Sterling Organization acquires East Bay shopping centers for $40M

Florida-based real estate firm Sterling Organization has acquired two retail centers in Fremont for just north of $40 million, according to Daniel Tyner from JLL, who was part of the team that represented the undisclosed seller. 

The adjacent assets are located at 6690-46850 Warm Springs Road and 46650 Mohave Drive, and total 117,000 square feet. The price calculates to $342 per square foot. 

The centers have a total occupancy of 92 percent. Notable tenants include Safeway, Taco Bell, KFC, Burger King, Bank of America and 7-Eleven. Additionally, the Warm Springs property is well-positioned to the adjacent Tesla Fremont Factory. This is the first time the properties have traded hands in more than 50 years.

Since the pandemic, grocery-oriented retail has remained a more reliable asset class than other types of retail and has proven resilient to market distress, according to a report by JLL. The tenancy in these centers is more necessity-based than other property types, which means rents and occupancy are generally stable. Also, the typical supermarket lease is long-term with a significant portion of the rental income guaranteed for years to come.

“We continue to see grocery-anchored centers attract strong interest from the marketplace as they perform very well even through shifting market environments,” Tyner said. “We expect investor demand for grocery-anchored retail to continue to remain robust for the foreseeable future.”

The East Bay retail market started to see signs of a comeback at the end of the fourth quarter last year, according to a market report by Cushman & Wakefield. The vacancy rate stood at 7.2 percent, which was down from 7.4 percent the previous quarter. Vacancy in Alameda County was stronger at 6.2 percent, down from 6.8 percent quarter-over-over. 

This one transaction in Fremont accounted for more in terms of total dollar amount and square footage than all transactions during the fourth quarter. There was 103,000 square feet of retail space acquired last quarter at a price of $39 million.