Anchored by a Shaw’s Supermarket, this shopping center at 61 Locust St. in Medford is part of a portfolio of six grocery-anchored retail sites being offered for sale in Massachusetts.
Offering to sate the appetite of real estate investors hungering for grocery-anchored shopping centers, six such Massachusetts properties are being put up for sale, with CB Richard Ellis’ Northeast Retail Investment Team retained to market the 390,000-square-foot portfolio. By some estimates, the package could fetch more than $120 million in the current hot climate for retail properties.
“It’s exactly what investors are looking for right now,” opined one source familiar with the portfolio. On the block are grocery-anchored centers in Cambridge, Quincy, Swampscott, Medford, Plymouth and Swampscott. The latter three feature Shaw’s Supermarkets. The Cambridge and Quincy properties operate as Star Markets, the homegrown chain acquired several years ago by Shaw’s parent company.
The 36,000-square-foot Swampscott property is being converted into a Whole Foods store, another Shaw’s brand that caters to the health-conscious shopper. Shaw’s itself was just acquired by Albertson’s, a national supermarket popular in the Southeast.
The portfolio up for sale is owned by a partnership that includes Crosspoint Assoc. and Charlesbank Capital Partners, a Boston-based private equity investment firm with close ties to Harvard University. Chris Angelone of CBRE’s retail marketing team declined to discuss any aspect of the sale when contacted last week. Angelone and CBRE/Whittier Partners principal William Moylan are said to be overseeing the sales process. Efforts to contact Charlesbank and Crosspoint officials by press deadline were unsuccessful.
While mum on the portfolio deal, Angelone did acknowledge that retail remains a darling among risk-adverse real estate investors, who comprise a substantial portion of the capital flow pursuing commercial properties. “The economy is still just okay, but retail continues to thrive,” said Angelone. “We have been very busy.”
Including two just-completed deals in Rhode Island involving Inland Real Estate, CBRE has brokered more than $1 billion worth of retail assets during the past three years, said Angelone. Other local retail brokerage houses have also been active in recent months, with Spaulding & Slye Colliers negotiating the $26 million sale of the Shops at the Pond in Marlborough and Cushman & Wakefield of Massachusetts selling the Festival at Hyannis on Cape Cod for $37 million.
‘A Rare Opportunity’
The largest of the six centers being brokered for sale by CBRE is the Quincy Star Market at 130 Granite St., which features just over 100,000 square feet. Built in 1967, the Swampscott property at 331 Paradise Road is the smallest in the mix but has the longest lease term, running to 2026. Most of the half-dozen properties are in the 60,000-square-foot range and have leases expiring in 2016. The Cambridge Star Market is at 699 Mount Auburn St. on the Watertown line, the Medford Shaw’s is at 61 Locust St., the West Roxbury Shaw’s is at 75 Spring St. and the Plymouth Shaw’s is on Route 3A.
“It’s very rare to have an opportunity to buy six grocery-anchored shopping centers, especially when five of them are located within Route 128,” said one broker. Besides the heavy population from which to draw customers, comparable development sites for new stores are difficult to find in metropolitan Boston, noted the broker, with acquisition costs and permitting hurdles often too onerous for a developer to overcome.
Given the irreplaceable nature of the properties, most observers spoken with said they believe the assets being offered by Charlesbank and Crosspoint will garner considerable interest and pricing that could near record levels. At $120 million, the portfolio would exceed $300 per square foot.
According to sources, there is no formal asking price for the assets and investors can bid on the entire portfolio or on some of the properties individually. One supposed exception, however, is that the Medford, Swampscott and Plymouth properties are bound by financing and must be purchased together.
Once primarily dominated by private players, New England retail has increasingly attracted capital from outside the region during the past decade, with institutional ownership and even overseas investors clamoring for a share of the inventory. In the latest survey by the Association of Foreign Investors in Real Estate, for example, retail placed first among asset classes being targeted by international capital. Just a few years ago, only a handful of overseas investors were comfortable with retail property, but that position has changed as the office, hotel and multi-family asset class experiences their own challenges.
Having ridden out the recession better than most product types, the retail market continues to exude optimism, as witnessed by the just-concluded International Council of Shopping Centers spring convention in Las Vegas. According to ICSC officials, this year’s event boasted a record turnout, with nearly 36,000 attendees on hand. The ICSC also released upbeat results from its member store surveys, with the group reporting that same-store activity was up in May by 5.7 percent compared with the same month in 2003. ICSC also offered predictions of a 6 percent boost in sales for June.
