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Commercial Real Estate Transactions

Hanley Investment Group Completes 4th Retail Property Sale at Monterey Crossing in Palm Desert, Calif.

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COMMERCIAL REAL ESTATE TRANSACTION ALERT

New construction Habit Burger Grill Drive-Thru sells for $4.57 million, representing a record-low cap rate nationwide for a single-tenant Habit Burger Grill

Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm arranged the sale of a 2021-new construction, single-tenant The Habit Burger Grill Drive-Thru at the newly developed Monterey Crossing shopping center at the Interstate 10 and Monterey Avenue interchange in Palm Desert, California. The sale price was $4.57 million. This transaction marks the fourth retail pad building Hanley Investment Group has sold at Monterey Crossing, totaling a combined 17,060 square feet and approximately $20.3 million.

Hanley Investment Group’s Executive Vice Presidents Bill Asher and Jeff Lefko represented the developer and seller, Fountainhead Development of Newport Beach, California, in all four retail transactions. John Costa, David Fults and Brian McLoughlin of Voit Retail Estate Services in Los Angeles represented the buyer of The Habit Burger Grill Drive-Thru, a private investor based in Southern California. Previous sales included two brand new, single-tenant ground leased pads to Chick-fil-A Drive-Thru and Quick Quack Car Wash, along with a two-tenant pad building occupied by AT&T and Spectrum. All four properties were sold to four separate buyers at record-low cap rates.

The single-tenant net-leased investment occupied by a new, 2,700-square-foot Habit Burger Grill is situated on 0.91 acres at 73320 Dinah Shore Drive in Palm Desert. According to Asher, “We created a competitive bidding process that helped secure a 1031 exchange buyer at 100% of the asking price,” said Asher. “The sale represented a record-low cap rate for a single-tenant Habit Burger Grill nationwide.” 

The Habit Burger Grill is known for its signature Charburgers and fast-casual dining experience, notes Asher. The menu also includes sandwiches, fresh salads, a variety of sides and more.

In March of 2020, Yum! Brands, which owns Taco Bell, KFC and Pizza Hut, finalized the purchase of the Southern California-based burger chain for around $375 million. Today, Habit Burger currently has 340 locations globally with the majority of its locations in California.

“The new Habit Burger Grill’s Palm Desert location incorporates indoor dining, patio dining and drive-thru to maximize sales,” said Asher. “The pandemic certainly shined a very bright light on the impact of having a drive-thru. Approximately 70% of quick-serve restaurant sales were generated through a drive-thru and sales were approximately 50% greater in locations that had a drive-thru. We expect to see more QSRs with drive-thrus as companies roll out their prototypes across the U.S.”

Monterey Crossing is strategically located at the signalized intersection of Monterey Avenue and Interstate 10 freeway, one of the most centrally located and heavily visited interchanges (110,000 cars per day) in the Desert Cities area of Southern California and a primary east/west arterial connecting to Los Angeles to San Bernardino County, Riverside County and Phoenix, Arizona. Monterey Avenue (37,000 cars per day) is the major north/south connector between the freeway, resorts and high-income communities of Palm Desert, Rancho Mirage and Cathedral City.

Fountainhead is currently developing additional single-tenant pads and multi-tenant buildings in the first phase of the project in addition to a second phase of the shopping center, which combined will ultimately feature 17 acres of best-in-class retail.

Monterey Crossing also benefits from freeway-visible pylon signage and is the first Palm Desert center to be approved for freeway signage, according to Asher.

National tenants located at the intersection of Monterey Avenue and Interstate 10 include Costco, Home Depot, Kohl’s, Sam’s Club, Walmart, 99 Cents Only, Ashley HomeStore, JOANN Fabrics and Crafts, PetSmart and Regal Cinemas.

Palm Desert is the geographic center of the Coachella Valley, a fast-growing region of Southern California. Within a three-mile radius of Monterey Crossing, the population increased by 53% between 2000 and 2020 and is projected to grow an additional 7.4% by 2025. The average household income is currently $106,000. There are more than 4,500 new residential units planned or under construction within a 2.5-mile radius of Monterey Crossing.

