December 17, 2015 | By: Carrie Rossenfeld
FULLERTON, CA—A thriving Downtown and lots of colleges nearby make for an attractive retail market in Fullerton, Marcus & Millichap‘s VP investments Paul Bitonti tells GlobeSt.com. Bitonti recently represented the seller, a local developer, in the sale of a 12,765-square-foot absolute-net-leased retail property for $10.95 million or $858 per square foot, a record-setting price, to an undisclosed buyer. We spoke exclusively with Bitonti about the Fullerton retail market and the challenges to investing in it.
GlobeSt.com: How would you characterize the Fullerton retail investment market?
Bitonti: It’s very dynamic and strong. There are a lot of colleges in the Fullerton area, and that drives a lot of business, especially if you have a retail property near a college. It has a young demographic because of the colleges, and it’s a good retail market for the most part. The Downtown core area has a lot of restaurants and pubs, it’s very busy and has a lot of foot traffic. Fullerton has done a good job for the last several years of making that Downtown area more vibrant. A new 200-unit multifamily property, Malden Station, is right across from this property. It’s more of an urban area than a lot of places in Orange County—it has more of a Downtown urban setting.
GlobeSt.com: Why are retail buyers drawn to it?
Bitonti: Retail buyers in general are drawn to strong urban areas with densities, Fullerton being one of them, and any areas for the most part that have those characteristics will have a lot of looks by investors. Fullerton falls in to that category with those types of densities and traffic patterns. These are the good metrics you look for when sizing up any type of retail property.
GlobeSt.com: What are the challenges retail investors face in this market?
Bitonti: There’s not a lot of consistency with rents. Rental rates can vary widely depending on where your building is located. Some other submarkets are more consistent with rents, but Fullerton has more divergence and disparity just because you have a lot of properties with maybe older, longer leases with some of these tenants. This building had a really good developer and is a great piece of real estate on a great corner. That drove and set the market on rents.
GlobeSt.com: What is the outlook for this market for 2016?
Bitonti: I expect to see more lack of opportunities across all major metros right now. We don’t have a lot of available inventory and that should continue into the new year. Demand outstrips supply in dense submarkets, and we will see more of that coming up next year.