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Insignia / ESG Tapped to Sell Glendale Fashion Center

No asking price has been set for the project. Same brokers also handled sale of developer Vestar's Long Beach Towne Center

September 05, 2000|BRAD BERTON | SPECIAL TO THE TIMES

Fresh from the $77-million sale of their new Long Beach Towne Center mall, the project's developers have hired the same real estate brokers to sell another just-completed, fully leased project: Glendale Fashion Center.

No asking price has been set for the Glendale property, but the sellers expect to get about $65 million. Efforts to sell the properties reflect continued optimism about demand for retail space in growing Southern California.

Phoenix-based Vestar Development, along with its Australia-based financial partner, Lend Lease Real Estate Investment, hired a local team from New York-based real estate service company Insignia/ESG last winter to sell Long Beach Towne Center.

Tenants quickly filled the 860,000-square-foot center, which the Vestar/Lend Lease joint venture had built last year on the site of the former Long Beach Naval Hospital.

Insignia/ESG brokers Larry Krasner and David Doupe cut a deal two months ago at more than $77 million with BGB Real Estate (USA) Inc., an investment vehicle affiliated with a major German bank. Dallas-based Phoenix Property Co. advised BGB on the acquisition.

The Long Beach development includes several "big-box" tenants, mostly along its periphery, that surround a core anchored by a 26-screen Edwards Theatres. Major tenants include Sam's Club, Lowe's, Sport Chalet, Petsmart, Barnes & Noble, Linens 'N Things, Ross Dress for Less, Staples and Michaels.

Financial problems recently prompted the Edwards chain to seek bankruptcy protection, raising questions about the viability of shopping centers anchored by the company's theaters, and at least temporarily tabling a pending sale of the Valencia Town Center mall in the Santa Clarita Valley. However, the multiplex at Long Beach Towne Center is one of the nation's highest-grossing theaters of its kind, Doupe said.

The price the German group paid for the Long Beach mall factors to about $90 per square foot of retail space and reflects the fact that the city owns the underlying land, Krasner said. In contrast, the price Krasner, Doupe and their clients are expecting for the Glendale property factors to about $250 per square foot.

A 50,000-square-foot Ralphs supermarket and a Longs Drugs anchor the 260,000-square-foot community center, which replaced an older, earthquake-damaged mall along Glendale Avenue near the downtown core. Other key tenants include Staples, Ross Dress for Less, Barnes & Noble and Nordstrom Rack.

Retail rents in the Los Angeles area are expected to rise about 4% this year, according to a report from investment brokerage Marcus & Millichap. But higher interest rates--and reluctant sellers--will likely keep retail property investment sales activity short of the exceptional levels seen over the last couple of years.

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