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| March 15, 2004 |
Santa Rosa Retail Market: Southwest Looks to Attract National Tenants This Year
by Mark Koenig (BTCommercial/Terranomics) - North Bay Business Journal |
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Monthly rental rates for the Santa Rosa retail market range from $1.25/sf NNN to $3.00/sf NNN, with the majority of lease transactions in the $1.50-2.50/sf NNN range. The difference in rates is predicated on the shopping center type as well as the strength of the location in the trade area. There is a market base of approximately 7.5 million square feet with an overall vacancy factor of less
than 3%.
Significant deals in 2003 include the opening of the new Safeway Center on Mendocino Avenue and the opening of Beverages & More and Trader Joe's second Santa Rosa location in the Santa Rosa Marketplace.
Big projects planned for 2004 include a Kohl's department store in north Santa Rosa and a new 100,000sf anchor at the Stony Point Plaza, formerly the Santa Rosa Value Center. Plans have been presented for the Prickett's Nursery site on Highway 12 in east Santa Rosa as well as for the addition of an Orchard Supply Hardware and Longs Drugs at the Montecito Shopping Center in east Santa Rosa. It remains to be seen if WinCo Foods will begin to process or sell its site at Petaluma Hill Road and Yolanda Avenue.
Rents will remain stable, and newer projects will produce higher rents. Mendocino
Marketplace and Santa Rosa Plaza are achieving rents above $3/sf NNN.
The affordable southwest quadrant of Santa Rosa will continue to grow in population and housing. As a result, we will see a continuation of national tenants replacing local "mom and pop" tenants. The Railroad Square redevelopment will attract boutique restaurants and shops.
Additionally, anchored and well-located shopping centers will continue to trade in Sonoma County at historically low cap rates (below 8.5%) as long as interest rates remain at their all-time lows.
This phenomenon demonstrates that buyers are willing to pay top price for properties that are virtually impossible to duplicate in this entitlement-sensitive area with very little land left to develop. The high income and education levels of the residents of Santa Rosa and Sonoma County also makes it an attractive retail market for both investors and tenants.
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