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9/13/16
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An OC-based private investor paid $6 mil for a new 6.8k sf, Walmart Supercenter in Ontario. The transaction closed at a cap rate of 5.02% and $880 per square foot, said to be a record low cap rate and the highest price per square foot for a multi-tenant pad building shadow-anchored by Walmart in California, according to CoStar.
Located at 1337 N. Mountain Avenue on 1.05 acres, the building was 100% occupied by national and regional tenants including T-Mobile, Yogurtland, Waba Grill, and Wells Fargo at the time of the sale. The property underwent a full interior and exterior remodel completed in April 2016.
Eric Wohl with Hanley Investment Group Real Estate Advisors represented the seller, Pacific Development Group, based in Newport Beach. Joong-In (James) Kwon with Coldwell Banker Best Realty in Fullerton repped the buyer, a private investor based in Irvine. Pacific Development Group is a shopping center developer in California and has been responsible for the development of over 300 shopping centers ranging from small strips centers to large 1 msf community shopping centers.
“The market for shadow-anchored multi-tenant retail in southern California is still very strong,” said Wohl. “These types of investments are a great alternative for passive investors looking for a better yield than a single-tenant retail property where cap rates in southern California are dipping as low as 3.75% for prime assets leased to national credit tenants on long-term leases,” Wohl noted.
The property, which is located on Mountain Avenue, the major retail corridor in Ontario, benefits from the 35,000 cars per day and the convenient Interstate 10 freeway on/off ramp, which is just 1.5 blocks north of the property with 247,000 cars per day.
Another highlight of the property was the long-term leases. According to Wohl, there will be zero tenant rollover until 2021 with over 77% of the GLA leased through 2026.
"The amount of daily customer traffic generated by Walmart, along with being situated at one of the most highly-travelled intersections in Ontario, were highly attractive selling points to the long-term stability of the location and the main reason the property was pursued by a large group of prospective buyers.”
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