Break-up Strategy Continues to Net Big Value for Developer
FONTANA. Calif. – 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 has arranged the sale of a new construction, single-tenant Sprouts Farmers Market at the Highland Village Shopping Center in Fontana, California. The sale price was $10.4 million, representing a 5.19% cap rate, a record-low cap rate and a record-high price per square foot for a single-tenant grocery store in the Inland Empire.
Hanley Investment Group’s Executive Vice Presidents Kevin Fryman, Bill Asher and Jeff Lefko represented the seller, Adler Realty Investments, Inc., based in Woodland Hills, Calif. The buyer, a private investor, was represented by Heidi Kim of TNG Real Estate Consultants of Brea, California.
Adler Realty Investments recently completed the ground-up shopping center development, which is anchored by a 30,000-square-foot Sprouts Farmers Market, and also includes Burgerim, Jack in the Box, Raising Cane’s Chicken Fingers, Jersey Mike’s, Café Rio, Oggi’s Restaurant, Mountain View Tire & Auto Service, Pacific Dental and Quick Quack Car Wash (currently under construction). The property is immediately adjacent to the 210 Freeway at the Sierra Avenue entrance/exit.
According to Fryman, Highland Village enjoys exposure to a high volume of commuters and local residents that travel along the 210 Freeway, one of the major east/west freeways connecting California’s San Gabriel Valley and Inland Empire. The average daily traffic count is approximately 119,000 at the Sierra Avenue exit. The freeway-visible pylon sign provides outstanding exposure, identity and visibility for Sprouts and the entire shopping center by eastbound and westbound traffic.
“Highland Village Shopping Center is located directly across the street from Fontana Auto Center and the Fontana Promenade, the site of a future new Walmart Supercenter, which will drive a tremendous volume of regional traffic to an already busy area,” Fryman added.
“We generated a tremendous volume of interest in the Sprouts including procuring multiple competitive and qualified offers,” Asher stated. “We secured an all-cash, non-1031 exchange buyer and negotiated a longer escrow to allow time to complete the parcel subdivision to sell the Sprouts separately.
“With the sale of Sprouts, we helped the seller maximize value by executing another break-up sale at Highland Village and achieved approximately 75-100 basis points better than if the owner sold the shopping center as a whole,” Asher said. “Previously, we sold the Mountain View Tire & Auto Service, Raising Cane’s Chicken Fingers and the Jack in the Box, each as separate, single-tenant transactions at the shopping center. We now are marketing for sale a new single-tenant Sit ‘n Sleep and a new 7,500-square-foot, three-tenant, retail shop building located next to Sprouts with tenants Pacific Dental Services, Arrowhead Credit Union and MJ Nail Salon.”
Asher continues, “The new-construction Sit ‘n Sleep and the shop building represent two excellent opportunities to acquire newly constructed retail assets in a freeway-visible, dominant retail trade area with affluent demographics in a growing residential and industrial/commercial area.”
Fryman adds, “National and regional tenants also located at the Sierra Avenue exit include Costco, Home Depot, JOANN, LA Fitness, Lowe’s, OfficeMax, Petco, Ralphs and Walgreens. A newly developed 430,000-square-foot shopping center is located nearby along Highland Avenue, anchored by 24 Hour Fitness, Burlington, Cinemark, Grocery Outlet, Old Navy, Ross Dress for Less, and ULTA Beauty, drawing additional regional traffic.”
Approximately 10,000 new residential units are proposed to be built within 2.5 miles of Highland Village Shopping Center including Ventana at Canyon Duncan, a 105-acre master-planned mixed-use community with 842 residential units, 360,000 square feet of office/business park space, and 128-room hotel space; and Westgate Specific Plan, a 954-acre development with 3,751 residential units and 1.2 million square feet of warehouse space; and The Renaissance, a 1,439-acre, master-planned, mixed-use redevelopment project with 1,700 housing units, 500,000 square feet of retail space, and 3.9 million square feet of industrial space, which includes distribution centers for Amazon, Black & Decker, Niagara Water, Monster Beverage, Target, and Under Armour. Golden State Foods opened a 183,000-square-foot distribution center in Fontana in July 2018. The City of Fontana has received “Top Workplace” honors three years in a row, 2019, 2018 and 2017.
Fontana is the 2nd largest city in San Bernardino County and is projected to grow by 7.5% between 2017-2022. According to the City of Fontana Mayor, Acquanetta Warren, Fontana is expected to be the largest city in San Bernardino County after Census 2020.
Fontana is the #2 “Financially Strongest City with a Population of More than 200,000” (Fiscal Times, 2017). There are currently 320,000 people within a five-mile radius and an average household income of $82,000 within a one-mile radius of the Highland Village Shopping Center. Within one mile of Highland Village, the population is expected to grow 16% between 2017-2021.
Sprouts Farmers Market (NASDAQ: SFM), one of the fastest-growing retailers in the country, has made healthy living accessible to shoppers for nearly two decades by offering affordable, fresh, natural and organic products. True to its farmers market heritage, Sprouts is known for pioneering its unique grocery model by offering a welcoming store layout featuring fresh produce at the center of the store, an expansive bulk foods section, and a vitamin department focused on overall wellness. Sprouts also offers a unique assortment of healthier products with special attributes, such as plant-based, gluten-free, keto-friendly, and grass-fed, to meet the growing and diverse needs of today’s consumer. Headquartered in Phoenix, Arizona, Sprouts employs more than 30,000 team members and operates over 340 stores in 22 states from coast to coast.
About Hanley Investment Group
Hanley Investment Group Real Estate Advisors is a retail investment advisory firm with a $6+ billion transaction track record nationwide, who works closely with individual investors, lending institutions, developers, and institutional property owners in every facet of the transaction to ensure that the highest value is achieved. For more information, visit www.hanleyinvestment.com.
