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Coffee Dose co-founder Jeni Castro remembers when Southern California’s Ranch at Newport Bay was weathered-looking and ho-hum. Built in 1980, the 60,000-square-foot, grocery-anchored property straddles Costa Mesa and Newport Beach. “It was a center that you constantly just drove past,” she said. “The surrounding market was popular, but the overall vibe there was desolate.”
Now, Castro operates an upscale, diner-like flagship at the whitewashed property. She credits Space Investment Partners for repositioning The Ranch at Newport Bay after buying it in March 2019. “I was one of the first to sign on,” said the entrepreneur, who operates three other Coffee Dose locations in Southern California. “I have a creative mind, and I understood the vision for the center.”
“[The repositioning] has definitely made this center more alive. I would never have imagined that we would have this much traffic coming into this property.”
As part of the $11 million reinvention, Space repainted the center in a “modern farmhouse” style and unified its storefront and signage aesthetics, said managing partner and co-founder Ryan Gallagher. “We went with very standardized signage,” he said. “Tenants could have a different font, but everything was black-and-white. It no longer looked like a bunch of random tenants, which upped the cachet of the project.”
Space brought in a more modern pylon sign, installed new landscaping and built a 2,500-square-foot rooftop terrace with views of adjacent nature and ecological preserves. The terrace has benefited anchor Irvine Ranch Market, a specialty grocer that has operated in the community for 40 years. “People will grab a salad, sandwich or sushi, walk up the stairs and eat lunch on the terrace,” Gallagher said.
Space Investment Partners added a 2,500-square-foot rooftop terrace as part of its repositioning of The Ranch at Newport Bay. Irvine Ranch Market recently added prepared-food options, and its customers often use the terrace for their lunch hours. Photos above and at top courtesy of The Ranch at Newport Bay
Space also expanded the 15,000-square-foot Irvine Ranch Market by 2,500 square feet so the grocer could add bars and counters for wine, salads, poke, deli sandwiches, baked goods and the like. “I wanted to have one prepared-food area for customers coming in on their lunch hour,” said Irvine Ranch Market co-owner David Wong. “The goal was to make it simple for them to get in and out quickly. It has really taken off.” Spurred in part by the positive changes, the specialty grocer signed a new, 10-year lease with doubled rent, as well as a percentage rent clause, according to Space.
The Ranch at Newport Bay was an attractive investment target for Space due in no small part to its low-vacancy, high-traffic location, Gallagher said. The center is close to busy commercial and residential areas, as well as Orange County’s John Wayne Airport. “This property sits on the major thoroughfare that is home to all of the executive and regular housing down in this area of Newport Beach,” Gallagher explained, “and there is no other grocer between here and 17th Street.” Annual household incomes within a 1-mile radius of the center average $183,655, according to census data.
As Gallagher sees it, the prior tenant mix lacked a coherent and synergistic theme. When several operators “waved the white flag” during COVID, he said, Space seized the opportunity to craft a new mix around health, wellness, fitness, food-and-beverages and services, with an emphasis on the needs of women and moms in the affluent Costa Mesa/Newport Beach trade area.
In addition to Coffee Dose, the new operators include Del Mar Wellness, Coeur Pilates, Facial Lounge, Nike Training Studio, XPT Studio and New Mom School. The Ranch became the first location for Nike Training Studio, which offers group fitness classes, and it will be the first location for XPT Studio, a concept by surfer Laird Hamilton and volleyball player Gabrielle Reece that focuses on recovery for athletes.
The first Nike Training Studio is located in The Ranch at Newport Bay. Photo courtesy of Nike Studios
“We thought through all of the different things that people would want to have in their neighborhood center,” Gallagher said, “so we have operators like a pediatric dentist, a pediatrician, a veterinarian, workout facilities, a coffee shop, a vegan facial lounge, a nail salon and a farm-to-table restaurant.”
Wong described the repositioning as a “night-and-day improvement” that has packed the center’s parking lot and spurred cross-shopping. “I notice a lot of people from Nike coming into my store after their workout,” he said. “It has definitely made this center more alive. I would never have imagined that we would have this much traffic coming into this property.”
Coffee Dose, which offers kid-friendly menu options in addition to its coffees, lattes and gourmet brunch fare, sees “a constant flow of new traffic” from the parenting classes at New Mom School, Castro said. “We get a lot of moms, and they actually are our target customer.” Customers coming and going from John Wayne Airport add to the traffic. “We are excited to stay here,” Castro said, “and I am sure we will extend our lease when that time comes.”
Co-founder Jeni Castro has noticed new traffic at Coffee Dose’s Ranch at Newport Bay location since New Mom School opened at the center. Photo courtesy of Common Standard, interior design firm for Coffee Dose. Photo credit: Mike Carreiro
Other tenants have been similarly pleased with the results of the project, Ryan said. “The pediatric dentist pulled me aside and said: ‘Ryan, you do not realize. I had 30 walk-ins my first week. That would never have happened in a medical office building.’”
The center’s net operating income has grown from $1.3 million to $2.8 million since the 2019 acquisition, and the property is now 100% occupied and has a waiting list for space. “From a traffic perspective, we were at 440,000 in 2021 and were already up to 728,000 visits by mid-2024,” Gallagher said. “Today, it is probably closer to more than 800,000 annual visits.”
Since the repositioning, according to the company, unsolicited offers to acquire the property have reached more than $49 million, or double what Space paid for the asset.
A privately held investment, development, and management company, Space is looking for similar acquisitions across the Southwest. In many cases, Gallagher said, the performance of well-located grocery-anchored shopping centers could be improved by upgrading their aesthetics and taking a synergistic approach to their tenant mixes. “We find that people sometimes just lease the space because someone is there to take it,” he explained. “That is not our approach. We are very selective about the tenants we go after for our centers.”
Lineups based largely on health, wellness and fitness are a likely focus of that acquisition strategy, he added. “We think that there are additional health-and-wellness benefits and demand going forward. It is a trend that we believe in, and we are going to continue to look for those types of tenants for the centers that we target in the Southwest.”
By Joel Groover
Contributor, Commerce + Communities Today
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