Investec Banks on Necessity-Based Centers

Investec Real Estate of Santa Barbara, Calif., has opened its $17.5 million, 60,000-square-foot Gene Autry Plaza, a necessity-based shopping center, in Palm Springs. The center is anchored by a newly constructed 30,000-square-foot Smart & Final Extra! store and a newly-opened Staples.
Investec’s general partner, Jim Slaught, says that discount grocer Smart & Final! and Staples should perform very well throughout the recession, meeting Investec’s criteria for tenants of the necessity-based, recession-resistant market/drug-anchored neighborhood shopping centers it owns and manages. The completion of Gene Autry Plaza expands Investec’s retail portfolio in California to nearly two million square feet valued at more than $600 million.

According to Kenneth Slaught, president of Investec, traffic and sales are increasing at the company’s necessity-based shopping centers as consumers return to basics by eating at home more often and by searching discount retailers for bargains. “Knowing this type of real estate in California, particularly Coastal California, is performing well during this severe downturn, has us excited about the future,” he states. He says that Investec plans to continue buying the same type of properties in Coastal California and anticipates that, during the next few years, it will have a once-in-a-generation opportunity to buy this exclusive asset class at below replacement cost.

Slaught adds that, contrary to the general gloom about retail real estate and the press reports about the troubles plaguing discretionary retail and large niche chains, all of Investec’s existing grocery anchor tenants have shown sales increases averaging 2.9 percent over the past 12 months. The new Investec center has 8,500 square feet of available shop space, which the company is marketing to financial institutions, cell phone stores, coffee stores, and other food users.