LONG BEACH, Calif. — While the coronavirus pandemic may have negatively impacted the retail industry, a pair of commercial real estate companies are banking on people continuing to visit and shop at retail centers in person despite the ongoing pandemic situation.
A joint venture between San Jose-based private equity real estate and development firm DJM and PGIM Real Estate has acquired the Long Beach Exchange, more commonly known as LBX, from Newport Beach-based Burnham-Ward Properties in a reported $160 million deal.
Burnham Ward developed and opened the $100 million retail center in 2018.
The 26-acre outdoor retail center next to the Long Beach Airport features a Whole Foods, Orange Theory, and Nordstrom Rack. The center also features a 17,000 square-foot food hall that looks like a vintage aviation hangar called the Hangar, a popular hangout spot in Long Beach.
Chad Cress, the chief creative officer at DJM, told Spectrum News the company has a bullish outlook on the retail industry despite the uncertain time. DJM is also part-owner of Ovation Hollywood, the old Hollywood and Highland outdoor retail complex currently undergoing a $100 million makeover, and the Bella Terra in Huntington Beach. The company also owns other outdoor shopping centers, including Pacific City in Huntington Beach and the Lido Marina Village in Newport Beach.
"It comes down to knowing what the right type of retail is for the future and understanding the changing needs of the consumer," Cress said in an email to Spectrum News. "Indoor malls have suffered through the pandemic, and online shopping has increased. However, we have seen a growing need for well-designed, open-air neighborhood shopping centers that focus on retail, dining, fitness, and daily needs."
The pandemic, Cress said, "has only reinforced our view of what the next generation of retail needs to look like."
Since the pandemic began in March 2018, the brick-and-mortar retail industry was among the hardest-hit sectors in commercial real estate. A combination of government pandemic-related restrictions, stay-at-home orders, and weary and concerned individuals drove people away from brick-and-mortar shopping.
Online shopping is up. According to Digital Commerce 360, which tracks online retail sales, e-commerce has increased 45.6% in the third quarter of 2021 compared to the same time frame in pre-pandemic 2019.
While brick-and-mortar leasing suffered a major hit early in the pandemic, things have begun looking up as restrictions lift and people adjust and learn to live in the pandemic environment. Many brick-and-mortar stores adjusted to the people's changing shopping behavior by integrating online shopping and other methods to bring consumers into the store.
Cress said DJM has benefited from the pandemic. Since their shopping centers are outdoors, they experienced increased foot traffic and sales across their entire retail center portfolio.
LBX, Cress added, would complement their other assets in Southern California.
"Long Beach is such a vibrant community so we are thrilled to have a presence there," he said. "It has historically been under-served with quality retail so we are excited to continue to grow the retail, dining, and daily uses offerings for the area at LBX."