San Antonio Oaks
CHALLENGE: Fill a shopping center that was 30% occupied in less than a year.
RESULTS: Filled to 94% occupancy and an increase in property value that was deemed impossible over the previous 11 years.
“The owner was able to refinance and later sell the property at the price they wanted after 11 years of struggling with the occupancy and negative cashflow.”
The 1980’s center which at one time was shadow anchored by a grocery store was facing an uncertain future. Heritage Oaks Shopping Center struggled after the grocer exited its space and was temporarily replaced by a community college. The center’s occupancy hovered around 30% even having been under assignment with several of the major brokerage firms in town. The vacant spaces were in poor condition and a few industry insiders familiar with the property recommended a tear down. Escalating the situation was that the property’s loan was coming due within a year and several banks had already turned the project down.
The owner of the property contacted Foresite with one year left on the loan and a budget of $0 to be used for tenant improvements in the lease up of the center.
Foresite began aggressively contacting local tenants in the submarket that currently occupied poorly visible spaces at competing centers. They offered tenants the opportunity to benefit from improved visibility at Heritage Oaks at their current rates if they were willing to fund all tenant improvements themselves. Within one year the property was 94% occupied. The new leases were signed with limited renewal options in order to allow the existing or future ownership to bring the rental rates to market rate after recapitalizing the property. The owner was able to refinance and later sell the property at the price they wanted after 11 years of struggling with the occupancy and negative cash flow.
*Names of the centers have been changed to protect client confidentiality. Representative photos used.