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Southern California-based retail investor Paragon Commercial Group is preparing an expansion beyond its historical focus on value-add properties to capitalize on the shifting dynamics in the retail landscape.
Paragon hired Jeffrey Berkes in January to serve as its chief investment officer, spearheading the company’s growth into core and core-plus retail assets. The pivot is fueled by new opportunities with capital partners seeking to invest in these segments of the risk spectrum, Berkes said.
“They're taking advantage of an opportunity in the market where they think they can do more business if they expand the funnel,” he said.
Berkes defined core and core-plus as properties where owners drive value through efficient operation, contrasting with value-add strategies that require investment in upgrades or solving problems like high vacancy or anchor tenant turnover.
Prior to his arrival at Paragon, Berkes spent two decades at Federal Realty Investment Trust.
Paragon has historically specialized in the value-add retail segment, focusing on high-barrier-to-entry markets across Southern California, including LA and Orange counties.
The shift aligns with robust market fundamentals: Retail investment sales volume hit $66.8B in 2025, a 35% year-over-year increase and the highest annual volume since 2022, according to Newmark. Retail assets totaling $19.2B traded in the fourth quarter alone, a 42% year-over-year spike.
Berkes highlighted strong demand for space in necessity-based, open-air shopping environments.
“Supply has stayed constant, demand has gone up,” he said. “The fundamentals of the business are very, very strong. Rent growth has been great, occupancy has been great, and investors realize that, acknowledge that and want to participate.”
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Retail fundamentals strengthened in the fourth quarter, with tenants signing for 7.4M SF more than they vacated nationally.
Newmark attributed the gain to the absorption of early 2025 closures, including the Joann bankruptcy and store closures by Kohl’s, Macy’s and Billabong/Quiksilver. Availability remains tight at 5.3%, well below the 6.5% long-term historical average, and rents for open-air neighborhood, community and strip centers increased 1.3% quarter-over-quarter.
Consumer spending is also supporting the sector. Holiday spending surpassed $1T, providing a year-end boost for many retailers, which now anticipate further benefit from tax rebates scheduled for consumers in April.
“Generally speaking — not everywhere and not for every income group, obviously — the consumer is doing fairly well in the United States,” Berkes said.
However, economic recovery is bifurcated. Pyxis by Bain & Co. Senior Director Peter Volberding said the top 10% of consumers account for approximately 80% of discretionary spending, Bisnow previously reported.
Paragon targets trade areas where demand exceeds supply, allowing the firm to secure the best tenants, negotiate optimal deals and maximize property-level value, Berkes said. Broadening its acquisition focus will enable Paragon to expand into new markets throughout the West Coast and the greater West.
“A lot of the characteristics that Paragon has found in Southern California, understanding trade areas of barriers to entry and income growth … we see those characteristics in the other West Coast markets,” Berkes said.
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