Elk Grove-based Merlone Geier Partners will develop a retail complex in Hayward, marking the first completely commercial development for the city in a decade, according to Paul Nguyen, the city’s economic development manager.
The project is at 26231 Mission Boulevard and was formerly the site of a Kmart. The new shopping center will be rebranded as Hayward Retail Center.
Currently secured tenants include Sprouts Farmers Market, In-N-Out Burger, Raising Cane’s Chicken Fingers and Crumbl Cookies; all are new entrants to the Hayward market. Merlone Geier currently has 82 spaces available for lease ranging from 1,900 square feet to 25,000 square feet, for a total of 88, 000 square feet of leasable space.
Merlone Geier looks to capitalize on the strength of the grocery-anchored and food service retail market. Since the pandemic, consumers have prioritized daily needs and dining over department stores and home goods, according to a report by brokerage Marcus & Milichap.
“Well-located, necessity-centric retail properties that exhibited resilience during the health crisis should appeal to a broader buyer pool,” the report said.
Restaurants also look in good shape, with more patrons feeling comfortable eating out since the start of the pandemic. Food service has experienced a 9 percent increase year-over-year in foot traffic, and an 18 percent increase in sales, according to the report.
The cause of this is that inflation has caused consumers to scale back on purchasing expensive home goods such as furniture and electronics in favor of daily necessities and dining, the report said.
As real estate investments, daily needs and dining anchored retail centers have fetched more in Bay Area transactions this year. DJM Capital secured an Alameda retail center for $543 per square foot this summer, which was the largest retail transaction for the Bay Area this year. Other properties closed for about half of that, including a former Asian-theme center in Fremont that sold for $209 per square foot. 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.
In contrast, The Bayfair Center, which is anchored by big-box retail, in San Leandro also fetched $57 million, but the price of the 800,000-square-foot indoor mall came to about $71 per square foot. Plans for the site call for redevelopment into a life science campus.
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