Listed by CBRE - Orange County
$16,600,000
Newport 17th Plaza
Details
APN 425-431-01, 425-422-01
Property Type Retail
Sub Type Shopping Center
Square Footage 28,678
Net Rentable (SqFt) 28,678
Cap Rate 6.26%
NOI $1,039,539
Occupancy 100%
Tenancy Multi
Year Built 1977
Buildings 3
Acreage 2.620
Zoning C1 - Local Business
Parking Spaces 135 spaces
Parking per 1,000 SqFt 4.71
Investment Type Stabilized
Ground Lease Yes
Ownership Leasehold
Retail | 6.26% CAP | 28,678 SqFt
Marketing description
Newport 17th Plaza is a truly irreplaceable retail center located at the hard-corner signalized intersection in the heart of coastal Newport Beach/Costa Mesa, featuring a Chase Bank drive-thru pad along with a complementary mix of national, regional, and local food-and-beverage, service and specialty retail tenants.
The property is located at THE dominant location for retail at the intersection of 17th St, Newport Blvd, and Superior Ave (150,000+ CPD), in the primary retail and commercial corridor serving the Newport Beach/Costa Mesa area - Orange County's premier retail submarket, supported by highly affluent and dense coastal demographics.
This is an extremely dense and vibrant retail trade area, with 2.8 million SF of retail in a 1-mile radius and surrounded by top-tier retailers including Trader Joe's, Vons, Sprouts, Ralph's, Target, Grocery Outlet, BevMo!, PetSmart, Michael's, Petco, Staples, Walgreens, Del Taco, CVS, 24 Hour Fitness, Starbucks, Chick-fil-A, Raising Canes, US Bank, Wells Fargo, Crack Shack, Mendocino Farms, and many more national, regional, and local retailers.
Investment highlights
- Truly Irreplaceable Retail Center – Rare wholly-owned multi-tenant retail center on THE hard-corner signalized intersection in the heart of coastal Newport Beach/Costa Mesa, featuring a Chase Bank drive-thru pad along with a complementary mix of national, regional, and local food-and-beverage, service and specialty retail tenants
- THE Dominant Location for Retail – 100% location at the intersection of 17th St, Newport Blvd, and Superior Ave (150,000+ CPD!), THE intersection in the primary retail and commercial corridor serving the Newport Beach/Costa Mesa area - Orange County's premier retail submarket, supported by highly affluent and dense coastal demographics
- 17th Street continues to attract expanding regional and national brands, recently adding Target, Shake Shack and Nick's Restaurant in addition to premium retailers Whole Foods, Erewhon Organic Grocer, Bear Flag Fish Co. and more opening soon.
- This is an extremely dense and vibrant retail trade area, with 2.8 million SF of retail in a 1-mile radius and surrounded by top-tier retailers including Trader Joe's, Vons, Sprouts, Ralph's, Target, Grocery Outlet, BevMo!, PetSmart, Michael's, Petco, Staples, Walgreens, Del Taco, CVS, 24 Hour Fitness, Starbucks, Chick-fil-A, Raising Canes, US Bank, Wells Fargo, Crack Shack, Mendocino Farms, and many more national, regional, and local retailers.
