The Los Angeles retail market has recently seen challenges in the form of rising vacancy and rental rates, coupled with lower construction deliveries across the county in the fourth quarter of 2023. One property that may test the current market conditions is a 5,580 square foot retail space offered for sale for $12.75 million, or approximately $2,285 per square foot. The retail asset is located on 0.13 acres of land in the heart of Old Pasadena at 46 W Colorado Blvd.
The marketing of the property is led by May Realty Advisors’ Founder Matthew May and Managing Director Richard Huelsman. The property is currently owned by an entity affiliated with K & K Outdoor Advertising LLC, which acquired it in 2020 for $10 million, or about $1,792 per square foot, according to public records.
The Class A single story building was originally constructed in 1922 and was extensively renovated as recently as 2022. The marketing materials show that the landlords have made a series of enhancements both in its structure and aesthetics over the years. Capital improvements were made by the landlord in 2007, with further interior investments including a new HVAC system in 2014. The roof was also replaced by the previous owner, with a transferable warranty still in effect. The property also has a parking covenant included, which may allow the new owner to add this facility or a second floor of retail or office space on site.
The retail property is as of November 2023 fully leased to J.Crew, with the current agreement due to expire in just under six years, at the end of January 2029. There are five-year lease options available, and annual three-percent rent increases are included in the current agreement, according to the marketing materials. The reported current cap rate stands at 5.2 percent and the net operating income is $663,062 per year.
The retail asset includes 30 feet of store frontage on W Colorado Boulevard and is located next to an Apple store. Some other retail neighbors include Tiffany’s, Tesla and Lululemon, as well as The Cheesecake Factory. Old Pasadena is a well-known retail and walking area that is home to numerous arts, cultural and business institutions. The area is a short walk away from the Metro Gold line and has easy access to US Interstate Highway 210 and the Ventura Freeway.
Across Los Angeles County, the retail sector reports cap rates holding steady just above 5 percent year-over-year in the last quarter of 2023. While the asset values seem to be holding for now, the Kidder Mathews Los Angeles Retail Market Trend reports for Q4 2023 shows the average sales price is around $448 per square foot, which is nearly 12 percent higher year-over-year. One of the most significant transactions of the last quarter was the sale of the 11,500 square foot retail property located at 641 N Robertson Blvd. in West Hollywood, which was purchased by Charing La Peer LLC for $33.5 million, or approximately $2,965 per square foot.
