■ Matt McPherson / Columnist
Almost a decade has passed since the largest commercial deal ever in the valley closed escrow. In the fall of 2008, 70 acres on the northeast corner of Florida and Meyers avenues was sold for $17.6 million.
Currently WINCO and Sizzler occupy the popular and successful commercial center with more retailers interested in the prized location. Soon after, the recession across the nation set in and commercial real estate in the valley came to a near standstill. Low median income per capita and demographic factors deterred any commercial investors from any interest in the Hemet area for years.
Recently Popeye’s Louisiana Kitchen had a grand opening and is consistently busy with cars wrapped around the parking lot. Jimmy John’s sandwich shop, also just like Popeye’s, is extremely busy catering to an eager public happy to see something new finally coming to Hemet. Rumor on the street is that The Habit burger joint might possibly be coming to the old Coco’s building and In-N-Out is looking for a location toward Valle Vista.
The biggest news inside the Hemet commercial real estate market is the huge sale of Ramona Plaza on January 11 for $11.1 million. This commercial sale within the city of Hemet is the only commercial transaction over $5 million in the last five years and is setting the stage for other retailers and investors currently looking at the valley.
Marcus & Millichap brokered the 102,801-square-foot Ramona Plaza deal with an undisclosed buyer, establishing a handsome price for commercial downtown at $108 per square foot. The Ramona Plaza is made up of over a dozen major retailers such as the highly successful Planet Fitness, Grocery Outlet, Little Caesar’s Pizza, Subway, Leslie’s Pool Supplies, Dollar Tree, and local favorites Mr You Chinese Food, Juan Pollo, in addition to many other successful businesses that all thrive at the major intersection of San Jacinto Street and Florida Avenue.
Matt LoPiccolo, Mike James and Matt Hardy of San Diego represented both the buyer and seller on the highly influential transaction. Through diligent marketing, the trio focused on investors from Riverside, San Bernardino and Kern counties who are familiar with inland commercial markets versus the highly competitive and pricey coastal markets. Months of direct calls to investors finally resulted in contacting an owner of several properties within the valley who showed a serious interest in the location.
Matt LoPiccolo explained: “Overall the property was viable and had been surviving the downturn with 80 percent occupancy. The shopping center has some spaces that are still vacant, but the success of Grocery Outlet and Planet Fitness as anchor tenants served as good attributes when researching the income to value ratio.”
Loan factors such as a pre-payment penalty didn’t allow for the previous owner to sell the property prior to January 2017. The open period to pay off the loan once it reached maturity was back in October, which gave the real estate brokers a five-month window to execute the transaction. LoPiccolo also mentioned an assortment of other buyers from La Jolla to Los Angeles who exhibited similar interest around the $11.1 million price tag, which serves as a positive prediction for future investments and developments in the Hemet and San Jacinto Valley.
The biggest challenge to the commercial real estate agents was the stigma that has recently plagued Hemet and the poor statistics that have represented the demographic. Many developers and retailers hear “city of Hemet” and become discouraged due to the negative press associated with the community. Mainly from the 2016 audit by the state, the rise in crime, and most recently the passing of a $100 million sales tax [over 10 years] within the city.
Some savvy investors have the vision to see past the risk and stimulate a stagnant yet eager economy. A key factor which sold the shopping center from a sales standpoint was the 81 percent rise in sales at Grocery Outlet since 2010 and a successful new lease with Planet Fitness. Stay tuned for more investments, and major commercial developments on the horizon throughout the valley.
Matt McPherson, 6th Generation in the Valley, Coldwell Banker Associated Brokers, BRE #01362837.