the proceeds of the sale will provide a higher return than leasing the property.