The dig at brick-and-mortar retail centers is they have to get creative and reinvent themselves to stay competitive with e-commerce. That doesn’t hold true for a Homestead shopping center.
The 302,346-square-foot Homestead Pavilion on 42 acres northwest of Florida’s Turnpike and Campbell Drive is traditional retail. Tenants include discount department stores T.J. Maxx and Ross Dress for Less, Petco, home decor and craft store Michaels, Planet Fitness and an Olive Garden.
The $62.25 million sale of the retail center May 31 comes as developers push experiential retail, chef-driven concepts and food halls.
Yet the fully leased Homestead Pavilion caught the eye of a joint venture comprising four investment companies.
CREC Capital, the investment arm of the CREC brokerage purchased by Colliers International last year, took the lead on the acquisition and gathered several investors to partner on the buy. They are Pinecrest-based commercial real estate investment company MMG Equity Partners, Philadelphia-based value-add real estate investor Lubert-Adler Partners LP and Miami-based real estate investor Highline Real Estate Capital.
CREC, MMG, Lubert-Adler and Highline paid nearly $206 per square foot.
The developer, SITE Centers Corp., a Beachwood, Ohio-based publicly traded real estate investment trust previously known as DDR Corp., sold the plaza using an affiliated limited liability company, RVT Homestead Pavilion.
“Retail is far from dead,” said Alan Esquenazi, who co-leads CREC Capital together with Warren Weiser. “Retail is surviving and excelling in places like South Florida doing extremely well.”
That includes Homestead Pavilion.
It has top retailers reporting double-digit growth in recent years, upside potential with a location that’s visible to turnpike drivers, including tourists headed to the Florida Keys, Esquenazi said.
“This asset grabbed us because it offered both. It offered a location and a quality of retailers,” he said. “It’s my belief that location, location, location still is the word we all use and this being the most important factor, but we also believe retailer, retailer, retailer matters in a big way. In this case, the retailers, the synergy of the retailers and the quality of the retailers is as important as location.”
Other tenants include are Panera Bread, Old Navy, Five Below and Bed Bath & Beyond.
CREC and its investment partners also noticed Homestead Pavilion because of the value-add opportunities. Six acres is vacant and will be developed next year. Esquenazi said he is considering different retail options, but the venture is yet to pick one.
“That will be a value-add component that we think will push yields to our investors and ourselves, and we are very excited about the prospect that we are in negotiations at this time,” he said.
Homestead Pavilion was built in 2008 just as the real estate recession was setting in. This led to some of the rents being below market rate, something the new investors plan to address. Esquenazi declined to say how much tenants could expect to see rents increase.
The center benefits from Homestead’s growth, with its population pushing nearly 70,000.
“That trajectory in Homestead is exceptional. It’s a growing market,” Esquenazi said. “That was shown by the sales of all of our tenants in there.”