ENCINITAS — San Diego-based RAF Pacifica Group has acquired for $24 million the 39,000-square-foot retail portion of Pacific Station, a 100,000-square-foot mixed-use development that includes residential, office and retail space near the beaches in Encinitas.
The retail center is currently occupied by high-quality national tenants including Amazon and Wells Fargo, among many others. Pacific Station is at the eastside corner of Coast Highway and E Street.
According to founder and President of RAF Pacifica Group Adam Robinson, the acquisition is well-aligned with the firm’s ongoing strategy to diversify its real estate holdings throughout San Diego County.
“San Diego remains a core focus for us, and we have been extremely active throughout the region for the last several years, especially in terms of industrial and office space,” said Robinson. “This acquisition is demonstrative of our approach to diversify our portfolio beyond creative industrial and office and branch out into other product types including mixed-use, retail and multifamily.”
Pacific Station’s retail portion was rocked last year when its anchor tenant, Whole Foods, closed its doors after five years. The building has remained vacant, but in late 2017 a rumor emerged that Amazon would be opening an Amazon Go store in the space. The rumor was fueled by a website amazonencinitas.com, which said that the store would be coming soon.
Amazon representatives debunked the speculation when they issued a statement in November that they did not have plans for an Encinitas location and that the website was not affiliated with the company. The website went dark shortly thereafter. The Coast News emailed RAF representatives asking about the plans for the Whole Foods vacancy, but had not received comment before publication.
Pacific Station, which includes 47 residential units on the floors above the retail spaces, opened in January 2011 after several years of planning, debate and a lawsuit that was ultimately dropped when construction began in 2008.
Robinson explains that the firm began diversifying its portfolio last year with new developments such as Cardiff Reef Apartments in Cardiff-by- the-Sea; a mixed-use development in SolanaBeach, a mixed-use property in Carlsbad and the redevelopment of the Carlsbad Theater on State Street in downtown Carlsbad.
“Demand for mixed-use projects is on the rise as lifestyle preferences continue to evolve toward more walkable, community-focused environments,” Robinson said. “This is especially true in dense coastal communities such as Encinitas. Located within a high-quality mixed-use development, the retail portion of Pacific Station will be fueled by its surrounding residential and office counterparts, generating significant traffic, and adding to its long-term value.”
The retail center was acquired at a significant discount to replacement cost, further adding to its long-term value and appeal, according to Robinson.
“If we were to try to reproduce this asset today, it would take years to complete, and would cost approximately $1,200 per-square- foot, more than double the purchase price,” Robinson said. RAF Pacifica Group will hold the retail asset long-term.