CBM’s Retail Shopping Center Management & Leasing Blog

Retail Real Estate News & Trends in Southern California

By Shopping Centers TodayWeekly Digest January 6, 2012

Sears Holdings says it will close about 100 Sears and Kmart stores in the wake of disappointing holiday sales. This follows a 5.2 percent average decline in same-store sales for the eight weeks preceding Christmas Day for both retailers. Sales at U.S. Sears stores sank 6 percent, while Kmart’s were down 4.4 percent. “Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce ongoing expenses,” said CEO Lou D’Ambrosio, in a prepared statement. The company operates some 4,000 stores throughout the U.S. and Canada.

Part of the problem lies with the ability of online retailers to evade collecting sales taxes, which gives them an advantage over conventional stores, says analyst Burt Flickinger III, managing director of Strategic Resource Group. “There’s been a significant shift online because of the sales tax savings, he told CNN. “Consumers see it as instant discount, and most online retailers are delivering for free. That puts Sears and other land-based retailers at a significant disadvantage for the foreseeable future.” ICSC is pressing Congress to pass legislation to require online retailers to collect these taxes. Click here for a complete list of the stores marked for closure.

by Western Real Estate Business, January 5, 2012

Los Angeles — Dollar General plans to open 50 new stores and a distribution center this year in California. This will allow the discount retailer to create more than 1,300 jobs in the southern and central parts of the state. California is the 39th state Dollar General has entered. This expansion is part of a company-wide effort to create more than 6,000 jobs in 2012, following three years of positive job growth. If Dollar General hits its goal, it will have created more than 21,000 new jobs since 2009.

“California presents an extraordinary opportunity for Dollar General to fulfill its mission of serving others by delivering convenience and value. Our plans bring new opportunities for Californians, including hundreds of new jobs,” said Rick Dreiling, Dollar General’s chairman and CEO, in a statement.

By John Wisely and Greta Guest, USA TODAY  December 20, 2011

As “Big Box” stores are on the decline, due to an increasing number of bankruptcies amid the sputtering economy, many large mall have shifted their focus away from traditional retailers. Once exclusively the domain of nationally recognized “Name Brand” retail outlets, shopping malls are now seeking off-beat, mom-and-pop stores in order to fill a growing vacancies.

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Western Real Estate Business, December 22, 2011

Hemet, Calif. — A 50,000-square-foot retail property in Hemet that is currently occupied by LA Fitness has sold to a private trust from Beverly Hills, Calif., for $9.6 million. The single-tenant location sold at a 7.6 percent cap rate. This is the lowest cap rate that a single-tenant, health club-occupied property has obtained in the U.S. since July 2008, according to CoStar. The property is situated on 5.61 acres at 220 North Sanderson Ave.

Shaun Riley of Faris Lee Investments represented the trust, which was also in a 1033 exchange. He noted the buyer was initially seeking a drug store property to capitalize on long-term, passive returns. Riley instead urged the buyer to consider health club properties, which could be attained at a significantly higher yield. The buyer was ultimately able to place long-term financing on the property at 240 basis points lower than the cap rate, Riley noted. This positioned the trust favorably, affording it a 10 percent cash return going in and the potential for future rent increases. The seller, Eden Group, LLC, was represented by Marcus & Millichap.

“The buyer was yield-driven and was looking for a strong-credit, single-tenant investment in Southern California. After conducting a thorough search of the marketplace, we advised our client on the possibility of acquiring the Hemet LA Fitness as a strong option since the tenant had the financial strength the buyer required and had more than 12 years remaining on the lease term. The pricing, cap rate and the opportunity to finance the property with new debt that could be obtained at a historically low interest rate, also appealed to the buyer,” Riley said in a statement.