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Manatee County-based Benderson Development Co. is making a push west, with a handful of acquisitions along the West Coast in the past year totaling more than $121 million.
But unlike typical Benderson purchases, its deals in Chicago, Seattle and a trio of deals in California involve one-off, stand-alone assets and not entire shopping centers, as was the case when it acquired and revived the troubled Landings Shopping Center and Pelican Plaza, both in Sarasota County, over the past three years.
Instead, the acquisitions of pair of Safeway supermarkets, a Costco Wholesale store, a Pavilion’s supermarket and a vacant Toys “R” Us/Babies “R” Us store more closely resemble recent Benderson deals in Sarasota for a vacant SweetBay supermarket in the Town & Country Plaza and an empty Dillard’s department store in the Westfield Sarasota Square Mall.
Though the former remains derelict, Benderson successfully subdivided the latter into space for a Lucky’s supermarket and LA Fitness gym and integrated into the larger, enclosed shopping mall owned by Australia-based Westfield Corp.
In the case of Babies “R” Us — a casualty of parent Toys “R” Us’ bankruptcy earlier this year that resulted in all the chain’s outlets shuttering, the store is adjacent to — but not a part of — the East Bay Bridge Shopping Center, a 439,000-square-foot power center in Emeryville, Calif., near Oakland, Calif.
The 32-acre center, at 3938 Horton Street, is anchored by Home Depot, Target, Nordstrom Rack, Michael’s and an Ashley HomeStore, among others. It is owned by Federal Realty Investment Trust, a real estate investment trust headquartered in Rockville, Md.
Benderson acquired the site for $15.6 million in a bankruptcy-related auction.
Mark Chait, a Benderson executive in charge of the company’s Florida leasing, says the store has been leased to Decathlon S.A., a French company that is the world’s largest sporting goods retailer. In all, the company operates more than 1,400 locations in 45 countries and generates annual revenue of nearly $13 billion.
“We are very excited to add this great asset to our growing West Coast U.S. portfolio,” Benderson CEO Randy Benderson says, in a late August statement announcing the Babies “R” Us store purchase.
Prior to the acquisitions, Benderson owned three properties in Illinois, in La Grange and Naperville; four in Washington state, in Bonney Lake, Seattle and Vancouver; and nine properties in California, in secondary cities such as Martell, Oakdale and Oceanside.
Benderson’s Chait downplayed the significance of the spate of acquisitions, noting that the company — among the largest privately held real estate developers in the nation — controls more than 750 properties in 38 states with in excess of 40 million square feet.
“We’ve always looked to acquire properties that fit with our strategy, and we’ve always had a pretty wide footprint,” he says. “We’ve always liked strong markets where we believe there will be extraordinary population growth now and into the future.”
In the Costco Wholesale deal, Benderson paid the Illinois Medical District— the largest urban healthcare, research and educational collection in the U.S. containing four major hospitals — $17.1 million for the discount warehouse in the city’s South Loop. The property contains 156,000 square feet and sits on 16 acres, according to Benderson’s website.
The Laguna Beach, Calif., and Berkeley, Calif. Purchases, together with property in Seattle and Anchorage, Alaska, were part of an $89 million purchase of four net-leased grocery stores. In all, the four supermarkets — three Safeway stores and a Carrs in Alaska — contain 220,000 square feet.
Chait also cautions that the Western acquisitions don’t signal a shift away from Benderson’s home territory, or that the Sunshine State is saturated with retail properties.
“We still look at Florida as a growth market,” Chait says.
In Sarasota County alone, for instance, the company continues to pursue developments at Siesta Promenade, a planned mixed-use project on 25 acres at U.S. 41 and Stickney Point Road; University Town Center; the aforementioned Landings and Town & Country Plaza; and elsewhere.
Jim Kovacs, executive managing director of commercial real estate brokerage firm Colliers International’s retail services division, says the moves could be part of a multipronged strategy by Benderson, with whom he has worked on a number of transactions.
“There are three primary reasons why a company like Benderson would want to expand geographically: It could be they want to open up their proverbial basket so they don’t have all their eggs in just a single basket or it could be opportunistic behavior, in that they have the chance to pick up the right property at what they perceive is the right price,” Kovacs says.
“Most importantly, I think it might have to do with following or establishing a tenant relationship. They may have a relationship with a retailer on the East Coast and they want to expand with them to the West Coast, or it could be the other way around. Going to, or getting more steeped in, different markets allows them to build new relationships.”
Barry Seidel, the president of American Property Group of Sarasota Inc., a commercial real estate brokerage firm, agrees that the implications for furthering relationships makes sense for Benderson.
“It’s a very smart thing to do,” Seidel says. “Who wouldn’t want to be more diversified if they had the wherewithal to do it, and certainly Benderson does.”
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