“In 2022, we anticipate developers and shopping center owners will continue to see the accretive value of implementing a break-up sale strategy to capitalize on the high demand for single-tenant and multi-tenant retail pad product at premium pricing,” said Asher.

Hanley Investment Group has sold more than $407 million in retail properties in the Inland Empire in the last 36 months.

The Inland Empire Business Journal (IEBJ) is the official business news publication of Southern California’s Inland Empire region - covering San Bernardino & Riverside Counties.

Commercial Real Estate Transactions

DAUM Commercial Completes $16M Sale of 49,561 Square Foot Industrial Property in Corona

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Deal follows value-add strategy with brokerage assisting ​ with upgrades, repositioning in strong Inland Empire market

DAUM Commercial Real Estate Services, a leading provider of commercial real estate services including brokerage, tenant representation, consulting, leasing, sales, and property management, has completed the sale of a 49,561 square foot industrial building in Corona, Calif. The total consideration for sale of the building was $15.99 million.

The property at 1141 California Ave. in Corona, Riverside County, was built in 1988. In 2023, the asset was purchased by PPVS Properties LLC. With the assistance of their Daum Commercial team, the company worked to renovate the property and reposition the site for possible industrial lease or sale.

The free-standing industrial building of over 49,000 square feet sits on a more than 2.5-acre site with ample space for employees, customers, and commercial truck parking. The warehouse building consists of cross-dock loading with four grade level doors and six dock high doors. The property has a fenced-in yard area, an interior warehouse clearance of 24 feet, and a 2,169 square foot office space. The warehouse, office, yard, and loading areas were all fully renovated to a turnkey, move-in position.

With close access to the I-15 Freeway, Ontario International Airport, and the Port of Long Beach, Riverside County is the 10th largest county in the U.S. with a gross domestic product of $115.4 billion as of 2021. These strategic advantages have bolstered the region’s industrial real estate market amid the recent uncertainty in the national economy.

According to DAUM’s Q1 2024 Market Report, Southern California’s Eastern Inland Empire is currently experiencing direct vacancy rates of 5.2% and an overall vacancy of 7.6% driven primarily by an increase in available sublet space. New deliveries of industrial space accounted for 1.6 million square feet with another 5.5 million under construction. Asking rents fell in Q1 to $1.21 per square foot. High interest rates have tempered overall sales with volume in Q1 down 27.9% compared to Q4 2023 with a median per square foot price of $235.89.

Commercial Edge, a real estate data provider, noted that in-place rents increased in February by 12.7% year-over-year across the entire Inland Empire leading the entire country. Between 2021 and Q1 2024 rents in this market have grown by over 60%.

The DAUM Commercial team of Johnson, Joseph Harmon, SIOR; and Noah Samarin, EVP and Principal, represented the seller. Clyde Stauff, SIOR, Jace Gan, and Jackson Marlow of Colliers International’s Orange County represented the buyer, who will use the property to expand their existing flooring business.

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Commercial Real Estate

CBRE Negotiates $14 Million Sale of Ariana at El Paseo in Palm Desert

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The deal is one of the largest in Palm Desert over the last decade

CBRE arranged the $14 million sale ($222,222 price per unit) of 63-unit Ariana at El Paseo in Palm Desert, Calif., to Investment Concepts, Inc. CBRE’s Eric ChenKevin SinBlake TorgersonDean Zander and Stew Weston represented the seller, 45278 Deep Canyon Road, in the transaction.

“Our team successfully marketed this unpriced property to investors,” said Mr. Chen, executive vice president. “Our team generated multiple competitive offers resulting in the largest multifamily transaction in Palm Desert over the last eight years. The owner passed away last year, and her trustee was tasked with selling this asset. The owner has generously donated all proceeds to various charities.”

The boutique apartment homes are located at 45278 Deep Canyon Road and offer a mix of studio, one- and two-bedroom floorplans, averaging 865 sq. ft. Each unit features a fully equipped kitchen, vinyl plank flooring, oversized patios and balconies, central air and heating, and large closets. The community amenities include a resort-style pool, on-site laundry facilities, an outdoor lounge and fireplace area, a pet play area and BBQ stations.

