Curbside sale at Chino Hills mall highlights niche retail market

The curb-fronting sections of a Chino Hills shopping center sold for $34.2 million in a trade underscoring a small but growing segment of the retail market.  

The roughly 77,000 square feet of shops nearest to the street at the Crossroads Marketplace attracted over 20 offers in September with Beachwood, Ohio-based Site Centers snapping up the space at 12945 Peyton Drive. It was the last investment the shopping center owner bought before spinning off what the company calls its convenience retail portfolio into a publicly traded company named Curbline Properties. The recently acquired Crossroads assets are now part of Curbline.

The spinoff, with a recent market cap of $2.4 billion and offices in New York, holds what management views as an investment vehicle with legs: properties sitting closest to the curb line — hence the company’s name — along high-traffic arterials.

“There are a lot of national retailers going after that section of the market,” said Colliers’ Charley Simpson. “That’s because that multi-tenant retail portion that’s out in front commands the highest rents, the leases usually have annual increases built into them and their leases are triple net.”

Simpson, along with Colliers’ El Warner, Caitlin Zirpolo and Alyssa Mera represented seller LNR Partners in the Chino Hills trade. Site represented itself in the all-cash deal.

Trading spaces

In contrast to smaller tenants, a center’s anchor spaces are typically rented out by national retailers that receive large tenant improvement allowances and caps on expenses they pay into for a shopping center’s common areas. Those larger tenants also present challenges for landlords in refilling those spaces once they leave.

That reality partially explains Crossroads Marketplace’s recent hurdles.

The property was foreclosed on after big box tenants, such as Bed Bath & Beyond, left. Crossroads then came under the ownership of special servicer and Starwood Property Trust’s LNR Partners.

LNR sold Costco Wholesale the back portion of the center, over 186,000 square feet, for $37.5 million in September 2023. Home improvement retailer Lowe’s also owns its big-box space at the center.

The remaining roughly 77,000 square feet of curb-fronting retail not owned by the larger retailers is what LNR sold this year to Site Centers.

That piece of the property was about 92 percent leased at the time of the sale with 22 tenants, including Wendy’s, Cold Stone Creamery, Fukuoka Hakata Ramen and 85 Degrees C Bakery Cafe.

“All the space in the front has always done well,” Simpson said. “There was upside to it and good tenants in there. We took it to the market and that property type that Curbline is going after, there’s a lot of national retailers going after that for the same reason.”

Seven of the offers for the curb-fronting retail came from national commercial real estate companies focused on investing in convenience retail properties without the anchor spaces.

Big exposure

Crossroads Marketplace sits in a busy retail corridor, off State Route 71, in San Bernardino County about 30 miles east of Downtown Los Angeles.

It’s less than two miles from the outdoor lifestyle center Shoppes at Chino Hills, which counts Forever 21’s XXI Forever brand, Old Navy, Banana Republic, Victoria’s Secret and Barnes & Noble among its larger tenants.

“It’s a different shopping experience,” Simpson said of the Shoppes compared to Crossroads, “but they’re both capitalizing on the same thing, which is the affluence and the demographics in Chino Hills.”

Both centers are located just off State Route 71 and pull in not just neighborhood shoppers, but visitors from as far as Diamond Bar, which is about nine miles northwest of the city in Los Angeles County.

Within a three-mile radius of the center are more than 130,000 people with incomes averaging in excess of $120,000, according to property marketing materials.

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