Highlighting success within the economic landscape of our community
Economic Development Update
October 15, 2022
Access to new CoStar Software Highlights major commercial investments in the City of Tehachapi
Commercial real estate investment continues in the City of Tehachapi as investors have spent millions in the last few months on some marquee properties in transactions with long-term stable tenants.
As part of a new initiative, the City of Tehachapi has partnered with CoStar to access real-time commercial real estate data to assist in economic development efforts. This software is a powerful tool that generates reports on active sales, sales histories, comparable properties, lease rates, vacancies, owner information and much more. In a secondary market like Tehachapi, this data was previously difficult to acquire, now it is a useful tool to complement the use of Placer A.I. for location data used to record visits to commercial properties and special events.
This latest tool has already shown several important numbers that show the City of Tehachapi as a magnet for investment. When commercial properties are built, they oftentimes have a shelf life, however, the City of Tehachapi has been able to help increase both the viability and the value of many properties, thanks in part to a robust regional economy, diverse shopping base, proper planning and public/private projects that have helped raise values of shopping centers and encouraged more investment.
Earlier this year, the Walgreens on Tehachapi Boulevard, which was constructed in 2003, sold for $6.4 million to an investment company. Walgreens has a strong history in Tehachapi and has another 11 years remaining on the lease of the 14,560-square-foot retail corner. The building first sold in 2014 for $5.4 million. Market-rent-per area shows this property has increased in value over 4% in the last 12 months.
Most recently, the Albertson's building, another prime commercial property with a stable grocery tenant since 1994, sold for $22.25 million to another real estate investment firm. This property had previously sold in 2020 for $14 million and fetched a large price tag due to the stability of the tenant and the production of the grocery store. Additionally, the Market-Rent-Per-Area report from CoStar also shows a 4% increase in property value over the last 12 months for this building. These two commercial sales represent nearly $30 million in investment in the Tehachapi market in the last six months alone. It should be noted that the sales were due in part to the stability of the tenants and that the current tenants will remain in operation.
CoStar also classifies the majority of the City of Tehachapi as a Southeast Kern County submarket of Bakersfield, with one of the lowest vacancy rates in the county at just 3.1% with projections over the next six months showing a small .04% change. CoStar also describes the rent rates in this submarket as higher because retail tenants are willing to pay a premium to reside in the SE Kern County submarket, which commands a materially higher price than the metro area. Rents in the submarket average $23 per square feet/triple net, compared to $18.60 per square feet/triple net in the Bakersfield metro. This was linked to the submarket's amount of new retail space constructed in the last decade compared to that of Bakersfield metro.
These data tools from CoStar and others will allow the economic development efforts in the City of Tehachapi to leverage real time pricing data for new and existing retail space, assist local agents and brokers with leasing efforts and continue to showcase the successful retail market that exists in the City of Tehachapi for businesses of all size looking to invest and move their services to our city.
A day in the life of the City Economy
Check out this video from Placer.ai at http://www.youtube.com/watch?v=KT9v1TvlKrg showing the movement patterns for work, school, goods and services in the City of Tehachapi on a daily basis. Data was collected from July 5-Oct. 4 to generate this hour-by-hour average video using several different categories.
Towneplace Suites by Marriott Opens its Doors in Capital Hills
The long-awaited 85-room Towneplace Suites by Marriott, the City of Tehachapi's first extended-stay hotel, is open in Capital Hills. The hotel has planned an Oct. 20 ribbon cutting event.
Innovating Commerce, Serving Communities event
The City of Tehachapi had a full slate of meetings at the recent Innovating Commerce, Serving Communities event in San Diego. Many potential future retailers, restaurants and investors were excited about the future of our market and are making real investments in our community. These meetings included new owners of a few retail properties in the City.
For more Economic Development news visit http://www.liveuptehachapi.com/303/Economic-Development-News.