The Gardens in Palm Desert Fuels Retail Buying Spree
Retail properties continue to be hot targets for real estate companies looking to capitalize on low interest rates. This month, Davis Street Land Co. closed on The Gardens on El Paseo, a 200,000-square-foot center in Palm Desert, Calif.
The Evanston, Ill.–based company purchased the center for $70 million from its previous owner and developer, Washington, D.C.–based Madison Marquette Realty Ser vices L.P., according to Insignia/ESG of Los Angeles, which handled the sale.
“Retail is very hot right now,” said Lawrence Krasner of Insignia’s downtown Los Angeles office. “It’s being driven by interest rates, but there has also been an overabundance of office-space buying, and retail is viewed more favorably today.”
Upscale centers such as The Gardens— which houses Saks Fifth Avenue, Tommy Bahama’s Emporium, Talbots, Ann Taylor and Brooks Brothers stores, among others—may be less prone to recessionary traits in the economy. Despite the drop-off in worldwide tourism, the Coachella Valley, with its year-round warm weather and bigdraw sporting events, has managed to attract regional tourist traffic, as well as the usual migration of snowbirds from Canada.
Krasner said Davis Street is looking at a long-term hold for the center, which Madison Marquette built in 1998. The center is 95 percent occupied, and Madison Marquette recently signed a lease with Tiffany & Co., which will move in this fall.
The heavily landscaped, two-level, openair retail and dining center is located off El Paseo and San Pablo Avenue amid specialty and boutique retail shops, restaurants and art galleries.
The new owner has not planned any major improvements for the center, said Krasner.
Davis Street is a privately held company that specializes in suburban and urban developments. Madison Marquette, an affiliate of international investment company Capital Guidance, has a portfolio of more than 26 million square feet of property, including Fashion Island in Newport Beach, Calif., and the Irvine Spectrum Center in Irvine, Calif.
The Gardens purchase comes on the heels of sales involving the Del Amo Fashion Center, the Puente Hills Mall, the SouthBay Pavilion and the Whittwood Mall. In most of these deals, investors are refitting aging shopping centers with more entertainment amenities and specialty retailers to draw traffic. —Robert McAllister
