Heitman Selling Fremont’s Pacific Commons Retail Complex

One of the Bay Area’s biggest shopping centers, a nearly 900,000-square-foot property in Fremont, is up for grabs.

Chicago-based Heitman has listed Pacific Commons in Fremont, the Silicon Valley Business Journal reported. The 84-acre property is 92 percent leased and anchored by Costco, Target and Lowe’s, with Asian grocery chain H Mart set to open what is expected to be its largest U.S. store.

JLL is marketing the center, though no asking price has been disclosed. Heitman acquired the property in 2013, though a sale price in that transaction was never disclosed.

The offering lands as Silicon Valley’s retail fundamentals continue to improve even as investment sales remain sluggish. Retail vacancy dropped to 3.8 percent in the second quarter, while tenants absorbed nearly 590,000 square feet over the past year, according to CoStar data cited by the Business Journal. But elevated borrowing costs have kept many buyers on the sidelines, creating a disconnect between strong leasing fundamentals and muted transaction volume.

Pacific Commons is located a few miles from Tesla’s 6.2 million-square-foot Fremont factory and is surrounded by a growing cluster of semiconductor, robotics, battery and advanced manufacturing companies. That employment base, paired with affluent nearby households, has helped make the property one of the region’s most sought-after retail assets, according to the Business Journal.

The retail property has demonstrated staying power in the two decades since it opened. It debuted in 2006 just before the financial crisis and successfully found tenants through the downturn while attracting institutional investors including pension funds and large real estate firms.

The Pacific Commons listing comes a few months after San Francisco’s long-beleaguered San Francisco Centre mall sold out of distress to Presidio Bay Ventures and the Prado Group. The 1.2-million-square-foot property was seized by lenders last fall in a foreclosure auction credit bid of $133 million, representing a steep fall from its $1.2 billion value a decade ago.

— Chris Malone Méndez