November 1, 2017

Real Estate Newsletter Fall 2017

National Retail Real Estate News:

Amazon to Enter the Pharmacy Industry? Leerink, a boutique investment firm that focuses on the healthcare industry, reported on October 6th that Amazon will “almost certainly” enter the prescription drug distribution business within the next two years.  As a result of this news, shares of CVS and Walgreens both dropped 5% that day.  The following Monday, shares of these stocks fell another 3%.

Amazon’s purchase of Whole Foods is making waves throughout the retail industry, and the online retailer doesn’t seem to be stopping anytime soon from taking over bricks and mortar retail.  In the retail real estate business, drugstores had been considered relatively safe investments, with CVS/Walgreens/Rite Aid stores in Southern California routinely selling at or below 5% cap rates.  It remains to be seen if Amazon will enter the industry via a mail order delivery service, or perhaps buy an existing pharmacy chain such as CVS.

 

Local Happenings:

How is the Inland Empire Retail Market doing?  Here are graphs that encompass all Retail Property sales in San Bernardino and Riverside Counties since January 1, 2005, spanning over 4,200 transactions.

 

Inland Empire Retail Market Trends, 2005-2017

 

local-happenings

 

As you can see, our sales volume in this cycle was higher than in the prior cycle.  Cap rates are at historic lows, slightly lower than in ‘07.  The retail rental market is showing stark differences today versus 10 years ago.  The overall vacancy rate is around 12%, double what it was in the last peak.  Rental rates are around $17/sf/yr ($1.41/sf/mo).  Back then, the average asking rental rate was around $22/sf/yr ($1.83/sf/mo).  We hope that the strong market trends continue, but as an industry, we are all proceeding with “cautious optimism” as no one really knows how long this bull market will last.

 

If you like these reports, but would like them customized to a particular region, product type, or other specification, please let me know.  Creating custom market reports is a free service that I offer to my clients. 

 

Ontario-AirportOntario Airport (ONT) Adds Flights to and from Taiwan, Texas, and Denver:  Several months ago, Dynamic International Airways began offering two flights per week from Nanchang, China, to Ontario International Airport.  On Sept. 30, China Airlines announced that it would launch nonstop service between Ontario and Taipei, the capital of Taiwan.  Despite its name, China Airlines is based in Taiwan, not mainland China.  These flights between Taiwan and ONT are expected to carry more than 80,000 passengers per year.

In addition, on October 12, Frontier Airlines completed its first flight to Austin, TX from ONT airport.  San Antonio and Denver are also new destinations, with Chicago to be added in 2018.

Passenger traffic at ONT was up 8.2 percent in August 2017 versus August 2016, and continues to grow ever since control of the airport was changed from the Los Angeles Airport Authority to a local Ontario authority.

 

Inland-Empire-analyticsEmployment continues to trend up in the IE:  According to the latest (August) report from the UC Riverside School of Business, the Inland Empire added 2,200 jobs in July 2017.  Year-over-year growth in the Inland Empire stands at 2.7%, which is well above the 1.7% growth in the state as a whole.  For the 12 months ending June 2017, the IE was responsible for the second most jobs added in California, trailing only the Los Angeles Metro area.

 

Featured Listings:

 

Multi-Tenant-center-with-high-freeway-visibility

Multi-Tenant center with high freeway visibility in Corona, CA

This property has four tenants, all on NNN leases: 26 Degrees Sports Bar, Eyebrow Threading Salon, iLoveKickboxing.com (over 200 locations nationwide) and Sombrero’s Mexican Food with a drive-thru (30 locations in SoCal). The center benefits from a busy Starbucks drive-thru. The building is highly visible from the I-15 N offramp at Ontario Ave. and can be seen from the I-15 freeway.

Price: $4,320,000 – 5.0% Cap Rate

National-Single-tenant-NNN-Investment

National Single-tenant NNN Investment – Day Care in Peoria, AZ

This property is an absolute net leased investment to Child Care Networks, operating as Sunrise Preschools. Child Care Network is the 4th largest operator of day care facilities in the US. There are 13+ years left on the lease, and the property was built in 2008. Peoria is a suburb located just 15 miles northwest of Phoenix.

Price: $4,250,000 – 6.0% Cap Rate

Shell-Gas-Station

Shell Gas Station – Business and Property – Chino, CA

This busy gas station sits on a prime corner at the intersection of Central Ave. and Walnut Ave. 4 pumps, 12 dispensers, and an 840 SF C-store with Type 2- liquor license. The station sells gasoline and diesel. Many opportunities to add value by adding car wash, check cashing, propane sales, etc.

Price: $3,295,000

About me:

I specialize in representing buyers and sellers of retail investment properties, focusing primarily on the Western Inland Empire, encompassing the cities of Corona, Norco, Eastvale, Ontario, Chino, Chino Hills, Montclair, and Pomona.  Prior to commercial real estate brokerage, I worked as a residential real estate investor, flipping houses in Orange County.

 

I am originally from New Jersey, and have worked for corporations such as Nestle PowerBar, Prudential, and Computer Sciences Corporation. I have a degree in Biomedical Engineering from Johns Hopkins University and an MBA from Duke University.

Retail property sold

Retail property sold


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