- Investment Grade Credit and Publicly Traded Pad Tenant – The property is anchored by Chase Bank, which has operated at this location since 2013 (~13 years), ranks in the top 27% in the chain per Placer.ai, and has approximately $245M in deposits
- Chase Bank (NYSE: JPM), the banking subsidiary of JPMorgan Chase & Co., is the largest bank in the US and currently operates about 5,000 branch locations. Chase Bank is an extremely strong "investment grade" credit tenant with an S&P rating of AA-, revenue exceeding $195 billion, and a market cap of approximately $878 billion
- Highly Synergistic and Proven Tenant Mix – With its 100% occupancy including Chase Bank, The Butchery, Just Food For Dogs, LightStyles+Builders Source Appliance Gallery, Lantern Café, Yuzu Sushi, and Ketcham Tackle, Newport 17th Plaza's curated tenancy is proven to be synergistic, stable, and optimal to serve this affluent trade area
- Established, Stable Occupancy – 4 tenants totaling 12,286 SF (43% of GLA) have occupied the property for 10 years or more with 7 tenants totaling 17,203 SF (60% of GLA) for ~5 years or more proving the viability of the center and its continued success – the weighted average lease term (WALT) remaining is 4.25 years
- Income Stream Diversity – 100% leased 10 tenant retail center investment with staggered lease expirations and no tenant accounting for more than ~19% of the project's GLA, limiting rollover exposure in any given year - LightStyles+Builders Source Appliance Gallery is the largest tenant at the property and recently relocated to this location signing a 5-year lease with significant investment into its free-standing and high-end corner pad building
- Significant Income Growth – Through scheduled rental increases and rolling below-market rents to market, the NOI is projected to increase more than $557,000 (53%) over the projected 10-year hold period, providing an impressive 3.4% compound annual growth rate (CAGR) and a strong hedge against inflation
- Below Market Rents – Property-wide rents at Newport 17th Plaza are estimated to be approximately 10% below market with many tenants more significantly below market levels, providing tenant stability, future rental growth, and an opportunity to curate a more optimal tenant
- High Barriers To Entry – Dense, infill, coastal location with virtually NO available land left for large scale retail development in the area – Redevelopment only in this trade area and mostly oriented towards residential
- Internet and Recession Resistant Tenant Roster – Synergistic in-place tenant mix of grocery, food, and service tenancy generate high frequency foot traffic and are impermeable to the threat of the internet
- Conventional Site Plan and Layout – Newport 17th Plaza features a traditional, linear site plan and shallow, efficiently sized tenant suites conducive to high occupancy, optimal rents, and low tenant improvement costs, keeping capital expenditures to a minimum, year to year
- Low Retail Vacancy – Limited retail vacancy combined with a supply constrained trade area maintains upward pressure on rental and occupancy rates—there is very little retail vacancy along 17th Street and no new retail being developed
- Professionally Managed and Maintained – The property has been thoughtfully operated and maintained under current ownership, resulting in a well-curated, high-image asset with unsurpassed exposure in the retail trade area
- Tax Advantageous Leasehold – Outstanding after-tax returns due to leasehold nature of property – potential to depreciate 100% of the asset's purchase price
- Long-Term Ground Lease Duration – Newport 17th Plaza is subject to a long-term ground lease expiring in 2058, with 1, 20-year option to extend through 2078 for a total remaining term of over 52 years
- Beneficial Increase Structure – The ground lease has capped FMV adjustments (Max. 40%) in years 2039 and 2059 including collared CPI increases (Min. 5%/Max. 15%) every 5 years
- The Ground Lease term and rent were recently recast and renegotiated in 2014, limiting the potential for a large FMV adjustment in 2039
- ROFR Opportunity – The ground lease features a right of first refusal (ROFR) in favor of the lessee/improvement owner to purchase the fee land
- Coastal Gateway Location – 17th St crossing Newport Blvd marks the "gateway" to coastal Newport Beach and Costa Mesa from the 55 Freeway and subsequently Newport Blvd.
- Dominant High-Traffic Intersection – Premier location at the signalized intersection of three streets, Newport Blvd (±93,000 CPD), 17th St (±35,000 CPD), and Superior Ave (±21,000 CPD), just minutes from the 55 Freeway (±151,000 CPD) and 73 Freeway (±190,000 CPD).
- Prime Arterial Exposure and Access – Approximately 475 feet of frontage along Newport Blvd, 340 feet of frontage along 17th St, and 160 feet of frontage along Superior Ave, with visibility and access from all three streets, providing excellent exposure and access to daily traffic flows
- Extremely Affluent Coastal Demographics & Strong Purchasing Power - More than 31,000 people within a 1-mile radius, with an Average Household Income of $171,637; More than 140,900 people within a 3-mile radius, with an Average Household Income of $197,093; More than 298,400 people within a 5-mile radius, with an Average Household Income of $191,736; Strong Effective Buying Power – Average household disposable income of more than $134,566 in a 3-mile radius
- Uncommon OC Opportunity – Generational ownership of retail centers in coastal Orange County limits acquisition opportunities as "long term holders" such as The Irvine Company and similar high net worth private families
- Irreplaceable "Trophy" Retail Investment – The property is in the heart of coastal Newport Beach and Costa Mesa at arguably it's best known, most highly trafficked intersection. Newport 17th Plaza is the definition of an irreplaceable coastal investment property
- Delivered Debt Free – Newport 17th Plaza is offered free and clear of any existing financing, allowing a potential purchaser to purchase all-cash or place new financing with terms suited to its needs
Listing Contacts
Listed by CBRE - Orange County
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Loan Amount
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Annual Debt Service
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Annual Cash Flow
$1,039,539.00
$86,628.25/mo
Valuation Metrics
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DSCR
6.26%
Cap Rate
6.26%
ROI
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