ATLANTA—PGIM Real Estate, formerly called Prudential Real Estate Investors, acquired Avalon, a 1.1 million square foot mixed-use lifestyle center in Alpharetta, GA, on behalf of institutional investors. Financial terms of the deal were not disclosed.
Avalon is an open-air mixed-use lifestyle center, part of an 86-acre master-planned Avalon community in Alpharetta, a submarket about 20 miles north of Atlanta. The retail property serves the affluent communities in Fulton County, including Alpharetta, Roswell, Milton and Johns Creek.
“Avalon is one of the premier mixed-use development projects in the United States,” says Kevin R. Smith, head of Americas at PGIM. “The acquisition provides our investors with a rare opportunity to acquire a trophy-quality mixed-use property in a strong demographic area, and is consistent with PGIM Real Estate’s strategy to acquire experiential retail centers in markets that are poised to continue to benefit from an increase in consumer discretionary spending.”
PGIM’s investment includes 390,543 square feet of class A retail; 105,364 square feet of class A office space; 250 luxury multifamily units; and a 3.3-acre office development parcel. The retail and office components are 100% leased. The multifamily units are 98% leased.
PGIM will also purchase a second phase of Avalon, which will include about 90,000 square feet of class A retail and 276 luxury multifamily units. The second phase is under construction with completion scheduled for mid-2017. Terms of the transaction were not disclosed.
Anchored by Whole Foods, Regal Cinemas, The Container Store and Crate & Barrel, the existing retail is leased to national tenants. The second phase retail is pre-leased to tenants including Pottery Barn, Urban Outfitters, Williams Sonoma, Brooks Brothers, and a technology tenant. The retail property also includes several high-quality, local chef-driven restaurants, as well as national restaurants such as Kona Grill and Ted’s Montana Grill. The apartments and existing office space are located directly above the retail space.
Avalon is a strong example of experiential retail. It’s a trend that’s not only gaining momentum, it’s springing up across the board as retail shifts to meet new consumer demands. Some are saying experiential retail projects like Avalon in Atlanta could transform the industry.
“Restaurants and retailers are learning to become omnichannel, focusing on how to better align themselves with their customer base and how to win and keep loyal customers,” Brian Bern, a senior director of real estate services at Franklin Street, tells GlobeSt.com. As another example of experiential retail, Bern points to Whole Foods. The organic grocer has a blog where it posts recipes, cooking tips and more. Shoppers follow their blog and come in to buy the products and items featured.
“Nordstrom has restaurants and bars located within their traditional department stores, while attracting more customers online and at their off-priced Nordstrom Rack locations,” Bern says. “Shopping center owners and managers are paying more attention to the retail mix in their centers. They are seeking retailers that offer an experience in order to drive additional and repeat traffic to their centers.”