Colliers International has arranged the sale to one of the nation’s largest institutional investors of the recently completed second phase of a major regional shopping center in the densely populated south Los Angeles County municipality of Compton. Total consideration was not disclosed.
Gateway Towne Center, which opened its first phase in 2008, sold its recently completed Phase II to Invesco Real Estate, the Dallas-based firm that is an active investor in a variety of commercial properties throughout the nation. In Southern California, the firm has been especially active with holdings that include industrial warehouse and distribution buildings along with residential, retail and office properties.
Colliers Senior Vice Presidents Michelle Schierberl and Donald Ellis, both based in the firm’s Irvine offices, marketed the property for the owner and developer of the center, Orange County-based Prism Realty Corp.
“This is a great example of a successful urban infill project and the success driven by development in an under-served market,” said Schierberl. “But as in any urban infill market, it took an experienced development firm to meet the many challenges that are inherent in building in an urban and densely-populated area like this one.”
Like any development in untested markets, the success of Gateway Towne Center was never assured and presented many challenges for Prism, which specializes in the development and re-development of both retail and industrial properties. While that risk was somewhat mitigated by Prism’s lengthy experience and past success, Compton’s reputation as an economically disadvantaged area posed a real challenge to attracting prime national tenants.
Working with city and county officials, the advantages of Prism’s plan soon became apparent to the community as a job generator and a source of badly needed sales tax revenues. Residents would no longer have to drive long distances to do their shopping.
After studying the economics of the area, Prism was able to convince tenants that being located in an under-served market with no competition would benefit them. A host of national credit tenants soon followed. Since its founding in 2001, the development firm has developed or re-developed some 1.1 million square feet of urban infill retail and industrial space valued at more than $150 million for its own account and for third-party clients.
“This center has been one of the most successful in terms of tenant retention and occupancy since it opened in 2008, despite the fact that it, like so many other centers, faced the brunt of the recession and the other negative images long associated with this city,” said Prism’s Eric Eklund. “This is a great example of a successful urban infill project and how a location in an under-served market with little competition can be a recipe for success.”
According to Eklund, the center has been so successful, in fact, that it ranks consistently in the top tier of sales generators for the national retailers who are located there and it is now the dominant regional center in South Los Angeles.
Located at the intersection of Alameda Street and Artesia Boulevard in one of the most populated areas of Los Angeles County, the center serves some 3 million people within a 10-mile trade area. With visibility along the 91 Freeway, it has maintained a 98 percent occupancy level since it opened. First phase anchor tenants include Target, Home Depot, Staples, Best Buy, 24-hour Fitness and Bank of America, TGI Fridays, Panda Express and a host of others.
Phase II includes a similarly impressive list of national credit tenants, according to Schierberl, including Marshall’s, PetSmart, ULTA Cosmetics, Anna’s Linens, Dollar Tree, El Pollo Loco, Starbucks, and Chipolte, among others.
“With interest so high among institutional buyers, the sale generated significant interest and multiple offers for this new Los Angeles retail product,” added Schierberl.