Editor’s note: A version of this story was originally published by the Orange County Business Journal.
Long Beach is the latest target for an Orange County-based joint venture that has poured its dollars into open-air retail centers.
This time, the combo of Redwood West and Panattoni Development has acquired The Pike, an iconic 370,000-square-foot shopping center along the city’s harbor, from SITE Centers, an Ohio-based real estate investment trust, for $50 million. The deal closed June 25.
According to CoStar, it’s a ground lease deal in which the joint venture is leasing the land from the landowner. It explains why the price, about $135 per square foot, is well below comparable nearby retail sales. In January, for example, South Carolina-based retail investor Edens acquired the 246,000 SF LBX — Long Beach Exchange for $134 million, or about $547 a square foot.
Newport Beach-based Redwood West, whose portfolio includes Lido Marina Village and Peninsula Village, and Irvine-based Panatonni plan to sink another $20 million into the 14-property waterfront destination ahead of the LA28 Summer Olympic and Paralympic Games.
“The Pike’s premier waterfront location is truly one-of-a-kind and irreplaceable,” John Pomer, co-founder and managing partner of Redwood West, said in an interview. “The Pike has strong bones that we believe we can elevate to the next level through targeted lease-up and tenant repositioning, placemaking in common areas, events and activations, and elevating the overall aesthetic of the property.”
Long Beach Olympics
Built in 2003, The Pike spans about 25 acres along Long Beach’s downtown waterfront and sits next to the Long Beach Convention Center and the Aquarium of the Pacific.
The center is currently 91% leased, which is about 5% higher than other shopping centers in the city, according to the Downtown Long Beach Alliance.
Current tenants include Cinemark, Nike Factory Store, H&M, Levi’s, EōS Fitness, Restoration Hardware, P.F. Chang’s, California Pizza Kitchen and Starbucks.
Redwood West officials say the center draws about 7 million visitors each year with more foot traffic expected when the Summer Olympics hit Long Beach in two years.
The city is hosting 11 events including men’s and women’s beach volleyball in Alamitos Bay, water polo at the Long Beach Aquatics Center and handball at the Long Beach Arena.
Many of these venues are near The Pike shopping center.
The city is also pouring nearly $1 billion into capital investments and improvements in the surrounding areas through its Elevate 28 Infrastructure Investment Plan to prepare for the Olympics.
Open-air retail
The purchase underscores investor demand for open-air centers with restaurants, entertainment and community events instead of enclosed malls.
Pomer said that consumers are “choosing destinations over transactions.”
“The Pike has all of the right fundamentals that we look for, which includes a premier waterfront location, strong visibility, strong surrounding momentum with the city of Long Beach’s initiatives, and a strong residential development pipeline with a growing population base,” he added.
This is the joint venture’s second big retail purchase this year. In March, they bought the 1.2-million-square-foot Victoria Gardens in Rancho Cucamonga for $530 million.
The Pike improvements
Rather than undertake a sweeping overhaul of The Pike, Pomer said Redwood and Panattoni plan to elevate the property through targeted improvements aimed at reinforcing its position as a premier gathering place.
Visitors can expect enhanced common areas, a new central courtyard, an event lawn, updated digital signage, refreshed landscaping and an overall modernized look.
“We will create immediate leasing momentum through the lease-up of current vacant space, with a thoughtful re-tenanting as leases naturally expire,” Pomer said.
Redwood West said it plans to make the most of the property’s waterfront location by adding more events and activities to attract both residents and tourists.
“By leaning into the waterfront positioning of the asset, elevating the existing tenant mix, and by bringing events back to The Pike to give the community a reason to engage,” Pomer said when asked how the center can stand out amid growing competition for dining and entertainment dollars.
Pomer believes the property will have a new identity in five years.
“The Pike will be a central gathering place for both the community and visitors to Long Beach alike who will be able to experience a strong mix of restaurants and shops along Long Beach’s iconic waterfront,” Pomer said.
