Atlanta-Area Shopping Center Attracts Retail Tenants As Well As CrowdStreet Investors
After a difficult period early in the pandemic when e-commerce grew in popularity at the expense of brick-and-mortar retail, a recent report from CrowdStreet declares that “retail real estate investments are back in style.”
The online syndication platform based its positive assessment on several trends, including steadily growing foot traffic at stores that have led to brick-and-mortar center sales growth once again outpacing online sales growth. With relatively little new retail development in recent years, CrowdStreet anticipates this growth is likely to lead to higher occupancy levels at existing retail spaces.
“Any retail center that is functioning reasonably well today may have a good chance of functioning even better tomorrow because of what it has endured,” CrowdStreet’s report said. “Not only is activity returning, the retail sector now looks battle-tested.”
Westwood Financial recently launched a retail offering that raised $7M through CrowdStreet’s Marketplace. The nearly 90K SF property, Village at Peachtree Corners, is located in the largest city in Georgia’s Gwinnett County and is an example of a retail center that emerged stronger from the pandemic’s crucible.
“This was a great value-add deal,” Westwood Senior Vice President and Head of Leasing Lauren Ball said. “The combination of its location and stable cash flow made it an excellent investment opportunity.”
To CrowdStreet Managing Director Landon Wright, the Village at Peachtree Corners is the epitome of a battle-tested retail property.
“Not a lot of retail deals make it through our screening process,” Wright said. “This particular one was interesting to us because it is a grocery-anchored center in Atlanta, which is a growth market for us.”
The 100% occupied center is anchored by a Lidl grocery store, whose presence gives the Village at Peachtree Corners a competitive edge over other retail properties. Even in the depths of the pandemic, many people continued to shop in-person for groceries, driving traffic to Lidl’s neighbors in the center, which include Orangetheory, Marco’s Pizza and Massage Envy.
CrowdStreet was also attracted to the deal because of Westwood Financial's strong experience as a retail property owner and manager that operates more than 120 shopping centers across the country.
Westwood purchased the property in February when it was 74% leased. It since has brought the Village to full occupancy with the addition of tenants such as pOpshelf, a retailer owned by Dollar General that will serve as a second anchor for the center when the store opens in early 2023.
By securing pOpshelf, Westwood removed the risk associated with what had been a 24K SF vacancy and made the deal attractive to CrowdStreet investors, Wright noted.
“They solved for that vacancy issue and then allowed CrowdStreet investors to come in at their cost basis, and that really resonated with our investors,” he said. “That's one of the reasons why we blew past our initial estimated raise amount in a day.”
Westwood, which saw working with CrowdStreet as a way to diversify its equity sources, reported that the experience exceeded its expectations.
“Our offering was met with great enthusiasm, as evidenced by exceeding our goal by over $1 million,” Westwood Vice President of Operations Brett Johnston said in a statement. “Westwood added 128 accredited investors to its platform with an average investment of $55,000.”
Westwood has committed to making more than $500K of capital improvements to the 35-year-old center. These include parking lot repairs and facade upgrades.
Wright said project sponsors like Westwood appreciate the autonomy they have on the CrowdStreet platform because its investors are passive.
“Investors care a lot about their investment and making sure that you're following through on your business plan, but our investors don't have voting or control rights to force the sponsor to do anything they don’t want to do,” he said. “The sponsor is the expert and they are allowed to run that property in the best way for the profitability of their shareholders. That is the largest difference between our investors and institutional capital partners.”
CrowdStreet continues to look for other retail opportunities for its investors, with a preference for properties that share the Village at Peachtree Corners’ attributes. In its retail report, CrowdStreet described these as grocery-anchored neighborhood shopping centers leased to resilient anchors and backed by experienced sponsors.
Not every property fits that description and Wright said CrowdStreet works hard to select ones that offer opportunities for its community of investors.
“The due diligence process is integral to ensuring that deal and sponsor quality are upheld,” he said. “A lot goes on behind the scenes at CrowdStreet for each deal that investors do not see.”
This article was produced in collaboration between CrowdStreet and Studio B. Bisnow news staff was not involved in the production of this content.
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