Southern California Experiential Retail Center for Sale

Thursday, January 26, 2017

Holliday Fenoglio Fowler, L.P. (“HFF”), on behalf of the owner, is marketing for sale Kaleidoscope, a 243,660-square-foot retail center located in the highly affluent Southern California community of Mission Viejo. Currently 82.4 percent occupied (87.5 percent leased), the retail property for sale is anchored by Edwards Theaters (Regal), LA Fitness, Buffalo Wild Wings, Burke Williams Spa and Union Market, a proven public market/food hall concept. Surrounded by some of Southern California’s most desirable demographics and situated prominently on the I-5 Freeway, Kaleidoscope offers investors the opportunity to acquire an internet-resistant retail asset in an irreplaceable location with significant upside potential through multiple value enhancement opportunities.

Recognized as an experiential retail destination within the trade area, the project features a unique mix of dining, entertainment and daily needs tenants. Edwards Theaters and the entertainment-focused tenant mix at Kaleidoscope complements the adjacent Simon Properties-owned Shops at Mission Viejo. This 1.1 million-square-foot top-tier mall lacks a theater or any entertainment options, but tenants include Nordstrom, Apple, TESLA, J Crew, Microsoft, Lululemon and others. 

The property is situated in arguably one of the strongest trade areas in the state, surrounded by South Orange County’s most affluent and desirable neighborhoods, such as Mission Viejo, Laguna Hills, Laguna Niguel, San Juan Capistrano and Coto De Caza. More than 313,000 residents live within a five-mile radius, and the staggering wealth of the trade area is demonstrated by the more than $135,000 average household income and $730,000 median home price within a three-mile radius of Kaleidoscope. With almost 2,000 multi-family units and new subdivisions being delivered, this location is poised to benefit from densification. Additionally, less than 14 percent of the square footage has lease expirations over the next six years. The entire project has an average remaining lease term of more than eight years.

Southern California Retail Property for Sale Investment Highlights

  • Experiential Internet-Resistant Tenancy:  Anchored by national tenants, Edwards Theaters (Regal) and LA Fitness on long-term leases, the property features a unique mix of entertainment, dining, and health and wellness tenants that have solidified the project as a true experiential retail destination. Additionally, demonstrating their commitment to this location, Edwards Theaters recently executed a 10-year renewal and plans to invest a significant amount of capital into their space to upgrade to their new luxury theater concept, which will include alcohol service and seat reservations.
  • Value Enhancement Opportunities:  New ownership has the opportunity to strategically lease up available space to increase occupancy, grow income, and create a unique tenant mix that will drive additional traffic to the center. Because of the unique tenant mix and the layout of the center, new management could increase activity at the center through strategic partnerships and well-marketed community events at the center. 
  • Irreplaceable Freeway Location Within a Primary Retail Node:  Direct “on and off” ramp access from the Interstate 5 Freeway (350,000+ cars per day) at Crown Valley Parkway (68,000+ cars per day) provides unparalleled visibility and exposure from a trophy location that overlooks one of the busiest freeways in the country.
  • Significant Discount to Replacement Cost:  Opportunity to acquire this project at a steep discount to the current replacement cost for this type of construction. Comparable urban retail centers in Southern California are trading between $400 to over $700 per square foot.

For more information on this or other Southern California retail properties for sale, please contact John CrumpBryan Ley or Gleb Lvovich in HFF’s Los Angeles and Orange County offices.

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