Reports of the death of the Southern California mall have been exaggerated.
Legacy malls across the region have been trading hands for nine figures as investors bet on dense suburban sprawl, limited supply and a consumer shift toward experiential retail, Commercial Observer reported.
This year, retail has seen somewhat of a boom in investment, representing some of commercial real estate’s strongest growth opportunities. It has been bolstered by a combination of solid fundamentals, relatively affordable properties and capital eager for investment in the wake of the pandemic.
Lakewood Center, The Oaks in Thousand Oaks and Long Beach Towne Center have all traded hands over the past year, often at discounts from their mid-2010s valuations.
In Southern California “you have this dense suburbia with a lot of large parcels that haven’t been unlocked for a very long time,” Cole Perry, associate director of research for real estate analytics firm Altus Group, told CO. “The minute one comes up… It’s why they trade for nine figures, because you go to another city in the Midwest where density is probably half of what it is in Orange County, and, even if you were to convert a large property [in the Midwest] into a different use, it just doesn’t have the same kind of draw that one in Southern California would.”
Lakewood Center sold for $332.1 million in August, down from its $630 million appraisal 10 years ago. It drew heavy bidder interest thanks to its scale and location. Now, new owners Pacific Retail Capital Partners, Lyon Living and Silverpeak plan to turn the roughly 2-million-square-foot shopping center, one of the best-performing in California, into a mixed-use community similar to The Grove.
CenterCal and DRA Advisors are pursuing similar upgrades at Long Beach Towne Center, adding chef-driven dining, wellness tenants and family-oriented programming.
Stockdale Capital Partners is plotting a full repositioning at The Oaks in Thousand Oaks, betting that relevance, not its 1.2-million-square-foot size, determines a mall’s future. The idea is that because consumers tend to drive to malls for shopping as well as food and other experiences, it’s best to serve as many of those needs as possible.
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