“This immaculately maintained property is a generational quality asset in the growing Coachella Valley submarket. The Coachella Valley has seen some of the highest rent growth in all pockets of the Inland Empire in the past few years due to increased economic growth in the region. Multifamily fundamentals remain strong in the area with the restriction of supply coming into the market,” added Mr. Sin.

According to CBRE research, Coachella Valley has one of the lowest vacancy rates in the Inland Empire, at 4.3%, second only to Redlands. In the first quarter of the year, the submarket also saw a 1.9% year-over-year rent change.

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Commercial Real Estate

Hanley Investment Group Completes Sale of Chipotle Drive-Thru Anchored Pad in Palm Desert, Calif., for $3.86 Million

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Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm arranged the sale of a fully occupied, multi-tenant retail pad property in Palm Desert, California. The property is anchored by a new Chipotle Mexican Grill with a drive-thru “Chipotlane” near the Interstate 10 freeway Washington Street on/off ramp. This transaction closed at $3.86 million, marking the 17th Chipotle property sold by Hanley Investment Group in the last 24 months.

Hanley Investment Group’s Executive Vice Presidents Bill Asher and Jeff Lefko represented the seller, a private investor based in Los Angeles. The buyer, a private 1031 exchange investor from San Diego, was represented by Omar Hussein of Beacon Realty Advisors in Del Mar, California.

“We generated multiple qualified offers and created a competitive bidding environment to achieve maximum market pricing,” said Asher. “We procured an all-cash 1031 exchange buyer and negotiated a 21-day due diligence period and a timely closing to help accommodate the buyer’s exchange requirement.”

Built in 2008, the 8,500-square-foot, four-tenant retail pad sits on 1.01 acres at 39575 Washington Street in the heart of Coachella Valley. Chipotle Mexican Grill occupies approximately 40% of the building with a new 10-year triple-net corporate lease (NYSE: CMG). Other tenants include Cornerstone Pharmacy, Luxury Nails & Spa, and Keller Williams Realty Coachella Valley | Jelmberg Team.

The property is strategically located at a signalized intersection on Washington Street, a major north/south corridor in the Coachella Valley (46,350 cars per day). It is ideally positioned one block from the Interstate 10 entrance/exit for Washington Boulevard (107,750 cars per day). Interstate 10 connects Los Angeles to San Bernardino County, Riverside County, and Phoenix, Arizona. The Chipotle-anchored property is also directly across from Sun City Palm Desert, a 1,600-acre gated community with over 5,000 homes and more than 9,000 residents.

Surrounding retailers include Stater Bros., EOS Fitness, Bank of America, DaVita Dialysis, Del Taco, McDonald’s, Starbucks, Taco Bell, and Walgreens. The property is less than 2.5 miles from the new Acrisure Arena, an 11,000-seat indoor arena that opened in December 2022 and is home to an NHL minor league ice hockey team.

Palm Desert is the geographic center of the Coachella Valley, a rapidly growing region in Southern California. The average household income within a three-mile radius is over $110,000. The population within a three-mile radius of the investment property has increased by 65% between 2000 and 2021. Within one mile, the number of households has increased by 44% during the same period.

The Coachella Valley attracts over three million visitors each year and hosts major events such as the Coachella Valley Music & Arts Festival (the world’s largest music festival, attracting over 250,000 visitors), the Stagecoach Festival (the second largest country music festival with over 85,000 visitors), and the Riverside County Fair & National Date Festival (attracting 315,000 visitors). The region is also home to four casinos and more than 130 golf courses.

Asher adds, “Chipotle is one of the more sought-after QSR drive-thru tenants in the marketplace right now, and it showed based on the high-interest level we received on the property. The sale of the Chipotle-anchored pad building in Palm Desert demonstrates there is still an active buyer pool for top-tier multi-tenant retail pad investments in today’s market.”

Hanley Investment Group has sold $1.8 billion in retail properties in the Inland Empire, including $470 million in volume in the last 48 months.

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