The latest deal for a Bay Area retail property falls in with recent trends pointing to strength for centers with lineups of tenants offering basic goods and services.
DJM Capital acquired an Alameda retail shopping center for $57 million as consumer spending trends indicate momentum for “daily needs” retail. DJM partnered with PGIM on the deal.
The 105,000-square-foot Bridgeside Shopping Center, located at 2531 Blanding Avenue, is 16 years old and fully occupied, featuring a grocery anchor along with other tenants that meet essentia daily needs, including medical and financial services, pet care and goods, and restaurants.
The sale price of $543 per-square-foot compares with $374 per square foot for retail properties in the East Bay overall during the first quarter, according to a report by Kidder. It’s more than double a recent retail sale of a former Asian-themed shopping center in Fremont last month. That property closed at $209 per square-foot which was below the East Bay average. A more recent transaction in the Silicon Valley market saw a New York-based investor pay about $270 per-square-foot for The Plant Shopping Center, a major open-air mall in San Jose.
Recent data indicates continuing momentum in the market in the East Bay, with the average asking rent up 12 percent and new construction up 35 percent. The recent trendline and the roster of tenants that offer essential goods and services enticed DJM to expand their portfolio with Bridgeside.
“We have seen grocery-anchored neighborhood centers continue to perform well and this asset fits within our acquisition strategy of well-located daily needs,” Rob Miller, vice president of acquisitions for DJM, told The Real Deal.
Miller’s optimism for daily needs retail centers could be in for another boost according to a recent report by Marcus and Millichap, which said that inflation has caused consumers to scale back on purchasing home goods such as furniture and electronics in favor of daily necessities and dining.
“Well-located, necessity-centric retail properties that exhibited resilience during the health crisis should appeal to a broader buyer pool,” the report said.
Grocers experienced the largest monthly increase in spending in May as inflation continued. Restaurants are also looking to be in good shape, with more patrons feeling comfortable eating out since the start of the pandemic. They have experienced a nine percent increase year-over-year in foot traffic, and an 18 percent increase in sales, according to the report.
Another recent East Bay sale that came on the heels of the deal for the Bridgeside Shopping Center emphasized the value of daily needs retail. The Bayfair Center also fetched $57 million, but the price of the 800,000-square-foot indoor mall came to about $71 per square foot.
The Bayfair Center, located at 15555 E. 14th St. in San Leandro, was bought by Peter Lennon and Adam Goldenberg, both executives with an investment firm called San Leandro JV. The complex’s tenants include Macy’s, Kohl’s , 24 Hour Fitness, Petsmart, Chili’s Bar and Grill and San Joaquin Valley College. The sites could be redeveloped and replaced.
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