The
Opportunity South
Orange County retail shopping space had been in high demand
since the late 1990s, and retail property in Laguna Hills
was no exception. However, at that time, certain shopping
centers had slipped into disrepair, suffering not from a lack
of demand, but from neglect; Laguna Hills Plaza was one of
those centers.
Originally
consisting of 96,000 square feet, Laguna Hills Plaza is located
just one block from the Interstate 5 freeway on Alicia Parkway,
but had seen better times and was not collecting rents comparable
to competing centers. The owner at the time had a plan to
renovate the center to boost rents and image, but the project
had stalled due to lack of funds and overall poor property
and construction management. Milan saw an opportunity and
negotiated a purchase of the asset in the middle of construction
from the poorly capitalized and inexperienced owner.
The
Project
After Milan’s purchase, many of the previous owner’s
plans were implemented, yet some were revised utilizing Milan’s
extensive experience with design elements and value-add management
for retail shopping centers. The property underwent significant
changes including a complete re-landscaping of the parking
areas and perimeter boundaries. Also, additional parking was
added to the center, which made possible the construction
of an additional 28,000 square feet to the co-anchor tenant,
Chicks Sporting Goods, increasing their square footage to
50,000. The property also underwent extensive façade
work, major signage upgrades and additions, and other renovations.
The
Results
Due to the increased visibility of the anchors and shops as
an outcome of the landscaping renovation, and the resultant
increase in demand for the space in the center, Milan filled
the remaining vacancy at 50% higher rents than the average
rent in the center at the time. The addition to the overall
square footage of the center also added directly to the return—
the NOI increased nearly 70% in less than two years from the
purchase. The property was refinanced in 2004 with a loan
for more than the original purchase price and the property
continues to yield an excellent return to Milan and its partners.
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