Richard EllisDC Ranch Crossing shopping center at Pima Road and Legacy Boulevard.
DMB Associates has sold its DC Ranch Crossing shopping center in north Scottsdale for $16.5 million in one of the largest deals this year for a Valley retail property.
Stockbridge Capital Group LLC of San Francisco bought the 68,113-square-foot center, anchored by AJ's Fine Foods. It is on 14.5 acres southeast of Pima Road and Legacy Boulevard.
DC Ranch Crossing, which opened in fall 2008, has a prime location on Pima just north of Loop 101 but it entered the market at the worst time as the economy collapsed, said Glenn Smigiel, a CB Richard Ellis senior vice president. He handled the transaction with colleagues Bob Young, Steve Brabent and Rick Abraham.
"Within 12 to 24 months, (Stockbridge is) going to have this property filled," Smigiel predicted. "They will have an aggressive leasing campaign with money for tenant improvements and leasing incentives."
Stockbridge officials were not available for comment.
The shopping center was 60 percent leased at the time of the deal, which closed June 9. Tenants include Calistro California Bistro, Lush Burger, First American Title and Verizon.
The sale included a developed pad at the front of the property and a 2.35-acre parcel just north of the center. Restaurants have shown interest in a ground lease for the pad, Smigiel said.
The center's price per square foot - minus about $2 million for the pad and 2.35-acre parcel - works out to be about $214, he said.
"There haven't been a lot of large transactions," Smigiel said of the Valley's retail sector. "It's been banked-owned strip centers that have sold."
The Arizona Center in downtown Phoenix sold this spring for $136 million, but it is a mixed-use project with more offices than retail.
Scottsdale-based DMB, developer of DC Ranch and Verrado in Buckeye, decided to sell DC Ranch Crossing because its core business is community development, said Charley Freericks, DMB senior vice president and general manager of its commercial real estate. Plus, there was strong interest in the property, he said.
DMB was saddled with heavy debt on the shopping center that made it difficult to lease space at high enough rents when the recession hit, Freericks said.
It did not help that Chandler-based Bashas' Supermarkets, the parent company of AJ's, filed for bankruptcy protection two years ago, he said. Potential tenants were spooked by the anchor tenant's financial troubles.
DMB had its own financial troubles last summer with DC Ranch Marketplace, the community's primary retail district. The company defaulted on its loan with GS Securities Corp. II but was able to restructure the deal in December, Freericks said.
DC Ranch Crossing has seen its traffic improve at AJ's and the other businesses, he said.
Smigiel said the center benefits from having a median household income of $171,000 within a 1-mile radius.
"DMB did a great job laying the foundation for this shopping center," he said. "Stockbridge can take it to the next step."
by Peter Corbett The Arizona Republic Jun. 16, 2011 10:39 AM
DC Ranch Crossing shopping center sells for $16.5 million
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